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Issue link: https://coal.epubxp.com/i/131326
news continued Jerry Benkert, Vectren executive vice president and chief financial officer, said, "We continue to be very pleased with low production costs at Oaktown 1, which should only improve once Oaktown 2 is in production." Vectren likes its location in the high-sulfur Illinois Basin, which it believes will continue to benefit from declining production in Central Appalachia and additional scrubber installation by electric utilities that should result in higher demand for IB coal. While coal production fell 7% in the U.S. in 2012, it increased by 9 percent in the IB, Vectren noted. The company, during a February 27 investors conference in New York City, said IB coal is more likely to be used in larger, more efficient power plants with modern pollution controls, helping the region to compete against low natural gas prices. Those gas prices continued to inch upward in early 2013, climbing above $3/mmBtu. At that price, coal-to-gas switching will be discouraged and even reversed in the IB, company officials said. On the whole, 2012 was not a very good year for Vectren's coal mining business, however. Coal mining lost $3.5 million for the year after contributing a $16.6 million profit to the company's bottom line in 2011. This year is expected to be even worse, with Vectren estimating a mining-related loss of $9 million in 2014 due to weak demand. But the company is confident of a turnaround in 2014. Already, Vectren has booked sales of 5.8 million tons at an average price of $46 per ton in 2014. The total includes about 800,000 tons currently in arbitration with an unidentified customer. 22 www.coalage.com Sequester Affects OSM Reclamation Funds The U. S. Department of the Interior's Office of Surface Mining Reclamation and Enforcement (OSM) recently announced the availability of more than $305 million in Abandoned Mine Land (AML) grants to states and tribes—90% of the more than $339.4 million available for distribution—to eliminate environmental hazards caused by past coal mining. OSM administers the grants in accordance with the Surface Mining Control and Reclamation Act of 1977 (SMCRA), which requires OSM to make AML funding available to eligible states and tribes. Twenty-eight coal-producing states and tribes receive annual AML grants, which are funded in part by a per-ton reclamation fee levied on all coal produced in the United States. States and tribes receive their allocations according to a congressionally mandated formula established by SMCRA. "The AML grant funds are important to states and tribes to eliminate dangerous mines and restore abandoned mine lands," said OSM Director Joe Pizarchik. The annual announcement of the grants is traditionally done in December. The announcement was delayed by preparations for the sequester. The grant amounts announced make available 90% of AML grant funding that each eligible state and tribe would normally receive, because 10% of the funds are being held back pending the sequester. OSM has worked with states and tribes to provide as much assistance as possible in advance of the release of AML funding, and the bureau will continue to offer support to AML programs nationwide. The 10% sequester holdback will have impacts on communities across the nation, the American people and the environment. March 2013