Coal Age

DEC 2014

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According to the Associated Press, Blankenship was released on a $5 million bond. His travel is restricted to Washington, D.C., and parts of West Virginia and Kentucky. He has been ordered not to speak with the family members of UBB mine explosion victims. Additionally, he is included in an umbrella gag order for all involved parties regarding disclosure of case details to the media. Blankenship's trial is scheduled for January 26. Sunrise Coal Will Increase Production With 1 Large Mining Operation Now that its $320 million acquisition of Vectren Fuels Corp. is final, Hallador Energy's Sunrise Coal LLC subsidiary is increasing produc- tion to 10.2 million tons a year as it moves forward with plans for one large, contiguous underground mining operation involving three southern Indiana thermal coal mines and a large company- controlled thermal coal reserve across the Wabash River in Lawrence County, Illinois. For several years, Sunrise's principal operation has been the Carlisle mine in Sullivan County, Indiana. The mine consistently has produced about 3 million tons of high-sulfur coal annually for sale to several scrubbed baseload power plants. The Vectren trans- action that closed in late August added the Oaktown Nos. 1 and 2 mines in Knox County and the Prosperity underground mine in Pike County, Indiana, the latter of which has been temporarily idled because of persistent geological problems. Hallador said in a November filing with the federal Securities and Exchange Commission (SEC) it has combined 21 million tons from Oaktown 2 with 43 million tons from the War Eagle reserve in Lawrence County to create a 64-million-ton reserve that will be mined through the Oaktown 2 portal. Because Oaktown 2 is contiguous to Carlisle and the War Eagle reserve, "we intend to mine part of Oaktown 2's reserve from our Carlisle portal and all of our War Eagle reserve from the Oaktown 2 portal," Hallador added. "Oaktown 1, Oaktown 2, Carlisle and War Eagle are now one large underground mining complex repre- senting 142 million tons of controlled reserves, with three portals, two wash plants and two rail facilities," located on the CSX rail- road. Sunrise also has leased approximately 19,300 acres in Vermillion County, Illinois, near the village of Alberton, for the proposed Bulldog underground mine. The mine will produce about 3 million tons of thermal coal annually from a current reserve base of about 35.8 million tons. In July, the company was notified by the Illinois Department of Natural Resources its Bulldog mine permit application had been deemed complete, starting the timeline for the agency's public review process. Sunrise hopes to be awarded a final permit no later than mid-March 2015. Thanks in part to the Vectren acquisition, Sunrise sold 3.1 mil- lion tons of coal in the first nine months of 2014 at an average price of $42.88/ton. That compares with the 2.4 million tons it sold in the same period of 2013 at an average price of $42.42/ton. Sunrise already has committed sales of nearly 9.5 million tons at an average price of $44.32/ton for 2015 and 3.3 million tons at an average price of $44.03/ton in 2016. So far, it has sold 1.45 million tons at an average price of $44.39/ton for 2017. Major customers include Duke Energy Corp.; Hoosier Energy, an electric cooperative in Bloomington, Indiana; Indianapolis Power & n e w s c o n t i n u e d Russian Coking Coal Arrives in South Korea Via North Korea Roughly 40,000 metric tons of Russian coal arrived in the South Korean port city of Pohang during mid-November. Mined in western Siberia, the coal was transported to Russia's border town of Khasan, according to Arirang News . The supplies were then transported to the North Korean port city of Rajin, via a roughly 50-km-long cross-border railway. The coal then left Rajin on a Chinese ship bound for Pohang. This is the first batch of a test-run coal shipment sent as part of the so-called Rajin-Khasan project, a trilateral trade agreement among both Koreas and Russia. The project was proposed at a South Korea- Russia summit in Seoul last year. Currently, POSCO imports its Russian coal by ship through Vladivostok, but this new route could cut the company's coal import costs by up to 15%. ICVL Ships First Coking Coal From Mozambique PTI reported that International Coal Ventures Ltd. (ICVL) said the first shipment of coal from its recently acquired Mozambique mine was shipped during November destined for the Steel Authority of India. During July, ICVL purchased Rio Tinto's 65% stake in the Benga mine and 100% each in Zambeze and Tete East coal assets in Mozambique for $50 million. Benga, the only operational mine, produces about 5 million metric tons per year (mtpy). There is a potential to increase production from the mine to 12 million mtpy in the near-term. CIL Seeks Underground Coal Mining Experts In a bid to check dwindling production from underground mines, Coal India Ltd. (CIL) is seeking to appoint global experts to conduct studies across mines to determine production potential, mecha- nization program and revive defunct assets. According to a CIL offi- cial, the global experts would initially be mandated to conduct studies across 90 underground mines and submit a preliminary report by March 31, 2015. This would be followed up by mine specific studies and the expert consultants would be responsible to suggest a definite action plan taking into account individual parameters of each of the underground mines, he said. The task of the consultants would be twofold — recommend inten- sive mechanization of currently operational underground mines, which were heavily manpower intensive and technological recommendations for reviving underground mines that have been closed down by CIL over a period of time, but still had recoverable resources, the official added. CIL's initiative to rope in global mining consultants with special expertise in underground mining was a precursor to the Indian gov- ernment's plan to offer incentive to modernize the miner's ageing underground asset, which were either defunct or showing falling pro- duction trend. Trafigura to Market Westmoreland's Coal Abroad Large independent producer Westmoreland Coal Co. has entered into a new coal services agreement with resource trader Trafigura AG for the marketing of its thermal coal for export. The Colorado- based company said that, under the new deal, Trafigura will exclu- sively market "certain tons" from its Coal Valley operation in Alberta, Canada, though it did not disclose any further details or terms. Continued from p. 6... 8 www.coalage.com December 2014 ˛

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