Coal Age

OCT 2018

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Page 7 of 51

6 October 2018 news continued But the plans are not sitting well with dozens of local fish- ermen in the Morien Bay area that is part of the Atlantic Ocean. In late September, about 30 fishermen briefly blocked the entrance to the mine to dramatize their opposition to the barging plans. Fishermen said they were worried that barging coal through Morien Bay will damage or even destroy their fishing grounds, thereby affecting their livelihood. According to one fisherman, coal barging could wipe out or decrease their normal catch of lobster, rock crab and sea urchin. So far, provincial officials have tried to walk a tightrope be- tween the two sides. Fishing has been a big part of Nova Scotia's heritage for hundreds of years. Coal mining once was an important industry in the province as well, although Donkin currently is Nova Scotia's only active mine. Kameron, as well as Donkin's former co-owners — Xstra- ta Coal and Morien Resources — have made no secret of their plans to barge the mine's metallurgical coal to foreign customers. Kameron acquired Donkin from Xstrata and Morien about three years ago. Earlier this year, Nova Scotia Power, the dominant electric utility in Nova Scotia, agreed to purchase an unspecified amount of steam coal for NSP's 620-megawatt Lingan power plant on Cape Breton Island. Nearly a year ago, Kameron laid off 49 Donkin miners, about a third of its work force, saying it needed to make changes in the mine's operation to increase efficiency and produc- tion. The mine is believed to be producing at the rate of just over 1 million tons annually. Coal Sector Reforms Hit Wall in India Indian reforms for the coal mining industry, as far as opening it up to private miners, is not expected in the near future in face of political risks and the impact on monopoly state miner Coal India Ltd. (CIL). Earlier this year, the government had announced that coal blocks would be auctioned wherein private miners could bid and successful bidders permitted to develop the block and commence production without any end-use restrictions, marking the end of Coal Nationalization Act 1974. But with Indian national elections slated next year and privatization still a political gambit, the Min- istry of Coal has decided to put plans of opening up the sector for private investor on the backburner. Commercial coal mining by private miners is also being op- posed by all major trade unions in the coal industry and with all government coal companies having an estimated 600,000 workers on the payroll, the government could face off with trade unions ahead of national elections. The government's reluctance to push ahead with commercial coal mining was evident from the fact that the Coal Ministry reject- ed a proposal from a high-power government committee that sug- gested that all coal mines, except for those earmarked for specific sectors like steel, cement and power, be put up for auction where private miners be eligible to bid. Sources said internal government memos said that CIL sub- sidiaries, which accounted for more than 80% of domestic coal supplies, were wary of the prospect of competition from private miners having communicated that such competition carried risks on production levels of the subsidiaries and long-term financial health of these government companies. Continued from p. 5... to close in the fourth quarter of 2018, subject to Alpha stockholder approval and the satisfaction of other customary conditions. Alpha stockholders will receive 0.4417 Contura common shares for each ANR Inc. Class C-1 share and each share of com- mon stock of Alpha Natural Resources Holdings Inc. they own, representing approximately 48.5% ownership in the merged enti- ty. Prior to the closing of the transaction, Alpha stockholders will also receive a special cash dividend in an amount equal to $2.725 for each Class C-1 share and each share of common stock of Al- pha Natural Resources Holdings Inc. they own. Stockholders of Alpha, who collectively hold approximately 38% of the shares of common stock of Alpha Natural Resources Holdings Inc. and approximately 35% of the shares of ANR Inc. Class C-1 common stock have entered into voting and support agreements, where stockholders have agreed to vote their shares in favor of the transaction, subject to the terms and conditions of the voting and support agreements. Ramaco Develops Alternative Plan at Berwind Mine After new exploratory drilling at the Berwind mine, Ramaco Re- sources has further defined the extent of a sandstone intrusion and has implemented an alternative plan to mine around it and ramp up into the Pocahontas No. 4 seam. The company said it will continue to mine in an alternate path through the Pocahontas No. 3 Seam at an expected annualized rate of about 200,000 tons per year (tpy). These development tons are expected to be sold at current pricing levels into the low volatile metallurgical market. Ramaco Resources now estimates that it will reach the thicker Pocahontas No. 4 seam low-volatile reserve in the second quarter of 2020, as opposed to the third quarter of 2019. When reached, the lev- el of production anticipated from both the Pocahontas Nos. 3 and 4 reserves remains as originally forecast at approximately 800,000 tpy. The Berwind coal reserve consists of 31,200 acres of con- trolled mineral and approximately 72 million clean recoverable tons of proven and probable reserves located on the border of West Virginia and Virginia, in McDowell County, West Virginia, and Buchanan and Tazewell counties, Virginia. Ramaco Resources has new commitments for the sale and deliv- ery of more than 1.2 million tons of various qualities of metallurgical coal to domestic customers in 2019. The average price of these sales is approximately $113/ton FOB mine, which compares to the com- pany's 2018 average sales price to domestic customers of $79/ton FOB mine, an increase of roughly 43% year over year. The company also contracted earlier this year with various export customers for the sale of an additional 200,000 tons of metallurgical coal for deliv- ery in the first half of 2019, at prices set against various index prices. Judge Denies FES Request to Reject Murray Energy Coal Supply Agreement Murray Energy Corp. will continue supplying steam coal to FirstEn- ergy Solutions Corp., at least for now, after an Ohio federal judge in early October denied FES's motion to reject the 6.5-million-tons-per- year (tpy) supply contract not set to continue for another decade. Soon after filing for Chapter 11 federal bankruptcy reorganization on March 31, 2018, FES, a subsidiary of Akron, Ohio-based FirstEn- ergy Corp., requested permission from the federal bankruptcy court in northern Ohio to prematurely terminate the Murray agreement. Continued on p. 7...

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