Coal Age

FEB 2013

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news continued in 2012 to its highest production total in more than two decades. And if state industry officials are right, the best is yet to come. Phil Gonet, president of the Illinois Coal Association, put it succinctly: ���We���re rising while others are not.��� That reference to other coal-producing regions in the United States was more brutal truth than boast. For while the federal Energy Information Administration estimates coal output fell by 7% nationwide last year, Illinois produced about 46 million tons, up roughly 25% from 2011 and its most since Congress passed the Clean Air Act Amendments in 1990. This year, with any luck at all, Illinois should eclipse 50 million tons. No one disputes the Land of Lincoln mostly can thank billionaire Christopher Cline and his Cline Group/Foresight Energy Partners for spearheading much of the turnaround in a state that, just a few years ago, felt fortunate to hit the 30-million-ton mark. Cline/Foresight operates and is developing several large longwall mines that have the potential to reach 30 million tons a year or more all by themselves. But that is not the entire story. Several other companies and new mines also are driving coal���s revival in a Midwestern state where mining has been a major economic staple for better than a century. Prairie State Energy Campus��� Lively Grove underground mine near Marissa in Washington County is the sole supplier of coal to the new 1,600-mw Prairie State power plant. Lively Grove, a continuous miner operation, produced 2.8 million tons from the Herrin No. 6 seam in 2012. But it is still ramping up. When in peak production, Lively Grove is expected to produce almost 7 million tons annually. ���That coal isn���t dependent on the market,��� observed Gonet about Prairie State���s mine-mouth operation. Alliance Resource Partners also is no shrinking violet when it comes to Illinois coal. The company���s only currently operating mine in the state, the venerable Pattiki underground mine near Carmi in White County, saw production rise to 2.3 million tons last year from 2.1 million tons in 2011. Two years ago, Alliance, like Cline, made a big bet on Illinois coal by investing heavily in privately-owned White Oak Resources. That investment could begin paying off late this year when the White Oak No. 1 underground mine begins limited production. Production is targeted to accelerate in 2014 when the new longwall starts up. White Oak eventually could produce around 7 million tons a year, and there is the possibility of a White Oak No. 2 down the road. On deck are several other coal companies, including Hallador Energy, Arch Coal and Rhino Resource Partners. At varying speeds, all are pursuing new underground mine projects in Illinois. Hallador���s Sunrise Coal subsidiary probably is closest to reality. The company soon hopes to sign a water supply agreement with the village of Homer for the company���s planned Bulldog mine in Vermilion County. The company also hopes to be issued a state mining permit for Bulldog before the end of this year. Actual production probably is a couple of years away. Not only is Illinois coal profiting, Gonet said, from the decision of many electric utilities to install scrubbers and other pollution controls to burn the state���s high-sulfur coal, but export sales are soaring as well. Although the figures are not official, Illinois is believed to have shipped about 12 million tons of coal overseas in 2012, up from 7 million tons in 2011. ���And I think they can get larger,��� Gonet said about the exports, ���because most of that coal is going to Europe.��� Could Western Kentucky Rally Too? While uncertainty still hangs heavy over the nation���s coalfields in the early days of 2013, some officials are guardedly optimistic that western Kentucky, part of the high-sulfur Illinois Basin, may be destined for brighter days this year. Most of western Kentucky���s coal production typically comes from a handful of counties: Union, Hopkins, Webster, Muhlenberg, Ohio and Henderson. The region may not garner as much acclaim as its next-door neighbor and faster-growing IB member���Illinois, but it is more than holding its own while also grappling with a host of regulatory and environmental challenges, mild weather, and the low price of natural gas. Bill Bissett, president of the Kentucky Coal Association, said western Kentucky coal producers are narrowing the production gap with their counterparts in the eastern part of the Commonwealth, which is part of Central Appalachia. Mining costs tend to be higher in Central App and the seams are often thinner. Many surface mines in eastern Kentucky are mountaintop removal jobs and, as a result, have attracted fierce opposition from environmentalists and other groups. There are no mountaintop removal mines in flatter western Kentucky. Putting the ���Coal��� Back into ���Coalition��� UK Minister of State for Energy John Hayes joined the World Coal Association (WCA) recently in celebrating the appointment of the new WCA Chairman, Zhang Xiwu. Speaking at the WCA Leadership reception at the Institute of Directors, the Minister congratulated Dr. Zhang and offered him his ���very best wishes for his tenure as chairman of the World Coal Association.��� Hayes spoke of the vital role of coal in the UK, highlighting that: ���No one working on energy policy could be oblivious to the impact of coal, then and now, worldwide as a source of energy. Coal continues to have an important 10 www.coalage.com role in the UK energy mix, providing more than a third of electricity in an average year, and rather more in weather like this.��� Given this role, the Minister promised that he ���[is] determined to be the Minister that put coal into the coalition.��� In addition, Hayes said: ���We can bring clean, affordable and reliable energy to our people and to help share that benefit to other nations around the world. Organizations like the World Coal Association clearly have a vital role to play in doing that work.��� Dr. Zhang is chairman of the Shenhua Group, China���s largest coal producer. His appointment marks the first time in WCA���s 28 year history that it will be led by a chairman from China, marking an exciting period of growth and opportunity for the WCA and the coal industry. UK Minister of State for Energy John Hayes introducing new WCA Chairman Dr. Zhang Xiwu. February 2013

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