Coal Age

AUG 2016

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10 www.coalage.com August 2016 news continued Emphasizing the need for the new facility, VU Board Chair John Stachura said coal is located in 18 counties in southwestern Indiana, with rock mining located in most of Indiana's 92 coun- ties. According to the U.S. Geological Survey, Indiana has 17 bil- lion tons of recoverable coal. Johnson said construction of the mock mine will take about seven months. He expects construction to begin soon. VU's Gibson County Center for Advanced Manufacturing is a leading resource for workforce development. The 57,000-square- foot facility features modern and flexible training labs and class- rooms that serve employers, employees and students within southwestern Indiana's industrial corridor. It is located on U.S. 41 near Fort Branch and just a few miles from interstates 64 and 69. VU is state-supported with campuses in Vincennes and Jasper and additional sites such as Indianapolis, Lebanon and Gibson County. A leader in developing Early Colleges statewide, VU also offers instruction at military sites throughout the nation. In addition to offering a wide range of associate degree and certificate programs, VU also offers bachelor's degree programs in technology, homeland security, nursing, secondary education programs in mathematics and science, and special education/el- ementary education. VU enrolls students from throughout Indiana, 35 other states and 17 countries. Tuition and fees are the lowest among Indiana campuses with residence halls. VU is accredited by the Higher Learning Commission. CONSOL Settles Pollution Suit Five years after first being issued Clean Water Act violations for its Bailey mine complex, CONSOL Energy has settled a suit with the De- partment of Justice (DOJ) and the Pennsylvania Department of En- vironmental Protection (DEP). The producer will implement "exten- sive water management and monitoring activities" at the Greene and Washington County complex, according to the DOJ, to prevent future mine wastewater discharges. The agency, as well as the DEP, had said the earlier discharges had entered the Ohio River and its tributaries. CONSOL will also pay a $3 million civil penalty for the viola- tions, though the company said it already had set aside the funds because it has been waiting for some time for the proper author- ities to sign off on the settlement. Company spokesperson Brian Aiello told the Pittsburgh Post-Gazette that it has already spent more than $5 million on a closed-loop system at Bailey for the prep plant's slurry ponds and that CONSOL has also taken "proac- tive measures…[for] past surface water management challenges experienced at the Bailey complex prior to 2011." The proposed consent decree for the settlement has been filed in the Federal Register. It is now under a 30-day comment period for public comments, after which it will be signed by a judge. The comment period for the decree, which is available to view at www. justice.gov/enrd/consent-decrees, closes September 9. Alliance Continues to Earn Higher Than Estimates Alliance Resource Partners remains one of the healthiest compa- nies in the embattled U.S. coal industry, posting a profit of $82.7 million in the second quarter even though its production and sales were lower than a year ago. While many of its steam coal competitors are dealing with difficult balance sheets while wait- ing for electric utility stockpiles to burn down and demand to pick up, Tulsa, Oklahoma-based Alliance is still generating earnings higher than analysts' estimates. Alliance President and CEO Joe Craft said it is able to do so because the company has shifted production to its lowest-cost mines while trimming operating costs. "We've been in transition to move production from our higher-cost mines to our lower-cost mines," he said, referring in particular to the Tunnel Ridge long- wall mine in Ohio County, West Virginia, that started up three years ago. Tunnel Ridge saw its production rise to 1.8 million tons in the April-June period, and 3 million tons for the first half of 2016, according to the federal Mine Safety and Health Adminis- tration, leaving it on track to meet or exceed 2015 production of 6 million tons. Alliance made the difficult decision in late 2015 to idle its higher-cost Onton No. 9 and Gibson North underground mines in Webster County, Kentucky, and Gibson County, Indiana, respec- tively, in the process taking more than 4 million tons of high-sul- fur coal out of production annually. Craft said he hopes Alliance can reopen both continuous miner operations at some point, al- though there is no timetable. "We made the decision to cut production," he said, adding that the strategy of more closely matching production to commit- ted sales resulted in Alliance's production dropping by 28.9% in the first half of 2016 compared to a year ago. Alliance produced and sold 8.3 million and 8 million tons in the second quarter of 2016, down from 9.5 million and 10.4 million tons in the year-ago quarter. The company's production and sales for the first half of this year were 17.2 million and 15.4 million tons, respectively, ver- sus 20 million and 19.9 million tons in the first half of 2015. Alliance fetched a bit less from coal sales in the second quar- ter, $53.05/ton, down from $54.13/ton a year ago. But production costs decreased even more, to $30.93/ton in the latest quarter from $35.77/ton in the second quarter of 2015. For all of 2016, Alliance said production should be in a range of 33.5 million to 34.5 million tons, with sales in a range of 35 mil- lion to 36 million tons. "We anticipate sales volumes to increase by 4.5 million tons in the second half of 2016," Craft said, as buy- ing activity is starting to accelerate. Alliance now is essentially sold out for 2016 and has obtained pricing commitments for 24.3 million, 15 million and 7.9 million tons for 2017, 2018 and 2019, respectively. It expects to secure more sales in the coming months. On the minus side, prices in 2017 are expected to be lower than 2016. "Right now, based on what we are projecting, we would have pricing overall that will be down about 12 to 15%, somewhere in that zip code," Craft said. "What we're seeing is that we still have Vincennes University will build an underground simulation center at its Gibson County Center (above)..

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