Engineering & Mining Journal

JUL 2018

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NEWS - THIS MONTH IN COAL 24 E&MJ • JULY 2018 www.e-mj.com Cumberland Longwall Encounters Difficult Geology Contura Energy revised its 2018 produc- tion outlook downward for the Cumberland longwall mine in southwestern Pennsylva- nia. Over the last several weeks, the mine has been experiencing unforeseen geolog- ic conditions due to reduced coal seam thickness and localized soft clay influenc- es within the coal seam. As a result, both production and processing have slowed. The mine was temporarily idled for sev- eral days in mid-June to more effectively manage raw stockpile levels. Production has since resumed, though the company expects reduced tonnage levels for the next several weeks as production works through the localized clay issues. These challenging conditions are not currently expected to extend past early to mid-August. "While these tough con- ditions were not anticipated, we believe they are temporary, and we will continue to work through them in the most safe and efficient manner possible," said Kev- in Crutchfield, CEO, Contura Energy. "I am confident in our operations team to get the mine back to peak efficiency in the coming weeks." The company now expects its total 2018 Northern Appalachian shipments to be reduced by approximately 1 mil- lion tons below the previously announced guidance of 7.1 million tons to 7.5 mil- lion tons. NAPP costs are now expected to be between $35/ton and $38/ton for the full-year 2018. AEP Expects to Burn Slightly More Coal This Year American Electric Power (AEP) plans to burn slightly more steam coal in 2018 than last year at its remaining coal-burn- ing power plants. The Columbus, Ohio- based company should consume ap- proximately 33 million tons of coal from several domestic coal basins, according to a company spokeswoman. That is about a 6% increase over the 2017 coal burn, but it pales in comparison to a decade ago, when AEP regularly burned about 70 million tons of coal in its far-flung plants. The 33-million-ton figure relates only to AEP's regulated power plants. The company does not disclose the coal burn for its unregulated or merchant facilities, some of which have been retired by AEP. They include the 2,400-megawatt J.M. Stuart plant along the Ohio River near Aberdeen, Ohio, and the 600-mega- watt Killen plant near Wrightsville, Ohio. AEP and Houston-based merchant gener- ator Dynegy Inc. had been co-owners with Dayton Power & Light Co., which operat- ed the plants until they closed on June 1. By mid-2016, AEP had retired approx- imately 6,500 megawatts of coal-burning generating capacity as part of its plan to comply with the federal Environmental Protection Agency's Mercury and Air Toxics Standards rules for existing power plants. In the past couple of years, the pace of AEP's coal plant retirements has slowed. Coal still accounts for about 47% of AEP's total generating capacity of about 33,000 megawatts. AEP serves about 5.4 million customers in 11 states. Foresight Expects Strong Export Steam Export in 2018 Foresight Energy expects to sell at least a third of its Illinois steam coal production, perhaps more, into the export market in 2018 after such sales accounted for 33% of the 5.24 million tons the St. Lou- is-based company sold in the first quarter this year. Two primary motivations behind the higher export sales are low natural gas prices domestically and higher sales price realizations from shipping coal overseas as opposed to marketing it in the United States, Robert D. Moore, Foresight presi- dent and CEO, said. The company reaffirmed projected coal sales volumes of 21.5 million to 22.8 million tons this year, with at least 7 million tons destined for export. "We have 6.7 million tons contracted for the export market with the possibility of increasing that to 9 million tons to the export market for the full year," Moore said. Moore said he has seen a "decent amount" of domestic requests for propos- als for steam coal this year "and a move- ment upward in the price of Illinois Basin coal, a positive move as it relates to folks being more disciplined and recognizing there is a tightening as to the availability of coal for the remainder of this year." The export market, he noted, "has pulled a lot of volume out of the domes- tic market." Currently, Foresight is see- ing prices for its coal in the high $30s to mid-$40s per ton. The company re- ported average first-quarter coal sales of $45.49/ton, down 3.2% from the prior quarter but up 5.5% from a year ago. Foresight produced 5.67 million tons in the January-March period from its three longwall mines in Illinois, a 14.4% increase from the 4.96 million tons it turned out in the first quarter of 2017. A shearer operator cuts coal at the Cumberland mine using a handheld remote.

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