Engineering & Mining Journal

JUN 2019

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NEWS - THIS MONTH IN COAL JUNE 2019 • E&MJ 41 www.e-mj.com being tied to a single domestic custom- er. Besides, Eskom, like utilities around the world, is under pressure to close coal plants in favor of renewables. Queensland Approves Olive Downs Coking Coal Project Pembroke Resources reported that its Ol- ive Downs coking coal project has been approved by Queensland's coordinator general and is expected to begin produc- ing next year. Located 40 kilometers (km) southeast of Moranbah in Queensland's Bowen Basin, a well-established coking coal area with existing infrastructure, the project is backed by its major sharehold- er, Denham Capital, a leading global en- ergy and resources private equity firm. "This world-class project will have a production life of almost 80 years," Chair- man and CEO Barry Tudor said. "There is no viable alternative to coking coal in the primary steel production process for the foreseeable future, and Olive Downs will be a major supplier to the world's lead- ing steel producers and as such, will be a valuable contributor to the Queensland and Australian economy for generations." Tudor also said Olive Downs will bring employment and other opportunities to the state's regional communities. "Our focus is on workers living locally, including in the lo- cal economies of Moranbah, Nebo and Dys- art, and hiring locally from the surrounding towns of Central Queensland," he said. "There will be no fly-in, fly-out rosters." The first stage of the project will re- quire capital expenditure of A$450 mil- lion and will produce 4.5 million metric tons per year (mt/y) of metallurgical-grade coal, which will be exported through the Dalrymple Bay Coal Terminal. Pembroke awarded an A$184 million contract for the design and construction of a coal handling and preparation plant at Olive Downs, scheduled for commis- sioning in 2020. CONSOL Energy Starts Development of Itmann Mine CONSOL Energy Inc. has commenced the development of a new low-vol metallurgical coal mining operation in Wyoming County, West Virginia, with an anticipated comple- tion date of 2021. The Itmann mine, the company's first major growth initiative, will produce 600,000 tons at its full run rate. "Since becoming an independent publicly traded company, we have mean- ingfully deleveraged our balance sheet and improved our liquidity through strong operational performance and completion of our first-quarter 2019 refinancing," CEO Jimmy Brock said. "We also con- tinue to return capital to our sharehold- ers through our expanded repurchase program announced. The Itmann mine begins the next phase of our evolution, as we are now focusing on strategic and controlled growth as an additional avenue to increase our per-share value." Brock added that the new mine will align with the company's current asset base. "It will further diversify our already robust portfolio by adding a new metal- lurgical coal product stream to the mix," he said. When combined with metallurgical product from the Pennsylvania Mining Complex, it will allow the company to con- sistently produce 2.5 million-plus tons of metallurgical quality coal annually, once the Itmann mine and preparation plant are constructed and fully functioning in 2021. "We are also excited about the tim- ing of the Itmann project, as coking coal prices remain attractive," Brock said. "While other new metallurgical coal sup- ply is expected to emerge in the U.S. in the coming years, we believe that most of this new supply will be focused on high- vol metallurgical products." He added, "Our initial market out- reach has indicated a strong interest level among domestic and international cus- tomers in the Itmann product." The Itmann project has an anticipated mine life of 25-plus years. Construction of the mine is expected to begin in late 2019 or early 2020, pending successful permit- ting and project development efforts, which are ongoing and progressing as planned. Total capital expenditures will be $65 million-$80 million over the next two years to develop the mine and preparation plant. Contura Energy Greenlights Lynn Branch Projects In their first earnings call as co-CEOs for Contura Energy, Andy Eidson and Mark Manno, discussed results that were positive, but did not meet expectations. During the quarter, the company produced 6 million tons, a 2-million-ton increase over the same period last year. More than half of that increase was met coal selling at average price of $123.68/ton. The company's board of directors ap- proved the $25 million to $30 million Lynn Branch metallurgical coal project in Logan County, West Virginia, which is expected to reach full production by the second quarter of 2020. They announced they had encountered geological issues at Marfork and they had resolved infrastruc- ture-related issues at Mammoth Slab- camp. Despite a longwall move, the Cum- berland mine also posted good results. The Marfork mine encountered geolo- gy that yielded less clean tons per foot of advance. The decision was made to relo- cate the sections to other areas with better mining conditions. Manno referred to it as a temporary issue that will be remediated by the end of the year. The issues at Mam- moth Slabcamp were resolved in mid-April and the mine is back to full production. The Lynn Project is expected to unlock a high-quality, 25-million-ton high-vol met coal reserve. The project is expected to produce approximately 1 million to 1.2 million tons annually at its full estimat- ed run rate, with a projected cash cost per ton in the low $60 range. The capi- tal investment includes improvements to the Band Mill prep plant to accommodate this coal. Production is expected to com- mence in the second quarter of 2020. The company maintained its 2019 coal shipments guidance of 24.6 million to 26.7 million tons. Met coal guidance remained at 12.2 million to 12.8 million tons. With a 25-year life, the Itmann mine is expected to produce 2.5 million t/y of met coal.

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