By Lee Buchsbaum
A generation ago, now maybe two, the rolling hills of western Kentucky reverberated with the rumbles of many great mining machines. Similar to mechanical dinosaurs, these towering machines, some among the largest ever constructed, were emblematic of the scale and import of the area’s healthy coal industry. From the mid-1960s through the late 1980s, surface mining boomed throughout the region. Peabody Energy, Pittsburg & Midway (P&M), the Badget Brothers, and others employed a variety of shovels and walking draglines to remove the overburden from relatively shallow coal seams.
Over the decades most of the large surface mineable tracts were exploited, and with coal prices and demand for Illinois Basin coal falling throughout the 1990s, one after another, the draglines became extinct. Over time many were scrapped, sent in pieces to other mines, shipped overseas or wherever a home could be found. Eventually just five draglines were left in the area. Though of differing parentage, all of them by default fell under the ownership of the growing Alliance Resources LP, but only one had turned a wheel in ages. The rest sat, rusting, giant steel sculpts to a by-gone era.
As markets transitioned in the 1990s, most of the major players in the western Kentucky coalfields such as Andalex, Zeigler, P&M, and Peabody disappeared along with the draglines. Formerly one of the largest producers and reserve holders in the region, Peabody spun off much of their holdings into what has now become Patriot Coal. They also divested themselves of much of their interest in the reserves and operations that would become Armstrong Coal Co.
Today, with utilities increasingly installing advanced pollution controls on power plants up and down the Ohio River Valley, demand for Illinois Basin coal has started to rebound. Constrained demand in Central Appalachia and even Northern Appalachia has a few utilities buying along the river. It doesn’t hurt too that western Kentucky has a large indigenous coal burn as well. As the coal markets have returned, so have many of the former economic rules and calculations. The newly created entity, named after Hord Armstrong, infused with capital from east coast financiers and piloted in many respects by long time Peabody Energy veteran Kenny Allen and independent mine engineer David Cobb, early on assessed their reserves and collectively determined that the time had returned to fire up a few more of those draglines and put them into action once again. Today, after a long silence, Armstrong owns three draglines: one that’s now operating at their Midway Surface mine, one that’s about to go into operation at their under-development Equality Surface mine, and a mate that’s being rebuilt to join it.
The Draglines are Back
Ironically, though Marion and Bucyrus were the dominant dragline builders of the era, the three draglines Armstrong has purchased are all Page 752, 45 cubic yard, 225 foot boomed draglines constructed in the 1970s. They’ve spent their entire lives in the western Kentucky coalfields. First purchased by the Badget Brothers Coal Co. for their Cimarron and Venture mines, over time Andalex acquired two of them and Jim Smith Coal picked up the other. As the western Kentucky coal markets continued to contract, many of the large surface operations, including these three, were purchased by Alliance Resources. Alliance used the No. 377 in their Hopkins County Coal surface mine just south of Madisonville, before finally idling it in 2006 as reserves played out and the company shifted most of their resources underground.
As Allen and Cobb began planning out Armstrong’s new mines, they evaluated the No. 377 and the other 752s and determined that they fit the bill for their needs. SMC Dragline Service, Inc., owned and operated by dragline experts B.J. “Shad” Shadrick and Gene Miller, purchased all three machines from Alliance and as they’ve been rehabbed, Armstrong has purchased them from SMC.
By rebuilding and upgrading the draglines, Armstrong is banking on the economies of scale to once again prove that these older machines are still the most efficient way of moving large volumes of overburden. Their success with them may also serve as a model for other companies which have good surface reserves but would otherwise employ large mobile equipment fleets.
Economies of Scale
Of course, draglines are only helpful if you have the right reserves and conditions. While the market economics really determine what stripping ratios are cost-effective, a dragline offers some flexibility at 20:1 and sometimes 25-28:1. Midway’s stripping ratio currently averages about 10.8:1, increasing to 14:1. “We prefer the lower ratios,” said Cobb.
“Draglines are still the cheapest way to move a yard of overburden under the right conditions, like those Armstrong has,” said Allen, vice president of operations, Armstrong. “When they are rebuilt, we’ll have three machines running in basically like-new condition.” The company has invested several million dollars in them now and will have $15-$20 million in all three of them by the time they’re all operating.
“But a new machine is quite a bit more than that now, if you can even get one and put it in operation,” said Cobb. “You figure a new machine is going to cost roughly $1 million a yard, we’re certainly not going to have that much in ours when they are up and running. Thankfully, these dependable machines were available, and still in the right place at the right time.”
In today’s economy, with lowered coal prices and a tougher market, “by using the dragline for our primary stripping machine, we have lowered the cost per yard for removing the overburden,” said Allen. In terms of man hours and labor costs, a dragline’s efficiencies are unparralled. “It only takes two people to operate the machine and in less than one minute you can move roughly 45 cubic yards,” said Allen.
Armstrong purchased the machines largely based on its previous experience with them. “We know that a dragline, when put into an environment such as the Midway mine, will perform much more economically than mobile equipment,” said Allen. An additional advantage is also that the electricity necessary to run the machine is much cheaper than diesel fuel. “Certainly when it was north of $4 a gallon, we saw employing drag-lines as a big savings.”
When those capital and labor costs are compared to a fleet of trucks and shovels, it’s easy to see why Armstrong made this choice. The company does own a large mobile fleet including one 2500 Hitachi front shovel, one 1900 Hitachi back hoe, one 1200 Hitachi backhoe, one 850 Hitachi backhoe, eight Caterpillar 777 trucks, four Cat 773 trucks, two Cat D11 dozers, one Cat 475 dozer, two Cat D9 dozers, two Cat D10 dozers, and two Cat D6 dozers destined for smaller reserve tracts. But with the large reserves at Midway and Equality, the big boys aren’t going anywhere soon.
Mining Select Reserves
After decades of sustained large-scale surface mining, by 2000, much of the reserve base in western Kentucky had been exploited. Most of what remains are small pockets, or still strippable lower seams in areas that had previously been mined. When Armstrong was being assembled, it gained control of two of the largest surface blocks left in the region, Midway and the Equality Boot. Dragline No. 377 has been operating at the Midway mine for almost a year now, and with Midway’s plentiful reserves, it will have a job for at least another 12 to 15 years—depending of course on market conditions and the rate of production. Equality has even more remaining reserves and the two draglines will likely together be moving overburden for 15 or so years too.
Currently the No. 337 is fully erected and about to be painted. Though the 347 is in pieces, its swing segments, rack, tube, and other components are starting to come together. “It’ll be ready this summer, depending on how hard we push it,” said Allen. At the pace they’re currently working, it will take SMC through the third quarter of 2009 to complete the third dragline, if Armstrong needs it by then.
Armstrong estimates the Midway mine, where No. 377 is currently running, this year will produce about 2.8 to 3 million tons, but that figure will fall to an average of 1.5 million tons per year (tpy) going forward. “While we’re waiting on some 404 permits for our East Fork surface mine, we have extra equipment working at Midway now,” said Allen. Though Armstrong is investing heavily in their draglines, some of their aforementioned mobile equipment fleet is destined for small reserve pockets like those at their East Fork mine, now awaiting its 404 permits.
Once in full operation, East Fork will only produce about 750,000 tpy from a 4 to 5 million ton reserve with hydraulic excavators, dozers, and trucks. But in today’s permitting environment, when that will be is near impossible to estimate. “Delaying these 404 permits is very costly, especially to a company like ours where we’ve invested our capital and have this equipment sitting, ready to run. We need to be moving dirt and selling coal to pay for these machines. Just as importantly, we’ve got a lot of people that we can’t hire who want to go to work and need these high paying jobs. It’s more than frustrating,” said Allen.
Upgrades to the Draglines
Initially, SMC reviewed all of each machine’s components and inspected them to help Armstrong decide what to rebuild or replace. “We’re upgrading the machines mechanically, knowing that they’ll be weakened by stress over the years,” said Allen. Armstrong is upgrading some bearings in the machines, changing some gears and gear patterns.
“We re-built or enhanced the structural areas that had been a problem in the past. We also rebuilt the swing cases, which are generally full of oil, and dried the oil out. We’ve rebuilt them so that now you pump the grease into the bearings and spray OGL on the gear train, eliminating the need for putting oil on the dragline,” said Gene Miller, SMC. “The advantage is that when you spray all of it, the contaminants fall to the floor and off the machine. In a wet machine those contaminants can float back into the gear train or bearings which reduces their lives. This method requires a bit more monitoring, but you get a lot longer life out of the gears. In a hot environment like Kentucky, it helps them run cooler. With these enhancements, the draglines will stay lubricated almost automatically.”
But the largest improvements have been to the dragline’s electrical and operating systems. “We removed all the rotors and re-geared the machines completely. On the 337 and the 347 we’ve installed a completely new digital control system. On the 377 we left in the original GE system, based on our experience on them,” said Allen.
The 377’s original GE DOMII system is very reliable. To keep things simple, Armstrong elected to keep it intact because most electricians in the industry are quite familiar with the DOM II system. The new digital drives going into the 337 and 347 are less well understood. “You almost have to bring an outside source in until they learn the systems,” said Miller. “Armstrong basically purchased a digital upgrade from Avtron that, when installed, becomes the operating system and eliminates the DOM II.” Though the DOM is very reliable, it’s becoming increasingly hard to find parts for it.
The second and third machines, which had Westinghouse operating systems, had all of their motors and systems upgraded and rebuilt to make them more reliable. “One of the advantages of the Avtron rebuilds is that there are fewer parts involved, so there’s less potential for breakdown,” said Miller.
Another plus is that you can really fine tune the system. With all the electronic monitoring, both the operator and anyone off-site can watch or troubleshoot the machine. In the old days, maintenance technicians would shut the machine down and run a full diagnostic. But, now, technicians anticipate problems and fix them before the machine suffers catastrophic failure. “On the new digital machines we’ll be able to troubleshoot them from any web portal, anywhere that you have a laptop,” said Allen.
SMC believes motors and generators are going to live longer because “you’re able to stay within their specifications and tolerances. This can really assist as you plan for maintenance,” said Miller.
One of SMC’s primary goals is to increase the availability of the draglines going forward. “You want that machine running at least 92% of the time,” said Miller. “There are only so many hours in a year. If we can upgrade the dragline’s availability by 1%, that could be both a big savings and help enhance our client’s bottom line. We’re also working with Armstrong to help them build a maintenance program so that when the machine does go down, they’ll know what to do. For some of the more predictable problems, those that you actually plan to shut down for, what we’ll do is swarm the machine with a human wave of workers. We figure if your machine being down costs you $5,000 an hour, doesn’t it make sense to spend $1,000 per hour to get the machine up and out quicker?”
SMC was initially contracted to move the machines from where they were, 40 to 50 miles from the Midway and Equality mines, tear them down, move them, re-build and re-assemble them for their next lives. SMC had the first machine operating in nine months. And if all is successful, the group will be able to boast that they’ve been able to move all three draglines in two years.
“We employed a lot of local people to move these machines. That helps cut down costs because these folks aren’t living on or near the jobsite in motels. And because they get to go home each night, it’s more like a regular job. I’ve moved a lot of draglines before and after a period of time people get burned out, a lot of it due to being away from home,” said Miller.
Between Shad and Miller, SMC has fixed or worked on about every dragline that’s ever been built. All have common problems and problems unique only unto themselves. “Any machine of this size and complexity is going to have some idiosyncrasies,” said Miller.
Armstrong is really pleased with the way the rebuilt No. 377 has performed since it was pressed into service. Startup on it “was about as easy as any I’ve ever been through, even when compared with new machines,” said Allen.
Past Experiences with Draglines
A native of western Kentucky, Allen’s experience with draglines started in the mid-1960s when he was working in a small motor shop while going to school. Then in 1967 he went to work for Peabody Energy at the nearby Homestead mine which employed a Marion 8800 with a 100-cu-yd bucket. It was the largest dragline ever located in the state. Two decades later, Allen rose through Peabody’s ranks to become superintendent of the mine where the 8800 dragline had been moved. “During my career with Peabody, I worked with or have been on draglines all over the world. It’s kind of neat to see them back and running again. When the bottom fell out of the Midwest coal industry, we were hurt really bad here and it fell to me to actually shut down several operations in the area, park the draglines and deal with the silence. I thought I’d never be involved in another dragline after that. It’s a great feeling to have the good fortune of being involved in this re-birth,” said Allen.
Like Allen, Miller, a native of Pickneyville, Ill., started his career in the mines when he was 18 years old, first at the Leahy mine and then at the Captain mine. At Captain, he bid on the operator’s position on the Captain 6360 Shovel, the largest shovel ever built. Miller was operating it the night it infamously caught on fire too. “We tried to salvage it, but it was too far gone. The heat from the fire had buckled a lot of its settle plates, and combined with all the smoke and fire damage, we just decided it wasn’t feasible.”
Following Captain, and a degree from Southern Illinois University in Carbondale, Miller worked for Bucyrus for 11 years. “That’s where I got the major portion of my dragline experience,” he said. After a stint with another contractor in West Virginia, Gene and his old friend Shad decided to start their own company. “Shad’s been working on draglines since Moses walked the Earth,” said Miller.
But to set the record straight, Shadrick has only been repairing draglines for more than 40 years, mainly with Peabody, working on their draglines all over the country. After being promoted to become Peabody’s manager of heavy maintenance, he worked on just about every shovel or dragline that’s ever been built. During his career he kept running into Allen who had risen through the ranks to become Peabody’s chief electrician. “Kenny and I worked together for about 15 years at Peabody. We’ve known each other long time,” said Shad.
When Armstrong decided on their draglines, they knew who to contact to get them in shape for a new life. “When you rebuild one, its almost built back to as new conditions, for a fraction of the costs of one shipped from the factory. But the problem is there just aren’t that many folks out there with much dragline rebuild experience left. There are very few who could successfully move and rebuild three draglines in two years,” said Shad. Watching them come back to life piece by piece, has been gratifying for Shad who in recent years has watched too many sit idle. “I’d rather work on a dragline than go hunt or fish. Most folks don’t get it, but I feel at home working on one.”
SMC is primarily a maintenance and repair company, though they also have a contract to operate a dragline for a particular company. “But mostly we do dragline repairs, relocation, and rehabilitation and provide technical support. With my Bucyrus experience and Shad’s incredible dragline knowledge, we often have folks calling us about how to fix something or just looking for parts,” Miller said. Though they are headquartered in Madisonville, Ky., SMC has an affiliated shop in Alabama too. They have dragline and other components stockpiled in both places and are able to build some as well.
According to SMC there’s been a tremendous increase in the amount of dragline relocation activity over the last five years. “In the past, we would go to a bidders meeting, and the few bidders that would show up would be fighting for what might have been one dragline rebuild that year. Now you may see six to eight moves done in a year’s time. But then again, when the market went south in the 1990s, the contractors did too. There’s just not a lot of folks who do this kind of work anymore,” said Miller.
“We will certainly consider moving the machines to another field after the reserves at Midway and Equality are depleted, depending on market conditions. It is possible to float them up the Green River to two other seams we have reserves in,” said Cobb. “It’s been done before.”
With all those scrubbers coming on line, are there more opportunities for other mothballed draglines to return to operation in the Midwest, even in this soft market? At the end of the day, said Miller, draglines still afford the same economies of scale as they did in the past. Using a dragline is still the cheapest way to move overburden. The only drawback to using one is that you have to have the reserves to pay for either its construction or its relocation and reconstruction. As a rule of thumb, you need at least 10 years of surface mineable coal, with low stripping ratios to make the effort worthwhile. But if you have that, said Miller, somewhere out there there’s a dragline waiting to be brought back to life.
Buchsbaum is a Denver-based freelance writer and photographer specializing in industrial subjects. He can be reached through his Web site at www.lmbphotography or by phone at 303-746-8172.
