New Illinois Mines Could Boost State’s Production

With several new coal mines poised to come on line in 2011, Illinois is preparing for its biggest bump up in production in several decades.

In the doldrums for more than 20 years since Congress passed the 1990 Clean Air Act Amendments, production has languished in the range of 30 to 35 million tons a year in a high-sulfur Illinois Basin state that routinely turned out 60 million tons or more annually in the 1980s. 2010 production totaled about 34 million tons, but it easily could eclipse 50 million tons by the end of this year, Phil Gonet, president, Illinois Coal Association, said in a late February interview.

There are several reasons for the belated recovery: A steady decline in Central Appalachian production, largely due to a falling reserve base and heightened government regulations, is prompting some electric utilities that traditionally use Eastern coal to look instead to the IB and Illinois; a strong global demand for coal, particularly in developing Asian and Indian economies; and planned infrastructure improvements, such as new or expanded ports, to export that coal.

Illinois also has a favorable regulatory environment and does not have to deal with the increasingly explosive issue of mountaintop removal mining.

Already, Illinois is seeing a modest increase in production in early 2011, thanks partly to initial output at Cline Group’s new Sugar Camp No. 1 underground mine near Akin in Franklin County. “Our coal production year-to-date is up about 8% over the same time last year,” Gonet said. A second Cline deep mine, Deer Run near Hillsboro in Montgomery County, is nearing production also. Three other new mines—Lively Grove, Eagle River and Hawkeye—all should be in production before the end of the year.

Of that trio, Lively Grove is the largest. Part of the $4 billion Prairie State Energy project near Marissa in Washington County, the underground mine will supply about 6 million tons of high-sulfur coal annually to the 1,600-megawatt Prairie State power plant rising above the rural southwestern Illinois landscape. The first 800-megawatt unit is slated for commercial operation late this year, the second in the summer of 2012.

Eight nonprofit municipal power companies own 95% of Prairie State, including both the plant and the mine. St. Louis-based Peabody Energy, which launched the project a decade ago, retains a 5% stake.

Also under construction is Eagle River No. 1, a surface mine being developed near Harrisburg in Saline County by Eagle River Coal. Joe Pearson, a retired executive of Arclar Mining in southern Illinois, is among the principals in Eagle River Coal. Expected to be in operation this spring, the mine will produce less than 1 million tons a year.

Knight Hawk Coal, meanwhile, plans to bring on its newest surface mine, Hawkeye near Sparta in Randolph County, later this year. Steve Carter, the company’s president, was attempting to wrap up permitting for the mine in early 2011.

According to Gonet, the Illinois Environmental Protection Agency issued a NPDES [national pollutant discharge elimination systems] permit for the mine, but the Environmental Protection Agency’s Region 5 office in Atlanta, Ga., “had some questions about the permit.” Still, Gonet anticipates Hawkeye to come on line sometime this year. “It’s going to be huge once all of the mines get on line,” he said.