Unveiled with much fanfare in August, during a news conference that featured Kentucky Governor Steve Beshear, the estimated $7 billion private-sector agreement involves the sale of 9 million tons of coal annually for 25 years—a total of 225 million tons altogether. Much of the coal is to be produced by privately owned Booth Energy, which operates mines in both eastern Kentucky and West Virginia.
The first tons were supposed to have been loaded onto barges in early fall, possibly as soon as September, at a Big Sandy River dock in eastern Kentucky for the long journey to India. But the initial shipment still had not been scheduled as the calendar flipped to 2013.
While it was unclear as to the specific reasons for the delay, an official with Cincinnati-based River Trading Co. suggested it was related to market conditions overseas or “economics.” River Trading is to load the coal onto barges for the trip to Associated Terminals on the lower Mississippi River near New Orleans, La. Then, the coal will be placed onto oceangoing vessels bound for India.
Despite the delays, John Grantham, River Trading vice president-East Division, was optimistic that shipments will begin sometime in 2013. As soon as River Trading gets the go-ahead from the Indian customer, it is ready to begin loading barges, he said.
Attempts to reach Abhijeet Group representatives for comment were unsuccessful. In August, an Abhijeet official declined to disclose specifications for the coal to be purchased under the mega-deal, calling such information “proprietary.”
According to its website, Abhijeet has been allotted a number of “captive coal blocks” in India by that country’s Ministry of Coal. The coal is to be produced to help meet the coal requirement of its steel and power projects located in various states in India.
The deal has elicited some skepticism from coal officials in the Central App region. They question the sheer amount of steam coal to be provided over a quarter century and wonder if buying that much coal over such a long period of time from a region experiencing steadily declining production makes good economic sense. They also suggest the arrangement might be more understandable if it involved metallurgical coal.
Booth Energy, headed by James Booth, produces and ships about 7 million tons of coal a year to domestic and export markets. The company markets its coal by the Norfolk Southern Railway and CSX Railroad, via truck to Kentucky Power’s Big Sandy power plant and through its Wayne County river terminal in West Virginia.