The company blamed the cutback on “economic conditions” but did not elaborate.

Coal industry sources, however, said Shay’s higher operating costs have placed the mine at an increasing disadvantage to larger deep mines in Illinois, in particular longwall mines also owned by Foresight.

Foresight operates or is developing several longwall mining operations in Illinois that, once producing at peak levels, could turn out more than 30 million tons of high-sulfur steam coal annually, essentially doubling Illinois’ coal output of just a few years ago.

After producing about 35 million tons in 2011, the state was expected to produce more than 45 million tons in 2012 and could be approaching the 60-million-ton mark in a couple of years.

The company acquired Shay, formerly known as Monterey No. 1, from Exxon Coal USA in 2009. The mine produced 1.27 million tons in the first three quarters of 2012 and 1.8 million tons in 2011.