With the twin moves, the Justice-owned companies based in Roanoke, Virginia, are expected to produce about 5.5 million tons of steam and met coal in 2015, according to Jay Justice, executive vice president, Southern Coal.
He said in April that Southern has secured some additional met coal export business and picked up more steam coal sales with Duke Energy Corp. and Dominion Virginia Power, leading to its decision to hire about 100 miners at the four mines — two in Wise County, Virginia, and one each in Raleigh County, West Virginia, and Letcher County, Kentucky.
“All four mines have been operating, so these are just expansions at these mines,” he said. He did not disclose the amount of additional export and domestic tonnage to be supplied, except to say that most of the overseas coal is destined for Europe. The fresh hirings are expected to boost the mines’ total work force by a third, as they currently employ approximately 200 people.
“We are currently shipping about 1 million tons overseas,” he said, “and with this expansion it will take us up to about 1.5 million tons annually.”
Southern Coal, which signed a major, multi-year coal supply contract with American Electric Power in late 2012, was thankful to get the additional sales early this year, given that many of its coal industry contemporaries in the region are still shutting mines or cutting back operations. “The market is still horrible,” Justice said.
“Our focus is totally centered around being able to produce coal at a profitable level in this market. And if the market gets better, that’s great. We’re running low-cost producers. We’re not banking on any kind of market recovery short term.”
Still, Southern Coal is digging in for the longer haul. “We wouldn’t be calling people back and putting equipment back on line if we felt this was just a flash in the pan,” he said. “We feel these are normalized levels going forward.”
Most likely by early June, Bluestone plans to be producing coal again at two of the four mines in McDowell and Wyoming counties in West Virginia that formerly were owned by Mechel, Justice said. Coal Mountain, which features both surface and underground mining, is likely to be one of the restarted operations, with one of two Keystone complexes another possibility. Also reacquired from Mechel was the Red Fox mid-vol surface complex in McDowell County.
Coal Mountain, in Wyoming County, produced only 19,783 tons in 2014, according to Mine Safety and Health Administration figures. But it has been a much larger producer in the past, turning out nearly 1.2 million tons in 2013.
The Bluestone mines were repurchased in February for $5 million plus a $3/ton royalty to be paid to Mechel. The Russian company bought Bluestone Coal Group in May 2009 for $436 million and 83.3 million shares in Mechel.
