Allegiance Advances Operations in Colorado and Alabama

Despite setbacks, an emerging met coal producer perseveres

by steve fiscor, editor-in-chief

Allegiance Coal is an Australian company focused on the development, operation and supply of metallurgical (coking) coal to the seaborne market. The company recently purchased and restarted the New Elk mine near Trinidad, Colo. It also recently purchased two met coal mining operations in Alabama, the Black Warrior open-pit mine and the Short Creek underground mine. Allegiance also owns Tenas, a development project in northwest British Columbia, Canada.

New Elk celebrated its first full year of operation earlier this year, following the restart of the mine in May 2021. Allegiance now has more than a year’s worth of experience at the Black Warrior mine, since they purchased it in August 2021. The environmental assessment application for the Tenas project was submitted to British Columbia’s Environmental Assessment Office.

Building and sustaining a workforce has been a major issue for the company this year. The New Elk mine has suffered some setbacks with mining conditions underground and its conveyor system. “It has been a challenging year for Allegiance Coal in many ways,” Allegiance CEO Jonathan Romcke said in his address to stockholders. “However, the coal market remains robust and Allegiance is well-placed to benefit from the ongoing demand for high-quality metallurgical and thermal coal.” Romcke was appointed CEO in May. He relocated to Trinidad this year and is focused on improving the company’s coal mining operations.

Allegiance is actively recruiting for senior and mid-level management positions as well as experienced and inexperienced miners. To increase availability and improve production, the company has invested in more equipment for both New Elk and Black Warrior.

Room-and-Pillar Mining

New Elk operates three continuous miner sections and Allegiance was expecting it to be a major contributor toward its goal of 2.5 million tons per year. For the first half of 2022, the mine produced 401,000 raw tons, which translated into 178,000 clean tons. They sold 102,000 tons.

Production at New Elk has been disrupted by roof falls and rib control as well as disappointing equipment reliability, especially with conveyor systems. During mid-November, the rebuilt Continuous Miner No. 4 (CM04) arrived on site and was put to work in the No. 1 Production Unit. CM operators were then trained on using a new style of remote control.

“Numerous electrical faults were required to be corrected by the overhaul contracting company and their electrical system sub-contractor during the commissioning process which contributed to poor performance in November,” Romcke said. “The majority of issues have been resolved with higher levels of up-time reported for CM04. For early December, continuous miner availability was tracking 93% for CM04, 85% for CM05, and 82% for CM07.” CM06 is currently being refurbished and CM03 and CM07 will be rebuilt during first half of 2023.

Two shuttle cars have also been recommissioned to operate in the No. 2 Production Unit where the floor conditions have been difficult, affecting the tire life on the RAM cars. Tire supply issues also affected the reliability of the RAM cars due to global supply chain issues with rubber and specialty tires. The shuttle cars have been working well in this unit.

New Elk has had some success in recruiting personnel recently. “In total we have attracted 22 new people to work at the mine,” Romcke said. “We have recently hired six experience miners, sourced 16 people from contracting companies, of which four are new recruits [green hats]. Staff retention remains difficult given the ongoing strong demand in the U.S. for skilled coal miners and qualified tradesmen.

“The mine has been performing below budget expectations, but with the return of CM04 to the mine, and the first of the newly sourced overhauled articulating head roof bolters now operating underground, we believe production should improve,” Romcke said. “The additional roof bolting machines have the capability to drill horizontal holes and insert rib support bolts to increase safety at the mine and improve roof and rib bolting cycle times.”

New Elk has also transitioned to a 7-day-on and 7-day-off shift schedule to attract more miners.

Moving Overburden at Black Warrior

Allegiance has been steadily ramping up production at the Black Warrior mine. For the first half of 2022, it produced 224,000 raw tons, which amounted to 157,000 clean tons, and they sold 169,000 tons. Overburden drill-and-blast has been a main limiting factor for Black Warrior since the new EX3600 excavator and larger 150-ton haul trucks arrived.

“Overburden drill and blast has performed very well since the two overburden drills have been commissioned with improved reliability and productivity,” Romcke said. “This has enabled drill-and-blast inventory to be increased and has reduced the risk of overburden removal impeding production.”

A refurbished D11T push dozer was successfully commissioned and has been running well, Romcke explained. “This enabled the mine to achieve within 2% of budget overburden performance in November,” Romcke said. “The [dozer] was commissioned six weeks behind plan. The supplier has had ongoing difficulties overhauling and sourcing the required parts and components.”

Allegiance placed a priority on overburden removal during November to provide additional working area for the D11T push dozer. “Coal production was behind budget due to sequencing of overburden and interburden,” Romcke said. “The second D11T dozer has been deferred due to the problems and delays associated with the first machine and alternative purchase options are being investigated.”

The mine has also commissioned a low-hour Cat 390 hydraulic excavator to replace the EX1200 excavator that could not be reliably repaired. “This machine will focus on mining the inter-seam burden and ramp down to the coal benches and allow the EX3600 machine to remain focused on the main overburden bench above the Newcastle seam,” Romcke said.

“Other than a September weather event in the pit, Black Warrior is now generally operating in line with plan and we are now challenged with focusing on reducing operating costs as well as looking at opportunities to improve production above budget,” Romcke said.

Black Warrior has also taken over the operation of the North Pratt prep plant by way of an exclusive lease to secure a dedicated facility to process coal for the export market. “Black Warrior has the opportunity to make maintenance and process improvements to the plant, which will improve coal quality control compared to the alternative toll washing arrangement we have relied on to date,” Romcke said. “Already we have made improvements to the dense media and classifying cyclones to improve performance.”

Previously Black Warrior was toll washing its coal at two prep plants (including North Pratt), and they found it extremely challenging to achieve the target ash for the hard coking coal product without being able to control the gravities at the prep plant. “Having exclusive use of the North Pratt washer allows us to pivot back to the hard coking coal market when the opportunity arises,” Romcke said.

Allegiance Coal also entered into an agreement with Drummond Coal and associated entities to acquire the Short Creek underground project, which is also located in Alabama’s met coal district. The company believes this project will extend its met coal offering with a long-life project based on the key coal resources in the Mary Lee and Blue Creek seams. They are currently developing plans and sorting permits for Short Creek.

In mid-November, Allegiance sold a trial cargo of 37,000 (+/- 10%) metric tons (mt) of coal for use as a thermal product. The product specification was a 14% ash and 6,500 kilocalories per kilogram (kcal/kg). A successful trial cargo could lead to an additional 12 40,000-mt cargoes of the same specification for delivery in 2023. The trial cargo set sail for Europe on November 29.

A stockpile of the thermal coal for Europe continues to build at the McDuffie Coal Terminal at the Port of Mobile. Two trains of New Elk coal have arrived at the port facility while 13 barges of Black Warrior coal are on the river making their way to port for unloading. A further 10,000 tons is stockpiled at Black Warrior’s Powhatan barge loading facility.

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New Elk Donates $15,000 to Las Animas County Sports Facilities

New Elk Coal announced its inaugural $15,000 community legacy donation will be given to Las Animas County to complete construction of a new outdoor basketball facility at the Las Animas County Fairgrounds.

“Our goal is to build on the multi-generational legacy of mining in our region, to support and strengthen our local community,” said Romcke. “We were honored to work with our local County Commissioners to select this worthwhile initiative that will become a permanent symbol of New Elk’s commitment to our community.”

The outdoor basketball court is the latest addition to the multiple upgrades now underway at the Las Animas County Fairgrounds, which include sports facilities, playgrounds, open park space, and building renovations. 

This donation is the first of what will be an annual community legacy donation and is a keystone in New Elk’s philanthropic efforts. 

“A key focus area for us is to support our youth, the future leaders of our community, through greater education and physical activity opportunities, which is why were so pleased to support this initiative,” Romcke said.

Since starting operations in 2021, the company has prioritized community investment activities, including:

Creating an annual scholarship program for graduating high school seniors in Las Animas County. 

Sponsoring local youth organizations: Youth Club of Trinidad, Healthy Kids Running Series, Trinidad Youth Sports, Mt. Carmel Leadership, and 4H programs. 

Participating in No-Shave November with contest proceed donations to Mt. San Rafael Hospital for a local chemotherapy treatment center in 2021 and the regional Relay for Life in 2022. 

Supporting community events: TLAC Chamber Luncheon, Action 22 Annual Meeting, Trinidad Golf Association Tournament, Trinidad Police Department Shop with a Cop and First National Bank of Trinidad Thanksgiving Food Drive.