“Because of their very high quality, the South Hilight reserves are exceptionally well positioned to serve both the growing export market and expanding domestic demand for ultra-low-sulfur coals,” said Steve Leer, chairman and CEO, Arch Coal. “Black Thunder is already producing the highest-Btu coal in the southern PRB, and the addition of the South Hilight reserves should extend that quality advantage still further over time.”
Shipped tons from Black Thunder have averaged close to 8,900 Btus/lb year-to-date in 2011, compared to an average of less than 8,600 Btus/lb for all other mines in the southern PRB, according to Energy Information Administration data. In 2010, Black Thunder produced 116.2 million tons of coal from an assigned reserve base that totaled 1.4 billion tons at December 31, 2010.
The U.S. Bureau of Land Management has determined that Arch’s bid meets the agency’s fair market standards. The $300 million bid amount will be paid in five installments of $60 million each, with the first installment paid immediately.
Arch will begin pursuing the necessary permits for South Hilight right away, with the goal of integrating the new lease into the existing mine plan at Black Thunder. Arch said it has no current plans to expand production at the Black Thunder operation.