Dozens of mines have closed across the region in the past couple of years, in part victims of low natural gas prices and an aggressive federal Environmental Protection Agency. But after helping to seal the $26.3 million Arch deal in early March, Blackhawk President Nick Glancy was in no mood to talk about Central Appalachia’s widely reported demise.
“We believe in the industry’s future in eastern Kentucky,” Glancy said matter-of-factly. “That’s why we’re investing there.”
Blackhawk owes its very existence, in fact, to the mountainous region. The company was formed in 2010 to buy and operate idled mines, reserves, preparation plants and loading facilities formerly owned by Black Diamond Mining in Floyd County. After filing for bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Kentucky, Black Diamond eventually sold its assets and went out of business.
Nearly two years ago, Blackhawk extended its Central Appalachian reach by snapping up the small, privately owned Pine Branch Coal Sales. For decades, Pine Branch was operated by the Duff family in the Chavies community of Perry County.
The sale brought Blackhawk three surface mines that produced about 1.7 million tons of thermal coal annually.
That transaction both whetted Blackhawk’s appetite for more Central Appalchian assets and set the stage for the Arch purchase. That deal also netted Blackhawk the Hazard mining complex that produced and sold about 1.7 million tons of coal in 2013, as well as related infrastructure and approximately 38 million tons of reserves. The newly acquired mines include East-Mac and Nellie, Rowdy Gap, Bearville and Thunder Ridge, as well as the Teton prep plant and Kentucky River loading facility.
The timing of the buy was fortuitous for Blackhawk, coming as
St. Louis-based Arch was looking to unload some of its Central Appalachian holdings. Indeed, John W. Eaves, Arch’s president and CEO, said the sale of its Hazard subsidiary “demonstrates that we are continuing to streamline our mining portfolio and monetize assets that are not essential to our future growth plans.”
Blackhawk’s growth plans clearly center around Central Appalachia, and for that Glancy makes no apologies. “I think this is a low-cost operating area,” he said about Hazard and Perry County. “We can be competitive both in the domestic and potentially in the export market.” Blackhawk sells some coal to brokers who take it overseas, mostly to Europe.
Blackhawk now operates seven surface mines in the Hazard area and four underground and two surface mines in neighboring Floyd County. Eventually, the company’s production is expected to double to more than 4 million tons a year.