The company had hoped to open the new portal, essentially an extension of the Prairie Eagle deep mine, this summer. Because of some regulatory delays, however, Knight Hawk did not receive its final permit until early July that allowed for work to commence on the portal. Now, “it’s looking like we should be starting underground around Thanksgiving in that area,” said Knight Hawk President Steve Carter.
In recent years, Knight Hawk has enjoyed slow but steady growth, a beneficiary of the increased popularity of IB coal. That trend carried over into the first half of 2014. “Everything’s been going real well,” Carter said. In the April-June period, “we had our best quarter ever in terms of production and shipments. We shipped 1,270,000 tons. We think we’re in a reasonably sustainable spot and are planning to keep going that way.”
A coal supply portfolio that mainly includes regional electric utilities that operate scrubbed generating units not currently targeted for retirement gives the company some confidence against the national backdrop of coal plant closures resulting from new federal Environmental Protection Agency rules and competition from natural gas.
“All of our customers are planning to stay in business,” Carter said. “We’re sold out for coal in 2014 and we’re close to selling out for 2015 and 2016. We’re working on 2017 now. We’re in pretty good shape.”
It could always be better, though, as could pricing. Still, Carter is not complaining. Knight Hawk expects to produce 4.7 million to 4.8 million tons of coal this year, up slightly from 4.5 million tons in 2013. If the 5-million-ton mark is reached next year, Knight Hawk will set its sights on moving up to 5.2 million tons a year, and so on.
The company has dabbled in the overseas export market in the past, but that is not currently a priority for Knight Hawk. Some of Knight Hawk’s coal is sold to industrial customers as well, although that segment has steadily declined. “At one point,” he said, “we were about 60% industrial, and we’re about 35% now.”
In addition to American Eagle, Knight Hawk is in the process of developing the new Golden Eagle surface mine in Perry County. Golden Eagle will replace the Red Hawk surface mine, whose reserves will play out in the next year or two.
Carter said he still hopes to be issued a permit from the Illinois Department of Natural Resources before the end of 2014 for Golden Eagle, which will produce about 500,000 tons a year. The permit application “has gone through its public notice time,” he noted. “We want to get started over there as fast as we can.”
St. Louis-based Arch Coal Inc. owns 49% of Knight Hawk.