Bill Hoback thinks so. The deputy director of the Illinois Office of Coal Development welcomes Denver, Colo.-based Hallador to a Midwestern state where coal has been mined for better than a century. In the doldrums for two decades since Congress passed the 1990 Clean Air Act Amendments, production is on the upswing again in Illinois. It promises to really take off—perhaps doubling last year’s output of 30 million tons—once all the big new mines under development by Cline, White Oak, Prairie State Energy Campus and others are in peak production in a few years.
To that mix add Hallador, currently the operator of only one mine, the Carlisle deep mine in neighboring Sullivan County, Ind., operated by its Sunrise Coal subsidiary. Carlisle’s coal shipments began February 5, 2007.
“We’ve met with them and talked about the opportunities we think could be there,” Hoback said. Vermilion County is “close enough to Chicago.” Most Illinois coal now is shipped down the Mississippi River to New Orleans, La. “We’ve been looking at shipping from the Great Lakes. [Hallador] would be in position to take advantage of that.”
Carlisle has steadily grown since it opened. In the second quarter of 2011, Hallador sold 765,000 tons of coal at an average price of $42/ton, the company said in an August filing with the Securities and Exchange Commission. For comparison, it sold 755,000 tons at an average price of $41.95/ton in the year-ago period.
For the first six months of 2011, Hallador sold 1.58 million tons at an average price of $41.81/ton versus 1.56 million tons at an average price of $42.68/ton in the first half of last year. The lower price for 2011 was attributed to the mix of the company’s various contracts and corresponding prices.
Hallador said its long-term view of the supply/demand dynamics in domestic steam coal markets remains positive. The company is forecasting modest increases in U.S. coal demand this year, followed by greater recovery in 2012 led by stronger economic growth and manufacturing activity.
All of Hallador’s 2011 production is contracted, as is 85%-90% for 2012 and 2013. Only about a third of 2014 production is under contract, and the company currently has no contracts beyond 2014.