That is why Knight Hawk is holding steady on projected production volumes for 2016 when many of its larger — and smaller — competitors are cutting back or shutting down unprofitable operations in hopes of riding out the worst coal market in decades.
“We feel good about where we’re at, we’re in a very strong financial position,” Andrew Carter, who heads up marketing for the company owned and operated by the Carter family, said in mid-March. “We’re not a huge player, but we’ve done things the right way. You’re not going to have to worry about us going bankrupt.”
Such a bold statement might have seemed unnecessary several years ago when coal prices and demand were riding high and the good times seemed endless. But dozens of mostly smaller companies have gone bankrupt in the past couple of years, and lately their ranks have been joined by industry heavyweights like Arch Coal Inc., Alpha Natural Resources and Walter Energy. There is speculation this spring that Peabody Energy, the world’s largest private sector coal company, and Foresight Energy soon could be added to that list.
Knight Hawk’s astute management enabled the company to avoid major debt-inducing mergers and acquisitions while some companies were busy gobbling up other producers just a few years ago. That was by design, Carter said. “The best investment we’ve found is the investment on ourselves. It’s been hard to find a deal out there that’s better than what we can do internally.”
When Knight Hawk grows, it usually does so organically. The company this spring is opening its new Golden Eagle surface mine near the 19,701-acre Pyramid State Park near Pinckneyville in Perry County. Under an agreement with the Illinois Department of Natural Resources, Knight Hawk is allowed to use a portion of the park as a staging area for mining 240 acres of private, adjacent land owned by the company.
Golden Eagle will not be a large mine. Indeed, few of Knight Hawk’s mines are. But it is expected to produce about 400,000 tons of high-sulfur steam coal annually for a number of years, helping Knight Hawk meet its contractual obligations with its electric utility customers. “We’ll be shipping some coal out of there fairly soon, in the next couple of weeks,” Carter said. “This year we’ll probably be around 200,000 tons and we’ll push it up to around 400