The initial high-sulfur coal should be extracted from Golden Eagle in early 2016, probably in January, according to Knight Hawk President Steve Carter.
“We’re in development, we’ve got a sedimentation pond dug,” Carter said in late October. “We’ll be starting development of the box cut.” However, “with the markets like they are, we’re not in any big hurry.”
Even by Knight Hawk’s standards, Golden Eagle will be a relatively small mine. While it potentially could produce more, the company intends to keep the mine’s annual output at about 300,000 to 350,000 tons, and it will be used to supplement existing regional coal supply contracts.
To access Golden Eagle’s roughly 240 acres of privately owned coal reserves, Knight Hawk will be allowed to use a portion of the 19,701-acre Pyramid State Park near Pinckneyville in Perry County as a staging area. Once mining is completed, the company plans to donate the land, valued in excess of $1 million, to the state.
Aside from Golden Eagle, though, Knight Hawk is looking to become more of an underground coal producer in the years ahead.
“We’re cutting back our surface-mined coal with the market the way it is and lengthening the life and focus of our underground coal,” Carter said. “Everything for us is about limiting expenditures.”
Even so, Knight Hawk is forecasting similar coal production in 2016 — about 5 million tons, as in 2015. This year, production should be just under 5 million tons, he said.
Knight Hawk expects to receive a bit less on its coal sales next year. “Prices, where we’ve had [contract] reopeners, will be down,” Carter said, although he did not elaborate. “It’s going to cut our revenue and overall margins, but we’ll be looking to lower costs. Even with the surface mines, our focus is on the lower-cost operations. We’re trying to cut out any unnecessary expenditures we can find, cut down on infrastructure, any trucking that we can.”
So far, Knight Hawk has not been forced to lay off employees, unlike many other coal companies in the U.S.
“We’ve never laid anyone off and we have no intention of laying anybody off,” Carter asserted. “We’ve tried to plan well enough that we’ve tried to match our personnel” with the available work.
The Prairie Eagle underground mine near Percy in Perry County remains the hub of the company’s operations. The mine produced nearly 2.6 million tons of coal in the first three quarters of 2015, federal Mine Safety and Health Administration figures show. It is on track to reach or exceed 2014 production of 3.1 million tons.
St. Louis-based Arch Coal Inc., one of the country’s largest coal companies, owns a 49% stake in Knight Hawk.