Rhino Eastern LLC, the joint venture, halted production at the Eagle No. 1 mine near Bolt in Raleigh County after the company was issued two imminent danger orders by the Mine Safety and Health Administration (MSHA) on March 18. The company, in a filing with the U.S. Securities and Exchange Commission, said the federal agency stated mining “was being conducted beneath a previously mined area that was holding an unspecified amount of water and that water was observed entering the mine through the roof.”
On April 8, R. Chad Hunt, vice president of Rhino GP LLC, the general partner of Rhino Resource Partners and the executive who oversees the Rhino Eastern operation, reported the company had “successfully drained the pools of water that caused MSHA to issue two imminent danger orders and we will continue to monitor the situation and drain any smaller pockets that remain when we encounter them. The safety of our workforce always has been, and will continue to be, our top priority.” Hunt added that future production at Eagle No. 1 “is not anticipated to be affected by the temporary idling of production or the engineering solution implemented by Rhino Eastern LLC.”
Hunt did not indicate if production had resumed at Eagle No. 1 and Joe Miller, Rhino’s general counsel at corporate headquarters in Lexington, Ky., declined comment. Amy Louviere, MSHA spokesperson, however, confirmed the mine was back in production.
Rhino owns 51% of Rhino Eastern to Patriot’s 49%. Patriot officials could not be reached for comment. Eagle No. 1 produced more than 250,000 tons of coal and employed about 50 people in 2010, MSHA records show. The joint venture acquired the Rhino Eastern complex in May 2008 and commenced production in August 2008. Raw coal is trucked from the mine to a facility owned by the joint venture where it is sized, washed and shipped by truck or via one of two loadouts located on the CSX Railroad and Norfolk Southern Railroad.
On November 19, 2010, MSHA notified Rhino Eastern “a potential pattern of violations” existed at Eagle No. 1. In a separate March regulatory filing, Rhino said it subsequently was informed by MSHA the mine had “achieved the target for its significant and substantial violations during the potential pattern of violations period.” As a result, Eagle No. 1 will no longer be listed by the agency as a persistent violator and subject to additional enforcement.
Rhino, which went public in the U.S. last year, sold 4.3 million tons of coal in 2010, down from 6.7 million tons in 2009. The company has said the decrease was the result “of a strategic decision made in 2010 to sell only tons that were contracted at acceptable margins based on current market conditions and increased cost of operations.”
Late last year, the Illinois Department of Natural Resources’ Office of Mines and Minerals granted a permit to a Rhino subsidiary, Taylorville Mining LLC, for an underground near that Christian County community that would produce about 3 million tons annually. Of Rhino’s approximately 285 million tons of proven and probable reserves, an estimated 109.5 million tons are located in the Taylorville field.