In an operational update, Lexington, Kentucky-based Rhino said Pennyrile, also known as Riveredge, will supply an additional 400,000 tons in 2016 and 550,000 tons in 2017. Although the utility in question was not identified, it is believed to be Louisville Gas & Electric Co. (LG&E), with which Rhino already has a long-term agreement to supply 800,000 tons annually from Pennyrile over the next four-plus years. LG&E and its sister utility, Kentucky Utilities (KU), are owned by PPL Corp. of Pennsylvania. LG&E and KU are the largest electric utilities, together serving more than 1.1 million customers.
Pennyrile began production in the second quarter of 2014, turning out 23,933 tons in the April-June period. The mine has been ramping up, however, and its total output hit 220,910 tons in 2014, according to the federal Mine Safety and Health Administration (MSHA).
Rhino said a second mining section has been added at Pennyrile to boost production capacity to fulfill the long-term contracts. The company also is pursuing additional long-term deals for Pennyrile so the mine can reach its potential of 2 million tons annually.
While mining conditions improved in the fourth quarter of 2014 at Pennyrile, Rhino said the mine continued to experience higher than anticipated mining and coal processing costs. MSHA, though, recently approved a deep cut mining plan that Rhino expects should lead to improvements in productivity and lower mining costs.
According to Rhino, Pennyrile’s sales remain fully contracted through 2015 and as production is further ramped up, the company expects the mine to be sold out through 2016.