Sunrise mines exclusively in the high-sulfur ILB, mainly at its Carlisle and Oaktown Nos. 1 and 2 deep mines in southern Indiana. The Oaktown complex was acquired, along with the Prosperity underground mine in Pike County, Indiana, last September from Vectren Fuels Corp. Prosperity was idled soon after the transaction closed. Sunrise also produces lower-sulfur coal at its Ace in the Hole surface mine in Clay County, Indiana. Ace’s coal is blended with high-sulfur coal for sales to U.S. electric utilities, particularly in the Southeast.
In 2014, Hallador/Sunrise produced and sold about 5.3 million tons at an average price of $43.33/ton. That represented an increase over the 3.1 million tons produced and sold in 2013 at an average price of $43.11/ton. The company’s principal customers include Duke Energy Corp., Indianapolis Power & Light Co., Northern Indiana Public Service Co. and Hoosier Energy, as well as three Florida utilities.
Hallador/Sunrise believe the Florida sales are an indication of a trend of ILB coal replacing Central Appalachian coal that traditionally has supplied the Southeast markets.
This year, 9.3 million tons already have been committed and priced at an average of $44.68/st, more than $1/ton higher than 2014, Hallador CEO Brent Bilsland told analysts in March. In 2016, 3.3 million tons are committed and priced at an average of $44.03/ton, and in 2017 some 1.4 million tons are committed and priced at an average of $44.39/ton.
Hallador/Sunrise expect to “book a few deals here in the next two to three months,” Bilsland added, and utilities are expected to embark upon another round of coal purchasing in the fall.
And he made it clear Hallador/Sunrise are in the coal business for the long haul. “Right now, we ship 15% of our business out of state to the Florida market,” he said. “We think that is a higher percentage three years from now, two years from now. The question is how long will some of these Central App producers hang on. When they run out of capital, they’ll be out of business.”
Bilsland said Hallador has modified and installed new equipment at Carlisle’s coal preparation plant in Sullivan County and has “seen recovery improve pretty dramatically” as a result. “In general, we think things are headed in the right direction.”
Bilsland has not given up hope the Illinois Department of Natural Resources’ Division of Mines and Minerals will issue the final state mining permit for Bulldog before the end of 2015.
But in March, DNR issued a modification letter to the company, requesting additional information on 62 issues ranging from federally endangered species that could be affected by mining as well as plans for on-site sediment ponds and post-mining reclamation.