U.S. Coal Mines Set for $1.33 Billion in Project Kickoffs through End of Year

Researched by Industrial Info Resources (Sugar Land, Texas)--More than 93% of U.S.-produced coal in 2018 was consumed by the electric power sector, according to the U.S. Energy Information Administration (EIA), while the industrial sector and exports accounted for the remainder. But production hit its second-lowest level since 1978, while consumption was at its lowest for the same time period. Industrial Info is tracking $1.33 billion in active projects at coal-mining facilities across the U.S. that are set to begin construction through the end of the year, the majority of which are attributed to underground mining.

Click on the image at right for an EIA graph detailing how U.S.-produced coal has been consumed domestically since 1950.

West Virginia is home to more coal-mining project kickoffs this year than any other state, including one of the biggest exceptions to the industry's declining fortunes: Arch Coal Incorporated's (NYSE:ARCH) (St. Louis, Missouri) Leer South Mine in Philippi. The 3 million-metric-ton-per-year complex will be a companion to Arch's Leer Mine, located 20 miles northeast, which is "widely regarded as one of the lowest-cost, highest-quality and highest-margin coking coal mines in the country," according to West Virginia's MetroNews. Coal from Leer South is expected to be sold internationally for steel production, particularly to India and other nations in southern Asia.

Arch Coal also is readying for expansions and modifications to its Sentinel Coal Preparation Plant in Philippi, which will process coal produced at Leer South. For more information, see Industrial Info's project reports on the Leer South Mine and its preparation plant.

West Virginia also has a pair of smaller mining projects on the books: CONSOL Energy Incorporated's (NYSE:CNX) (Pittsburgh, Pennsylvania) No. 5 Mine and Preparation Plant in Itmann, and Contura Energy Incorporated's Lynn Branch No. 2 Mine in Switzer. CONSOL expects to produce 600,000 tons per year of low-volume metallurgical coal for at least 25 years at its Itmann facility, while Contura, which merged with Alpha National Resources (Kingsport, Tennessee) earlier this year, expects to produce between 1 million and 1.2 million metric tons per year from a 25 million-metric-ton reserve. For more information, see Industrial Info's reports on the CONSOL and Contura projects.

Ramaco Resources Incorporated (NASDAQ:METC) (Lexington, Kentucky) is continuing with work on two long-delayed projects that are scheduled to kick off this year. The Tiller No. 1 Coal Mine and Preparation Plant in Raven, Virginia, would tap into an existing mine seam. Ramaco's executive chairman recently said the company believes the new mine could produce up to 500,000 tons per annum at full production, although the project was not reflected in the company's 2019 capital expenditure guidance. Nonetheless, the company says it will at least continue with analysis and evaluation. For more information, see Industrial Info's project report.

The northern areas of Wyoming, which ranks second only to West Virginia in the total investment value for coal-mining projects scheduled to begin construction this year, could see their first new coal mine in 50 years in Ramaco's Brook Coal Mine, near Sheridan. As designed, the 6 million to 8 million-metric-ton-per-year aboveground mine would produce coal for 20 years, with an initial production of 2 million metric tons per year. For more information, see Industrial Info's project report.

Ramaco received some good news on the project in April, when the U.S. District Court for Wyoming ruled it could mine under another coal company's surface rights, according to the Casper Star Tribune. Big Horn Coal Company holds surface rights above where Ramaco wants to mine, but ceased mining at the site in 1983; Ramaco owns a deed dating back to 1954. Ramaco's mining plan is under review by Wyoming's Department of Environmental Quality, according to the newspaper.

The EIA notes that the electric power sector has been the largest consumer of coal in the U.S. since 1961. But the U.S. also has been a net exporter of coal since 1949, as production normally exceeds consumption; exports in 2018 hit their highest level in five years. Less than 1% of coal consumed in the U.S. in 2018 was imported, according to the EIA.

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