Global Coal Market Supporting U.S. Coal-Mining Expansion Plans

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Researched by Industrial Info Resources (Sugar Land, Texas)--Because of increased demand for Illinois Basin coal, Alliance Coal LLC, the operating subsidiary of Alliance Resource Partners LP (NASDAQ:ARLP) (Tulsa, Oklahoma), is moving ahead with mine capacity expansions and a new mine construction program. In 2008, this will primarily affect mines in Kentucky. Alliance CEO Joseph Craft said in a recent webcast that in general, the market for U.S. coal miners is good because of positive supply/demand dynamics in global coal markets. Alliance Resource Partners spent $172.9 million on capital expenditures in 2007 and has announced expenditures of about $165 million in 2008.

Alliance Resource Partners is constructing the grassroot River View Coal Mine in Morganfield, Kentucky. The company recently increased the scope and magnitude of the project since it was first studied in 2006. The capacity of the River View underground mine has been increased from 3.5 million tons per year to 6.4 million tons per year, and the capital investment required to bring the project to fruition has increased from $130 million to $275 million. Alliance began shaft and slope construction in August 2007. Currently, the company is reviewing bids from firms interested in engineering and construction E&C of the material handling systems and the prep plant. Three E&C firms specializing in prep plants are being evaluated for the prep-plant portion of the project, including The Daniels Company (Bluefield, West Virginia); Taggart Global LLC (Pittsburgh, Pennsylvania), formerly Segdman USA LLC; and General Mine Contracting (Henderson, Kentucky). A selection is expected this spring. Completion of the River View Mine is scheduled for late 2009.

The company has also started construction of a new $20 million prep plant at its Warrior Coal LLC subsidiary mine in Madisonville, Kentucky. The new prep plant will replace a 600-ton-per-hour water-only prep plant.

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