Recent $500 Million Plans for Consol Energy Coal Mining Expansion Highlight Growing Trend for New Mine Development in the U.S.

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Recently announced plans for a $500 million expansion of CONSOL Energy's Pennsylvania coal operations is a good example of an ongoing trend in the U.S., where coal mining companies are looking at expanding domestic production to meet forecasted growth in coal consumption. However, this magnitude of projected expenditure for a coal mine expansion is unprecedented. According to Joseph Govreau, Metals & Minerals Manager for Industrialinfo.com, "This size of investment in the North American coal mining industry is virtually unheard of. However, it is a growing trend we are seeing, as several U.S. coal miners have announced plans for multi-hundred million dollar new mining operations to meet real and projected demand increases." Investments of this magnitude highlight the general optimism in the industry by energy companies, as coal prices trend upward and development of future coal-fired power plants increases. For details see related news article - Is It Coal's Turn for a Price Spiral?

CONSOL Energy Incorporated (NYSE:CNX ) (Pittsburgh, Pennsylvania) mines Pittsburgh seam coal in Greene and Washington Counties in Pennsylvania, and in 2004 produced just over 20 million tons at its two underground mines, Bailey and Enlow Fork. The Bailey-Enlow Fork complex, which shares a common prep plant, has been expanding for the past five years. In 1999, the company finished a $65 million expansion, which boosted capacity up to 20 million tons per year. And again early this year, the company completed an expansion of the prep plant, which will boost capacity up to 24 million tons annually. Now, the company is planning a massive $500 million expansion in Washington County, which will expand capacity from the complex another seven million tons per year. The project will include a new portal, rail loading facility, and new preparation plant, and will actually be an extension of the Enlow Fork mine, utilizing some underground infrastructure.

If that weren't enough, at Enlow Fork's sister mine, Bailey, CONSOL Energy is planning a $25 million raw coal handling addition in 2006. This project would require a new slope and 27,000 feet of overland raw coal conveyance from the mine to the Bailey Prep Plant.

CONSOL would like to expand its metallurgical coal producing Buchanan Mine and prep plant near Mavisdale, Virginia. However, a methane fire and subsequent temporary closure of the mine in early 2005 have delayed those plans. Demand for metallurgical coal is on the rise, as integrated steelmakers increase their use of coke.

As part of its North American Industrial Database, Industrialinfo.com is tracking more than thirty major new coal mines or expansions, including large grassroot mines being planned by Arch Coal, Murray Energy, and Alliance Resource Partners. The amount of new U.S. coal mine project spending has increased significantly in recent years, from $1.5 billion in 2001 to $2.5 billion today.

Click on the image at right to view a chart showing the breakdown of this spending.

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