More than a year after the relaunch of the Blue Creek mine development, Warrior Met offered an update on the project and discussed project scope changes that will require incremental capital expenditures over the life of the project that will ultimately lower operating costs and provide the company with increased flexibility to manage risks.
The changes, which were mostly related to transportation and logistics, will increase costs and some of the cost increases are due to inflation. The total capex for the Blue Creek mine are expected to increase by approximately $120 – $130 million over the remainder of the project development period.
Warrior Met originally planned for a single transportation method for the Blue Creek mine, an overland belt to a third-party owned and operated barge loadout facility. Now it plans to build a conveyor system to a railroad loadout to transport most of the coal produced at the operation, which the company believes will lower operating costs and move volumes to the port faster than originally planned. Warrior said it will also build and operate a barge loadout itself rather than using a third-party provider.
In addition, Warrior Met said it is also experiencing inflationary pressures at Blue Creek, especially in relation to labor, construction materials and certain equipment, that is expected to continue during the remainder of the project development period.
Warrior Met’s revised estimate of capital expenditures in 2023 for the development of the Blue Creek mine is approximately $250 to $300 million and is subject to change. The company currently expects development spending at Blue Creek to be the highest in 2023 and 2024, with 2024 being a similar amount to 2023 that is subject to change.
The Blue Creek project remains on schedule with the first development tons from continuous miner units expected in the third quarter of 2024 and the longwall scheduled to start up in the second quarter of 2026.
