While Alliance continues to construct the Tunnel Ridge longwall mine in northern West Virginia and moves closer to developing the long-delayed Gibson South and Penn Ridge deep mines in southern Indiana and Pennsylvania, respectively, it has “secured a reserve position” near its venerable Dotiki continuous miner operation near Providence in Webster County, Ky., Brian Cantrell, the company’s senior vice president and CFO, said in April. Alliance’s Webster County Coal subsidiary operates Dotiki, which opened in 1966 and was acquired by Alliance in 1971.
Cantrell, speaking at the BB&T Capital Markets Commercial & Industrial Conference in New York City, said Alliance controls a reserve base of 24 million tons for the projected mine near Sebree, also in Webster County. “We’re beginning the marketing process,” Cantrell said. “As soon as the market tells us there is a demand for that production, that is when we will bring it up.”
Western Kentucky has proven to be fertile ground for the company formerly known as MAPCO Inc. In addition to Dotiki, Alliance’s River View underground mine near Uniontown in Union County ramped up quickly after starting production in August 2009. “Since then, we took that single continuous miner operation to where we now have eight continuous miners in place…it’s the largest continuous miner operation in the country,” Cantrell said. Drawing upon a reserve base of 128 million tons, River View is producing at the rate of 7 million tons annually.
Next to go into production for Alliance, whose focus is on the Illinois Basin and Northern Appalachia, should be Tunnel Ridge, targeted for a first quarter 2012 startup. The mine is being designed for an annual run rate of 5.5 million to 6 million tons. It has about 97 million tons of reserves.
Gibson South and Penn Ridge may not be too far down the road. “Today, we are re-engaging with customers to bring Gibson South in production, initially in a 2014 time frame,” he said. Gibson South is expected to produce about 3 million tons annually, comparable to its sister underground mine, Gibson North, just a mile or so away. Gibson North is operated by Gibson County Coal, another Alliance subsidiary.
Penn Ridge appears to be a bit more problematic. The proposed mine “has been in our sights for quite some time on the Pennsylvania side of the Tunnel Ridge operation,” Cantrell said. Alliance would like Penn Ridge to be a longwall operation, but noted that Pennsylvania regulations often make it difficult to get approval for a longwall mine. “We have a contingency plan in place that we can bring that mine up as a continuous miner operation” he said. With a longwall, Penn Ridge would produce about 5 million tons a year. But the output would drop to about 2.5 million tons annually if the company is forced to rely solely on continuous miners.
