Coal producer Warrior Met Coal has confirmed plans to relaunch development of its Blue Creek reserves in Alabama into a new longwall mine adjacent to its existing operations in Brookwood, south of Birmingham.
Work at the site had been suspended for about two years due to market conditions, along with labor issues and the COVID-19 pandemic. An improvement in the market and growth in the company’s cash position was the impetus for the turnaround, the company said.
Warrior said it will invest about $650 million to $700 million in the coming half decade for the development of the reserves, including $45 million in restart expenses. The Blue Creek development will be a single longwall mine with a projected capacity of 4.8 million tons annually of high-vol A met coal over the first 10 years of production.
The producer also stressed that the asset is one of the country’s last remaining large-scale, untapped premium high-vol A met coal reserves.
“Once fully developed, the company expects Blue Creek to increase Warrior’s annual production capacity by 60% and expand its product portfolio to its global customers, by offering three premium hard coking coals that are expected to achieve the highest premium met coal prices in the seaborne markets,” the company noted.
Warrior currently controls about 70 million tons of recoverable reserves and 49 million tons of resources at Blue Creek and has the ability to acquire adjacent reserves that could increase that total. All told, life of mine reserves are potentially 170 million tons.
On its own, and under an expanded mine plan, Blue Creek’s mine life is about 50 years, assuming a single longwall operation.
“Finally, we believe the company’s strong balance sheet, liquidity and free cash flow generation provide us the ability to pay for the project fully in cash and significant flexibility in how we ultimately choose to finance Blue Creek longer-term,” CFO Dale Boyles concluded.
Blue Creek is anticipated to commence initial development tonnage in 3Q24 and reach prime production levels by 2026.