Full of surprises

In last issue’s column, I talked about spring being a time of rebirth. As we’ve long come to know of this industry, it is full of surprises – and this time around is no different.

Since the latter half of 2008, the coal mining sector has left some of us panicked, others shocked and yet even more dumbfounded. What had been a banner time for the commodity about 15 years ago seemed to be sliding into one of the worst dips in modern history. This was, of course, for a myriad of reasons of which we’re already painfully aware.

The more people I speak with in my networks across the operational, supply and analyst communities, the more it seems to carry great weight that coal is indeed returning to its position as one to watch.

Market numbers aside, the proof is in the actions of those in the know. Take the recent announcement from Alabama coal miner Warrior Coal. After years of longwall numbers dropping, it appears that trend may be reversing course – at least taking a starting step.

Warrior said in early May that it is planning 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.

Why the change of heart? With the pandemic now largely behind us, and the better conditions for coal pricing, the decision was an easy one for the operator. Rectifying some labor issues, along with improvements in the company’s cash position didn’t hurt, either.

Warrior said in its announcement it will invest $650 million to $700 million in the coming five years 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. Nothing to scoff at when a quality met coal is the new star once again of the soft rock commodity show.

Warrior added one other interesting tidbit: the asset is one of the country’s last remaining large-scale, untapped premium high-vol A met coal reserves. Not something heard every day.

Once fully developed, Blue Creek could increase Warrior’s annual production capacity by 60% and expand its product portfolio to global customers by offering three premium hard coking coals – tonnage that could potentially get among the highest premium met coal prices in the seaborne market. 

At the risk of sounding cliché: if you’re going to go, go big. Did I mention the operation has a mine life that could exceed five decades?

Blue Creek is anticipated to commence initial development tonnage in 3Q24 and reach prime production levels by 2026.

I like to call myself the eternal optimist. In this case, though, I think others just may join in my enthusiasm for what coal news we still have not yet heard.

A coal ‘bubble’? Not to me. Welcome back – we’ve missed you.

Donna Schmidt
Editor, North American Mining magazine
[email protected]
(740) 624-4642
Twitter: @Dschmidt_NAM

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