In late October, the former managing director of Australian firm Carabella Resources announced he would be taking a seat on the advisory panel of a new US coal mining company, County Coal.
The new company will be floated on the Australian stock exchange and will have a measured coal resource base goal of 1 billion tonnes of thermal export coal from the Powder River Basin within two years.
At the time of the announcement, 35-year coal veteran Mitch Jakeman said County Coal would be headed by Centennial Coal chairman Bob Cameron and that the new producer is aiming to have producer status within five years.
“The mining advisory panel provides geological expertise and advice to the board on County Coal’s current projects at all stages of exploration and development, as well as advice on further potential projects in the USA,” the prospectus said.
“In due course, County Coal intends to engage a chief executive officer to oversee the development of its operations in the USA and will consider, if appropriate, the appointment of a chief operating officer.”
While the news is surprising from the perspective of adding a new coal player, the international involvement is not.
In August, Canadian miner Corse announced the commencement of mining operations at the Casselman underground mine in Maryland.
Final approvals for the Garrett County operation were received in October 2010 by the then-owner, Maryland Energy Resources, which sold the property in March for $15 million and the assumption of approximately $1.2 million in debt.
The following month, an official for Russian steelmaker Severstal said the company was interested in adding more American coal to its portfolio through the acquisition of coking coal assets and licenses.
While he did not indicate the specific areas being targeted in the company’s search, Severstal strategy and corporate development head Thomas Verazsto told Dow Jones Newswires that it was seeking coal as well as iron ore so that it can shift from steelmaker to diversified operator of all three commodities.
“The US is a major exporter of coking coal, and it has some high-quality assets in the sector,” he said.
“We think it makes sense as the profitability in coking coal and iron ore has been expanding in the last 15 years, while it was shrinking in steelmaking.”
Also in October, Canadian explorer Velocity Minerals said it would possibly be bringing a rare sight to the state of Arkansas in the future: a coal project that includes both underground and highwall mining, if a joint venture plan goes as anticipated.
The Vancouver-based company said that it will confer the unnamed holder of the Arkansas leases with capital totaling $50 million in exchange for its 50% stake in the project.
Half of that will be earmarked for surface production and the balance will be used for the project’s underground phase.
The partner has projected development costs for the surface portion, at a rate of 35,000 tons monthly, to be $24.6 million.
Some $25 million is estimated to be needed for the underground segment; however, management noted that while historical data and feasibility studies have been reviewed, it has not yet conducted an independent assessment of the deposit or confirmed costs.
“The project is a historical metallurgical coal deposit with an exposed highwall from previous surface mining,” Velocity said.
“The lessee is proposing starting production with … operation[s] that will focus on the highwall and then go underground.”
A non-NI 43-101 compliant resource and reserve calculation completed in 2008 has outlined about 1.4 million tons and 975,000t, respectively, at the project’s highwall portion.
Additional data also suggests additional potential met tonnage that may come from the project’s surface segment that could bring that total to about 2Mt.
In addition to the surface-accessible portion of the deposit, the historical data also projects a further deposit of approximately 21Mt for underground extraction.
That estimate is also not part of a NI 43-101 compliant report.
Velocity will serve as manager of the newly incorporated Arkansas limited liability company, and officials noted its obligation for funding the project hinges upon the receipt of title, tonnage, grade and feasibility as well as project permitting.
It has a 12-month due diligence period to obtain the needed confirmations.
From another perspective, US operators also had their fair share of international growth over the last few months.
In October, Arch Coal announced the opening of a new London sales office in 2012.
President and chief operating officer John Eaves said the new location would allow Arch to take advantage of its strong existing talent while deepening its bench in key areas.
Matt Ferguson will join the company February 1 as senior vice president for sales.
The news followed a late September announcement by Peabody Energy that it had opened the doors on a new coal trading office in Essen, Germany to expand the Peabody Coaltrade platform.
“Germany is a European commodities hub, and the Essen office further strengthens our access to growing markets for seaborne coal on the continent,” president and chief commercial officer Richard Navarre said at the time.
“Our presence in Essen broadens our sourcing and shipping capabilities to deliver coal from Peabody’s US operations to European customers, who increasingly are turning to coal to displace nuclear generation and high cost natural gas.”
The German office will be managed by new northern Europe director of trading and logistics Juergen Treschan.
