Alliance entered two coal leases on Thursday which increased its reserve holding by 25%. The two leases are estimated to contain 100 million tons of high-sulfur coal reserves.
The development process for both properties will begin immediately, including obtaining necessary mining permits and securing coal sale commitments.
“As power generators complete announced installations of new environmental controls over the next five years, Alliance expects demand for high-sulfur coal to increase by approximately 20%, or more than 50 million tons over the same time period,” Alliance chief Joseph Craft III said.
“The Elk Creek and Tunnel Ridge leases reflect the Partnership’s continuing focus on the acquisition and development of high-sulfur coal reserves in the Illinois Basin and Northern Appalachia coal producing regions.”
The Tunnel Ridge reserve, which will use a longwall to extract coal from the Pittsburgh No. 8 coal seam and continuous miners for development, is located in Ohio County, West Virginia and Washington County, Pennsylvania.
The 50,571 acre reserve holds an estimated 70 million tons and is expected to produce six million tonnes annually. The mine is expected to use 300 employees with production to begin in 2008.
Capital expenditure on the project will total $200 million over five years.
The 9,000 acre Elk Creek reserve is located adjacent to the Partnership’s Hopkins County Coal complex in Hopkins County Coal (HCC), Kentucky.
Estimated reserves total approximately 30 million tons. The operation will be run as a room-and-pillar mine extracting from the West Kentucky No. 9 and No. 11 coal seams.
The mine will utilize the existing coal handling and other surface facilities owned by HCC. The operation will use 250 employees and produce up to 3.2 million tons of coal annually. Ramp-up is expected as early as the second quarter of 2005.
Capital expenditures on the project will total $60 million over a two years.
Alliance Resource Partners is the nation’s only publicly traded master limited partnership involved in the production and marketing of coal and currently operates mining
complexes in Illinois, Indiana, Kentucky and Maryland.
