The Maryland-based operator said the investment would include a new mine slope installation, overland conveyor and “related coal handling, supply and storage facilities” for Wabash Mine Holding, a room and pillar operation near Keensburg, Illinois, which employs 270 miners.
Wabash’s production, about 1.76 million tonnes in 2005, was sent primarily to Midwest customers. However, future plans for the mined coal include new multi-year agreements with two local customers, PSI Energy and Alcoa.
Foundation Coal communications specialist Peter Vietti told International Longwall News the changes mirror the company’s increasing industry profile in the Illinois Basin.
“Foundation Coal has two new multi-year customer commitments, which justify this capital improvement, thus allowing Wabash to become more competitive. These agreements reflect our bullish Midwestern coal market outlook, which we believe will place upward pressure on Midwestern coal prices as scrubbing capacity increases.”
The new slope, according to Wabash Mine Holding president Bill Kelly, is compromising on size for the sake of time savings and cost-effectiveness into the future.
“The new slope will substantially reduce the physical size of the active underground mine, resulting in increased operational efficiency, thus allowing for economically favourable recovery of existing reserves,” Kelly said.
Vietti offered some elaboration, saying “the changes in infrastructure will reduce the overall size of the mine by approximately 65 percent”.
He added that workers’ access would not be compromised.
“Currently, work crews gain entrance via an elevator at a portal, adjacent to the new slope construction area. Post-construction access will be the same.”
Wabash’s reserves are estimated at 22.7Mt within the Illinois No. 5 seam.
“Should regional markets develop as planned,” the company stated, “this project will allow for lasting production through accessing an additional 38Mt ... in the Illinois No. 6 coal seam, creating a solid multi-decade future for the mine.”
Foundation Coal president Jim Roberts commented on the advantages of the company’s decision. “The recapitalisation project provides improved access and lower mining costs for approximately 68.8 million recoverable tonnes of coal. It also serves as proof of our consistent focus to improve shareholder value and renewed interest in the Illinois Basin as a viable supplier of secure and abundant domestic coal resources.”
Foundation is riding the wave of positive news, with solid numbers reported in February for its 2005 fiscal year. The company reported revenues of $US1.3 billion, a 32% increase over 2004 with shipments jumping from 63.5Mt to 68.8Mt. Increased shipments helped the company land a remarkable $US86 million increase in net profit for the year, from $US3 million to nearly $US89 million.
