Consol closes supply deal

COAL producer Consol Energy has inked a 15-year coal supply contract with American Electric Power (EAP) for the supply of high-Btu bituminous coal from its Shoemaker and McElroy mines in West Virginia.
Consol closes supply deal Consol closes supply deal Consol closes supply deal Consol closes supply deal Consol closes supply deal

 

Donna Schmidt

The contract calls for up to 82.5Mt between 2007 and 2021. No financial information regarding the deal was released.

 

“We have more than one billion tons of proven reserves already assigned to our existing mines in Northern Appalachia,” Consol president J Brett Harvey said.

 

“The high Btu content, proximity to markets and access to multiple modes of transportation make these reserves ideal for fueling the expanding base of scrubbed power plants in the East. Moreover, Consol Energy is one of the few coal producers in the East who can meet the needs of customers looking for long-term security of supply.”

 

To meet the contract, Consol said it would invest $US150 to $US200 million to replace Shoemaker mine’s conveyor belt haulage system. While installation of the new, more efficient system will likely force the operation to suspend production from the third quarter of 2007 through sometime in 2009, a significantly increased output will more than make for it, going from 4Mtpa to 6Mtpa with the new outfit.

 

Consol said it would continue to fulfill its existing contracts with Shoemaker through that time via its two longwalls now under development and Harvey said it will look at ways to keep production up during the transition.

 

“Given Shoemaker’s current outmoded transportation system, it is difficult to justify the continued operation of the mine beyond the period needed to meet existing contract obligations,” Harvey said.

 

“Of course, we will continue to explore with customers ways in which we could keep the Shoemaker Mine running while the new belt haulage system is being installed. But at the moment, we anticipate that we will idle longwall production from the mine for a period of time.”

 

Shoemaker, producing since 1966, has a staff of more than 400 workers and produced more than 3.5Mt last year.

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