Regulatory hang-ups keep Pinnacle idled

CLIFFS Natural Resources’ Pinnacle operation in West Virginia, idled late last month due to high carbon monoxide levels, will remain closed until at least the fourth quarter after regulators denied the mine remediation plan.
Regulatory hang-ups keep Pinnacle idled Regulatory hang-ups keep Pinnacle idled Regulatory hang-ups keep Pinnacle idled Regulatory hang-ups keep Pinnacle idled Regulatory hang-ups keep Pinnacle idled

Pinnacle's plough system.

Donna Schmidt

Officials said Friday that its plan, which addressed the detected CO levels at the Appalachian complex, would have allowed underground mining operations to resume.

Cliffs said it was evaluating various options, including an appeal of the regulatory agencies' decision to deny its remediation plan.

It said that unless other options prove effectived it did not expect underground operations to resume at Pinnacle Mine prior to the fourth quarter.

Cliffs’ production goal for Pinnacle for the second half of 2011 had been more than one million tons of low-vol met coal.

Two weeks ago, following two weeks of sporadic spikes in the mine’s CO levels, Cliffs halted production and said it was working with the US Mine Safety and Health Administration on a remediation plan which included the flooding of the impacted section.

It also issued force majeure notices to its affected customers at that time and offered an estimate of July 1 for the resumption of production.

Earlier this month, Cliffs announced that its Oak Grove operation in Alabama, which received overland conveyor and preparation plant damage in a severe spring storm, should once again produce salable coal during the latter part of the fourth quarter.

“At this time, underground operations are fully functional and the company is stockpiling raw coal in anticipation of completing the repair and refurbishment work at the preparation plant over the next five to seven months,” officials noted.

An expected insurance settlement related to the severe weather should cover the capital needed for the preparation plant repairs.

As a result of the issues at Pinnacle and Oak Grove, Cliffs cut its whole-year guidance for the North American coal business in early June from 6.5 million tons in sales to approximately 5.1Mt, with revenue per ton anticipated to be $US125-$130.

Cliffs did not amend that 2011 guidance Friday.

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