New mine slows James River profit

JAMES River Coal Company’s third quarter loss of $US2.2 million was partly attributable to the transition from high cost mining to opening the new Mine 15 at McCoy Elkhorn in Virginia, according to the Central Appalachian producer.
New mine slows James River profit New mine slows James River profit New mine slows James River profit New mine slows James River profit New mine slows James River profit

Blue Diamond Coal, courtesy James River Coal Company

Staff Reporter

Mine 15 has been producing development coal since September and normal production will start once the development sections are linked with the ventilation shaft, to be completed in early November.

Limited production is expected this quarter before the mine ramps up to full annualised production levels of approximately 1.4 to 1.5 million tons per year by the end of 2006.

Overall coal production was up 8% for the quarter while the sales price for company coal increased $US3.10 to $US42.77 per ton, on sales of just over 3Mt.

During the quarter Virginia-based James River also opened the Commissary surface mine at Blue Diamond and completed contracts for upgrade projects at two preparation plants. The preparation plant projects are expected to improve overall yield by 1% to 2%, or 200,000-400,000 tons per year.

Costs blowouts for the quarter were also related to the training process for new coal miners, company chief Peter Socha said.

"We have been very successful in both attracting and retaining a new generation of individuals to the coal mines. Our retention rate for these miners has been greater than 80%. …While these training moves have a short-term negative impact in the form of lower productivity and higher costs, we believe that they will provide a significant long-term benefit to our company,” he said.

Socha said the company was very focused on maintaining low employee turnover but said James River was encouraged by the high percentage of miners that leave James River for other coal mining companies and return within a period of days or weeks.

“We are actively working to improve our retention of employees by implementing safety and incentive plans that we believe will reduce turnover.”

The company also added to its Central Appalachian reserves, now approximately 241.2Mt of proven and probable coal reserves and about 19.9Mt in the Midwest.

Growth opportunities are being explored among more than 40 surface mining projects, the reserves of which James River controls more than 75%. Sixteen of these projects have current state mine permits, and the Corps of Engineers permitting process has already begun on these properties.

Initial production from two of these projects could begin during the second half of 2006.

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