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New Alabama Mammoth Mine Project Long in the Making

 

 

By William Thornton

 

March 3, 2020 - Construction is expected to start next week on a mammoth mining project in Tuscaloosa County expected to more than double the mining company’s production capacity.

Warrior Met Coal could spend up to $600 million on a new underground coal mining facility in northern Tuscaloosa County over the next five years, creating 350 new high-paying jobs.

 

A longwall coal mining device used to extract metallurgical coal in Alabama.

Photo courtesy Alabama Coal Association

It’s a project with eye-popping ramifications. Average starting salaries for miners will be around $85,000 annually. The mine is estimated to produce more than $11 million in education taxes just from new construction and new purchases in its initial phase.

But it is a project that has been on the radar of environmental groups for its potential impact for almost eight years.

Operations at the mine, to be located on Brandon School Road, are projected to begin during the second quarter of 2025. The company expects to spend about $25 million on initial construction of the project, which is one of the last remaining large-scale untapped premium High Vol A met coal mines in the U.S.

Warrior Met mines non-thermal metallurgical, or met coal, used in steel production by metal manufacturers in Europe, South America and Asia.

The Blue Creek reserve project is expected to produce, based on current market pricing of approximately $150 per metric ton, more than $1 billion in coal over the life of the mine. The development will be a single longwall mine and is expected to have the capacity to produce an average of 4.3 million short tons per year of premium High-Vol A met coal over the first ten years of production.

Warrior expects first development tons from continuous miner units to occur in the third quarter of 2023 with the longwall scheduled to start up in the second quarter of 2025. The company believes it could recover as much as 170 million short tons of coal from the mine over 50 years. There are several reasons why the company expects a lucrative return.

Warrior expects High Vol A coals will continue to become increasingly scarce as a result of central Appalachian producers mining thinner and deeper reserves.

According to the company, Warrior believes this creates an opportunity for Blue Creek to take advantage of higher prices for the coal driven by a declining supply of premium High Vol A coals. With the combination of a low production cost and the high quality of the product, the company thinks the mine will generate some of the highest met coal margins in the U.S.

According to the Associated Press, Warrior Met is getting about $18 million in tax breaks during construction and another $8.5 million in abatements over a decade. The company is still expected to pay about $61 million in taxes over 20 years.

But the site has long been eyed for development before last week’s announcement. The mine received a permit from the Alabama Surface Mining Commission in June 2012 which was renewed in 2017. Permits have a five-year lifespan, which means the current permit would run out in 2022.

According to the U.S. Energy Information Administration, there are 30 active coal mines in Alabama, seven of which are underground mines. Alabama’s coal production has steadily increased for the last three years that data is available.

Black Warrior Riverkeeper, a non-profit environmental group, has concerns that a large scale mine could impact Big Yellow Creek, which flows into the Black Warrior River. Riverkeeper Nelson Brooke said the organization raised concerns with the Alabama Department of Environmental Management back in 2012 during the original discharge elimination permit stage.

Specifically, the group says the creek has shown signs of elevated concentrations of mercury, and elevated levels of arsenic, molybdenum, selenium, copper and thallium from mining in the area. Those levels won’t improve with another mine coming on line, they said.

“This is an area where Alabamians swim and fish on a regular basis,” Brooke said. “Some draw their water from the creek, others from groundwater through wells. So we have several concerns.”

A representative for Warrior Met Coal referenced the company’s inaugural corporate responsibility report issued earlier this year, which stated the company has a 99.86 percent compliance rate with environmental water regulations.

Warrior Met also says it invested $1 million in 2018 on environmental initiatives and compliance enhancements, and has a safety rate 33 percent better than its peers.