Under New Owners Since Last Year, Utah’s Three Andalex Coal Mines Will Soon Be Joined By a Fourth

By Johnson, Frances

When the owners of the Andalex coal mines near Price were looking for a buyer last year, they turned to Ohiobased Murray Energy Corp. and its Utah subsidiary, Utah American Energy.

Both companies were privately held, said Bruce Hill, president and CEO of Utah American Energy, and Murray Energy had already begun the process of opening a mine of its own, the Lila Canyon mine, nearby.

“We saw a certain amount of synergy in the Andalex mines,” Hill said. “It gave us an infrastructure, it gave us a base of operations in Utah and, most importantly, Andalex provided Murray Energy with a base of employees to draw from going forward.

The acquisition, which took place in August 2006, included three mines near Price, all of which had been operating for between 10 and 20 years.

The Westridge pit produces 5.5 million tons of coal a year, with the Tower pit contributing three million tons a year and the Crandall pit providing 700,000 tons of coal annually. The product ranges from 93 to 98 percent pure coal, Hill said. All Andalex product is sold raw and the “reject”- non-coal rock – is simply burned out by the user.

“It’s thrown into the mix of what’s sold,” Hill said.

The Andalex coal mines have some industrial customers who use coal to run their plants, but most customers are utilities that use coal to create electricity. Ninety-five percent of Utah’s electricity comes from coal, Hill said, and that means the state has some of the lowest electricity rates in the country. About half of the Andalex product stays in the state, with the rest going around the country.

“We firmly believe that Utah has a very good future in the mining community,” Hill said.

All Andalex mines are underground mines. The Westridge and Tower pits use a mining system called longwall extraction, whereby a large block of coal is framed and machinery called a continuous miner – a continuously rotating drum with bits that cut coal from the face of the coal seam. The Crandall pit uses the room-and pillaring- technique. Entries and tunnels are created and the coal blocks are split with the continuous miner on the retreat.

In both methods, coal falls from the face and is loaded into a shuttle car, similar to a large pick-up truck, Hill said. The shuttle car hauls the coal to a feeder, where it is dumped and taken to a belt line. The belt line carries the coal out of the mine to the load-out facility. It is taken from there to trucks, which transport the coal to trains where it is segregated and shipped.

The three mines employ 550 people, and the Lila Canyon mine would bring an additional 300 jobs to the area.

The permitting process for the Lila Canyon mine, which Murray Energy owned before last year’s acquisition of the Andalex mines, has taken more than eight years, Hill said, and is currently stalled in discussions between the Division of Gas, Oil and Mining and Indian tribes associated with the land. The mine has also faced some opposition from the Southern Utah Wilderness Alliance.

“The concerns range from hydrology, is there going to be any run- off water, to dust control to protecting the area where the mine is going to be,” Hill said.

These are not unfair concerns, he said, but dealing with them usually only takes two or three years. The initial permit for the Lila Canyon mine, issued in 2001, was remanded due to several issues that needed to be addressed in a revised environmental plan. Utah American Energy submitted the plan a few months later, but the process has been dragged out.

“It’s just been a non-stop proliferation of issues that keep coming up that are outside of what the board remanded,” Hill said. “You have all these radical environmental groups that come in and they argue and contest and try to delay the opening of the mine.”

Good and safe environmental practices are part of the permitting process, Hill said, and the environmental plan submitted by Utah American Energy meets all the requirements, including containment ponds and water treatment to avoid acid water and rain.

“In regard to opening a mine you have certain standards you have to meet and we’ve gone through that process. It’s a cadre of different issues you have to address,” Hill said. “All that is addressed before you extract the first pound of coal.”

Delaying or blocking the opening of the mine could mean major revenue losses for the area. Utah American Energy will spend $185 million to open the Lila Canyon mine, Hill said. The payroll for current operations is already in excess of $40 million a year, and total annual spending for goods and services is in excess of $300 million. In addition, a study conducted at Penn State indicates that 11 indirect jobs are created by every one mining job, Hill said.

“Here in Carbon and Emery counties they’ll tell you if it wasn’t for mining they basically would not exist,” he said. “The whole town, Price, Utah, is driven by the mines.”

Mining also helps fuel the rest of the state’s economy, Hill said. Lower energy costs in Utah translate into a higher standard of living for residents, including more time and money to enjoy recreational activities and other things the state has to offer.

“We absolutely believe that it only enhances the environment,” Hill said.

Copyright Enterprise Business Newspaper Inc. Jun 04, 2007

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