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MONEY TO BURN: With Coal Prices Sky High, State Attracts New Investments

Posted on: Tuesday, 5 July 2005, 09:01 CDT

SHARPLES - From state Route 17, the town of Sharples looks like a typical southern West Virginia town.

The road winds through a cluster of houses built either along the road and creek or up nearby hollows. The sign on the post office is one of the only ways to know for sure that this is indeed Sharples.

Regardless of how small this town is, it is in the center of a massive, $240 million investment by Arch Coal, which is in the process of opening a new deep mine less than two miles south of the Sharples post office and up Seng Camp Hollow.

The mine, known as Mountain Laurel, is expected to begin production in its continuous mining section in 2006. A longwall section of the mine is expected to open in 2007.

At its peak, Mountain Laurel is expected to employ about 375 people and produce 5 million tons of coal per year.

"Mountain Laurel is one of the most significant developments in southern West Virginia and will be for many years to come," said Steven F. Leer, president and CEO of Arch Coal.

Investing in the Future

Right now, the company is finalizing the construction and engineering work to begin mining. Shafts and the slope are being built, and a preparation plant is under construction. Mountain Laurel project manager Don Vickers said the shafts are 350 feet deep and the slope , which carries equipment into the mine and coal out, is 1,500 feet long.

Not long ago, the future of coal mining in southern West Virginia appeared to be in jeopardy. A series of court rulings that restricted permitting of surface mining and downturns in the market made some economists in the state predict the worst for coal mining.

But the Arch investment counters those dire predictions. Planning and engineering for the new mine have been going on for several years and coincides with a huge boom in the Appalachian coal market. Demand for cleaner-burning coal is high, and so are prices.

Leer said his company expects the current conditions to last for some time and for Mountain Laurel to be a key player in that boom. All one needs to do, he said, is read the paper and see all of the stories about the nation's energy policy and the role of coal in the country's future.

The coal to be mined at Mountain Laurel is part of the Alma seam, which contains high quality metallurgical and steam coal, according to John McDaniel, director of engineering and technical services for Arch's eastern region. While McDaniel couldn't get into specific Btu, sulfur and ash content of the coal because the products vary by location, he said the mine will produce high quality, high vol metallurgical coal and high Btu, low-sulfur steam coal. British Thermal Units, or Btu, are used to quantify the heat value of coal.

The lower seam that will be longwall-mined at Mountain Laurel is about 6 feet thick. The upper seem, which will be continuous mined, is 4 to 5 feet tall, Vickers said.

"It's one of the best reserves left in this part of the country," he said.

Bill Raney, president of the West Virginia Coal Association, said he believes the Mountain Laurel mine is the largest single investment in the state in recent years.

"We need to do a lot more of this," he said. "We need to invite more investment so we can get to coal seams now instead of waiting for the market to change and then hoping someone would make this kind of investment."

Impact on Economy

The new mine could be a huge boon for Logan County and the state.

Leer said Mountain Laurel has 107 million tons of underground reserves in Logan, Boone and Mingo counties. About 55 million tons are in the Mountaineer II section to be mined first. At peak production, Mountain Laurel should produce 5 million tons of coal per year.

If all goes as planned, that should result in about $12 million in corporate and severance taxes each year to the state, counties and municipalities, Leer said.

"It will be a boost to the entire state," he said.

Factor in the estimated 375 employees, and the impact of the mine in southern West Virginia is even larger.

Many of the employees who will work at the Mountain Laurel site will be quite familiar with Arch Coal and its different properties.

Arch owns the Mingo-Logan Coal Co. in Wharncliffe and will use a longwall system to mine it, Leer said. As that mine depletes over the next few years, he said, miners have the option to transfer to Mountain Laurel with the company.

That's the way the company likes to work, Leer said.

"We don't expect many job losses at the Mingo-Logan mine," he said.

In fact, Leer expects between 150 and 200 miners to make the switch. The rest will be new hires.

But how hard will it be to actually find those new miners?

In recent months, coal companies across the state have complained about having trouble finding enough qualified and trained employees to fill vacancies within their mines. The West Virginia Coal Association said the average age of miners in West Virginia is about 52, and industry experts predict about half of the current miners will retire between now and 2014. To top it off, the industry hasn't had massive hiring efforts since the late 1970s, so recruiting programs needed to woo new, younger workers to the mines and then train them are hard to find in some areas.

But Leer said he does not think staffing will be a problem at Mountain Laurel.

Sure, it's a concern, he said. But the company is taking active steps to recruit young people to the industry right now. Plus, Mountain Laurel has enough available underground reserves to ensure that the site stays active for 10 to 20 years.

"Coal mining is not one of the most glamorous jobs. It can be hard work and dirty but there are great jobs for the taking and great opportunities out there," Leer said. "Now young men and women can come in and get a chance at doing something at 25 or 30 that others who worked there longer may not get to do."

Giving Back to Community

Arch is trying to reach out to the local community with the new mine. Unlike every other new mine opening, Arch has participated in a Community Advisory Panel with local residents to talk with them about what is planned at the site, and to listen to their opinions, concerns and thoughts about the new investment.

In addition, the company is working with local communities to help improve water problems that persisted for years. The company and West VirginiaAmerican Water Co. are working together to extend public drinking water to Sharples and other nearby communities. It's an infrastructure need those communities have had for years but never had the opportunity to address.

"That additional community development makes (local residents) happier," said Leer.

In addition, the coal company and the state worked together to improve and reroute a section of state Route 17 near Sharples to avoid a busy railroad crossing the coal company will need to use. The company will be using CSX rails as its primary mode of transporting coal out of the mine, lowering their production costs, as well as costs to the consumer, said John Snider, Arch Coal's vice president for external affairs in the eastern region.

Rerouting the highway around the rails will cut down on highway delays and inconveniences for local residents, Leer said.

And those local investments in the end will help the company succeed. Leer said he believes to be successful a coal company must do three things - have a good safety record, have a good environmental record and have sound financials.

"You need all three to have a good social compact with the community," he said, "and without even one of those, you fail the community."

And that, Leer said, is not an option.

After all, if the new mine at Mountain Laurel is to succeed, Leer firmly believes Sharples and the local communities need to succeed, too.

Copyright State Journal Corporation May 20, 2005

Source: State Journal, The

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