Jim Justice to reopen two coking coal mines

OREANDA-NEWS. June 19, 2015. The Jim Justice family is bringing back into operation two idled coking coal operations in West Virginia, calling on 200 union employees to return to work.

The mining company will bring on 100 United Mine Workers of America employees each at the Coal Mountain and Red Fox metallurgical mining complexes. The West Virginia mines were idled in April last year by Russian mining group and former owner Mechel because of unfavorable market conditions.

The mining company owned by the Justice family, Southern Coal, is expanding production, benefiting from new business for its metallurgical coal mines. Company-wide production is expected to grow to 5mn short tons (4.5mn metric tonnes) from an earlier target of 4.3mn st/yr.

The Coal Mountain operation in Wyoming county is expected to produce 150,000st/month of thermal and high-volatile A metallurgical coal. The Red Fox mine in McDowell county is expected to produce 80,000st/month of medium-volatile metallurgical coal.

The company said those specifications of coking coal are popular worldwide.

Supply of the high-vol A specification is generally limited to mines in eastern North America and is in high demand. Argus yesterday assessed high-vol A coking coal at \\$103.30/metric tonne FOB Hampton Roads, about a \\$10/t premium to high-vol B coking coal and an \\$8/t premium to low-vol coking coal.

"With that product in demand and competitively produced at these operations, we see opportunity and think the market will absorb this coal," the producer said.

The mines are part of the Bluestone coal mining operations that the Justice company earlier this year bought back from Mechel for \\$5mn in cash plus royalty payments, or about 1pc of what it paid for the West Virginia properties in 2009.

Bluestone sold 1.7mn t of coal, mostly metallurgical, in 2013 and 2mn t in 2012, according to Mechel's annual filings with the US Securities and Exchange Commission.

Mechel chief executive Oleg Korzhov said the mines were "not profitable" at the time of the February sale. The units had operated at an average loss of \\$60mn since 2012, Mechel said.

Terms of the deal included giving Mechel royalty payments of \\$3/t on coal mined and sold from Bluestone operations, and 12.5pc of any future sale of Bluestone in the next five years, or 10pc if it is sold five to 10 years from now.

The agreement ended lawsuits Justice and Mechel had against each other.

A US coal mining magnate, Jim Justice, is running for governor of West Virginia. Justice is seeking the Democratic party's nomination for governor in next year's election.