Arch Resources plans to open its new metallurgical coal mine near Philippi, West Virginia, before the end of August, company officials announced Tuesday.
The new mine will open as international markets for met coal improves and as the commodity has become more profitable for the company to produce.
“We appreciate the tremendous focus and dedication of the Leer South team,” said John T. Drexler, Arch’s chief operating officer. “In a span of just two-and-a-half years, including through the global pandemic, the Leer South team has brought this large and multifaceted project to the cusp of completion, on time and effectively on budget.”
Earlier this month, the operations team commenced a planned, 30-day suspension of development mining at Leer South to tie the upgraded conveyance systems into the new preparation plant. At the same time, the team began to move the longwall mining equipment underground in preparation for start-up, which is slated for late August, according to the earnings release.
During the second quarter, Arch invested $50 million at Leer South and has now expended a net total of $392 million on the project, which was slightly above the high end of the original guidance range of $360 million to $390 million, according to the release.
Coal from Leer South is the type used to make coke, which is used in making steel.
“With the addition of Leer South, Arch expects to expand its High-Vol A metallurgical output by an incremental 3 million tons annually; enhance its already advantageous position on the global cost curve; strengthen its coking coal profit margins across a wide range of market conditions; and cement its position as the leading supplier of High-Vol A coking coal globally,” the release said.
The Leer South mine recovers coal from the same reserve as the Leer mine in Taylor County, also owned by Arch Resources. Arch also operates the Beckley mine at Eccles in Raleigh County and the Mountain Laurel mine near Sharples in Logan County. Both mines produce met coal.
When Arch announced its plan two years ago to develop Leer South, it said the mine would have about 600 employees.
On Tuesday, Arch reported net income of $27.9 million in the second quarter, compared with a net loss of $49.3 million in the second quarter of 2020.
“Arch’s core coking coal segment executed with efficiency and precision during the second quarter, delivering increased volumes, outstanding cost performance and steadily improving margins,” Paul A. Lang, Arch’s CEO and president, said in the earnings report.
Coking coal earned Arch a net margin of $30.34 per ton sold in the second quarter, up from $14.22 in the second quarter last year. The company said it expects a small sequential increase in metallurgical sales volumes in the third quarter and a larger increase in the fourth quarter, reflecting a full quarter of production from the Leer South longwall.
Thermal coal, which is burned in power plants, from Wyoming and Colorado earned a net margin of $2.62 in the quarter versus a net loss of 99 cents per ton a year ago.