Trinidad Times Article Nothing new here. FYI
Mine layoffs continue; return date unknown
| By Steve Block, Staff writer, TTi • September 21, 2012 |
The laid-off miners at the New Elk Coal Mine west of Trinidad will not be returning to the mine as soon as they thought, and the company that operates the mine is not sure when production at the site will resume.
A Monday press release from Toronto-based Cline Mining Co., which owns the mine, said the layoffs will continue past the expected 60 days announced by the company July 11. The release says that while the company hopes to resume full production, market conditions and other economic factors make it impossible to predict when mine personnel will be called back to their jobs with any degree of certainty.
New Elk Coal employed 305 miners at its most recent peak in early 2012, but reduced the workforce by 75 people in May, before laying off all its miners in July. Some maintenance and office workers will continue to be employed by New Elk, which reopened the mine in 2010 after it was closed for years.
The layoffs were a result of the need to manage costs and preserve the company’s financial condition, according to the press release. “While the duration of the suspension was expected to be approximately 60 days, the company, due to current market forces, will continue the suspension of operations at New Elk pending improved market conditions.”
In the press release, Ken Bates, chief executive officer and director of Cline Mining, said, “The global coal market, in which metallurgical coal prices have dropped sharply over the last two quarters, is incredibly challenging for coal companies at the present moment and is a direct reflection on current inventories and current soft demand.
“We are focused on, and committed to, negotiating this challenging environment. We have taken all the necessary actions so that we preserve our capital position and conserve our working capital. The implementation of the marketing strategy is also key and we are firmly committed to this process and to achieving a financially viable and economic rate of return for our coal product. The New Elk mine is an asset with long-term potential as markets recover.”
The company is working on a long-term marketing strategy to sell its existing stockpile of coal and future production at a rate that it deems to be financially viable. The company still has about 70,000 tons of coal that it hopes to ship overseas for steel production. Some of the retained workers will help load coal for future shipments.
David Stone, recently appointed New Elk Coal chief operating officer, completed a mine review process for operations, which says, “The primary focus has been on the development of the Central Zone of the mining lease, which provides optimum utilization of the already present infrastructure coupled with the highest short-term production output. The technical mine review plan now demonstrates the optimal resource and recovery, coupled with the overall focus on the Net Present Value of the asset. The Northern and Southern areas of the lease provide an exceptional upside case and will be developed once the action plan for the Central Zone is complete. These areas, in supplement to the Central Zone, facilitate the ability to perform low capital brownfields expansion.”
The company is continuing to build appropriate operating schedules for the life of the mine, and new financial and cost analysis for the project. The company expects to formalize this review and production plan at the time when it resumes production, according to the release.
Stone commented: “The results of the review have clearly demonstrated that the resource can be transformed into a world class mining complex. The entire plan has been built from first principles, taking into account geology, equipment and infrastructure. A detailed implementation action plan, inclusive of all required factors including safety, human resources, financials, logistics, engineering and maintenance is well underway for the entire operation, and we are confident that upon the securing of an off-take agreement the projected plan will be achieved.”
In mining terminology, an off-take agreement is one between the producer and buyer of a resource to purchase or sell portions of the producer’s future production. An off-take agreement is normally negotiated prior to the construction of a facility such as a mine in order to secure a market for the future production of the facility.
Cline Mining produces coal in Colorado, iron ore in Madagascar and gold in northern Ontario, Canada.
The New Elk Mine was originally opened in 1951 by the CF&I Steel Company to provide metallurgical coking coal for its blast furnace iron and steel production in Pueblo. The CF&I plant was converted to electrolytic reduction of steel in 1981, eliminating its need for coking coal, and the mine was sold to Wyoming Fuels, which operated the mine until 1989. The coal preparation plant, which was built in 1984 to improve product coal specification, continued operating with coal from other nearby mines until 1996.