New Elk predicts 30 years; Mine anticipates 3M tons annually at Hwy. 12 site
| By Steve Block, Staff writer, TTi • May 04, 2012 |
The New Elk Coal Mine is one of Las Animas County’s largest employers with about 330 people working there. Ron Thompson, the mine’s manager, addressed a Tuesday meeting of the county board of commissioners, talking about what’s going on at the mine and fielding questions from commissioners about the mine’s operations and future plans.
Thompson told commissioners that mining operations began in January this year. He said New Elk Coal had assumed the running of operations at the end of March, taking over from TK Mining, the contractor who originally ran operations there. Thompson said the company had shipped out two loads of coal from the rail yard in Jansen. Three or four more trainloads should be shipped out this month, bringing the total amount of coal shipped to 500,000 tons.
Thompson said the price of the metallurgical coal produced is quite low right now. He said the price is lower than forecast at the beginning of 2012. He said the company had hoped to ship 1 million tons of coal by the end of May, but now feels that 500,000 tons was a more realistic goal considering the fall in prices.
Thompson said the mine employs 290 hourly workers and 40 administrative and supervisory personnel. He said New Elk Coal is mining out of the Allen seam, which was the original seam mined by Colorado Fuel & Iron, the mine’s original owner. The company has also accessed the Blue seam, which also contains metallurgical, or coking, coal. Coking coal is a key component is steel production. He said the mine could be producing coal from four different seams by June 1, but will only produce from three until the price improves.
He thanked commissioners for their support, and said the company has gotten the Colorado Division of Wildlife to expand the area the company leases from the state. The agreement increases the mining area from 15,000 acres to 30,000 acres.
“At our peak production goal of 3 million tons a year, we expect there to be 30 years of production remaining at the mine,” Thompson said.
He said that things are running smoothly at the mine and New Elk Coal hopes to have many more years of successful production at the mine, adding that its always difficult to know how long the coal will last.
Commissioner Mack Louden asked about the proposed railroad line between the mine and the rail yard at Jansen.
Thompson said a preliminary engineering study had been done in March to study the grade, the bridges and what work would need to be done to complete the line. He said the report on the study was favorable and had no unexpected surprises. He said the company’s target date for completion of the rail line was the end of the first quarter of 2013. He said at peak production of three million tons a year, there could be four trains a week rolling into Jansen.
Commissioner Jim Vigil said the rail line would pass very close to the Pioneer Natural Resources facility and asked if any problems might result from that close proximity.
Thompson said his company had been having talks with Pioneer about the issue. A signaled railroad crossing would have to be installed. The trains will be traveling at 15 miles an hour, and there would be two 15 minute periods when the trains would be coming and going and road traffic would be stopped. He said his company had no problems in its discussions with Pioneer and didn’t foresee any problems because of the train traffic.
“We’re committed to working with them so both parties can have a successful operation,” Thompson said.
He said New Elk might contract with Burlington Northern and Santa Fe Railroad to run the rail operation.
Thompson said New Elk hopes to eventually employ 500 people at the mine.
Commissioner Vigil asked Thompson if New Elk could still make money given the low price of coal.
Thompson said that while the company’s profit margin wasn’t as good as it would like, it was good enough to make the mining operation financially viable. He said the market for metallurgical coal is different than the market for the coal used to generate electricity and said he felt the market price would soon rise.
Liz Aragon, who is running for a seat on the board this year, asked Thompson about the mine’s water usage. Aragon asked if the mine had enough water, where it was coming from and what was happening to the water after it was used.
Thompson said the mine gets 150 acre-feet of water each year from Hill Ranch through a water lease agreement. The mine has a short term, year-to-year water lease agreement with the city of Trinidad for up to 150 acre-feet of water. He said the city has said it’s willing to discuss a long-term water lease.
He said the mine needs 20 gallons of water to produce one ton of coal. If the mine reaches its goal of producing 3 million tons of coal a year it would need at least 500 acre-feet of water. He said New Elk is negotiating for more water rights, but said he chose not to discuss any details because he’s not an expert on water leasing issues.
He said the mine re-uses all its water until none is left, a process he called water extinction. He said the mine puts no water back into the system. He said Hill Ranch has an agreement with the City to store some of its water at Trinidad Lake, and New Elk is working on an agreement with the Purgatory Water Conservancy District to use some of that water stored in Trinidad Lake.