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Foresight working to reopen idled Deer Run coal mine in Illinois

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Foresight working to reopen idled Deer Run coal mine in Illinois

Foresight Energy LP is moving to reopen its long-idled Deer Run longwall mine in Montgomery County, Ill., which the coal producer closed earlier this year following a "combustion event" that occurred in 2015, officials said Dec. 7.

"It's looking that way," said Mark Cornell, an official with Patton Mining, the contract miner for Deer Run, when asked if the mine, also known as Hillsboro, will be producing coal again.

On Dec. 4, Foresight subsidiary Hillsboro Mining filed a permit renewal application for Deer Run with the Illinois Department of Natural Resources' Office of Mines and Minerals. The request covers nearly 5,000 shadow acres.

Cody Nett, spokesman for Ohio-based Murray Energy Corp., Foresight's owner, would not confirm if a final decision has been made but said Dec. 7 that "we are absolutely exploring the potential to reopen Deer Run."

The impetus for a likely restart was a recent settlement of a lawsuit between St. Louis-based Foresight and Natural Resource Partners LP, a Houston investment company that holds the lease on Deer Run's mineral rights, Nett said.

"The settlement gave us operating flexibility," he said.

Under the October deal that involved Deer Run and Foresight's Shay No. 1 underground mine in Macoupin County, Ill., Foresight agreed to pay $25 million to resolve past-due lease amounts. In addition, the companies agreed to amend the Hillsboro Energy LLC mining lease to provide $11 million of nonrecoupable annual minimum payments to Natural Resource Partners and to extend the lease term through 2033.

Neither Cornell nor Nett disclosed whether Foresight has a market for Deer Run's coal, but Cornell said, "It's an asset. You want to keep it close to you."

Murray and Foresight had distanced themselves from the troubled mine early this year after months of dogged efforts to quell what was believed to be an underground fire or hot spot in a longwall area proved unsuccessful. Nett said the company "sealed the area where the event was" in February.

Cornell said, "There's no fire" in the mine.

For months, the combustion event triggered elevated levels of carbon monoxide in Deer Run, a development that initially prompted the U.S. Mine Safety and Health Administration to order the mine closed in March 2015.

The move came after Deer Run had a good production year in 2014, turning out 5.5 million tons of coal, MSHA records showed. Foresight had touted Deer Run as one of its most productive operations since longwall mining began there in August 2012.

Foresight said on a Nov. 7 third-quarter earnings call that coal sales increased in the July-through-September period to more than 6.1 million tons, a 17% gain from a year ago, due to strong export and domestic markets. Projected sales volumes for 2018 rose to 22.4 million to 23 million tons, 9 million tons of which are expected to be sold into the international market.

The company posted record export sales of 2.4 million tons in the third quarter.

Bob Matyi is a reporter for S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.