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Contura runs into geological problems at Northern Appalachia coal mine

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Contura runs into geological problems at Northern Appalachia coal mine

Contura Energy Inc. reported it has experienced unforeseen geological challenges at one of its longwall thermal coal mining operations in Northern Appalachia.

Miners at the Cumberland mine have encountered reduced coal seam thickness and "localized soft clay influences within the coal seam," Contura reported July 2. The conditions are slowing the production and processing of coal from the Pennsylvania mine but are not expected to continue past early- to mid-August.

"While these tough conditions were not anticipated, we believe they are temporary, and we will continue to work through them in the most safe and efficient manner possible," Contura CEO Kevin Crutchfield said. "I am confident in our operations team to get the mine back to peak efficiency in the coming weeks."

The mine had been temporarily idled for several days to manage stockpile levels. Though production resumed, the company anticipates localized clay issues will cause tonnage levels to be reduced for several weeks.

Contura said it now expects 2018 coal shipments out of Northern Appalachia to be about 1 million tons lower than the previously announced guidance of 7.1 million to 7.5 million tons. Costs in the same segment are expected to climb from $35/ton to $38/ton for 2018.

A major customer of the Cumberland mine recently received bankruptcy court approval to reject a contract for 1.5 million tons of coal per year. In that filing, the customer said it could likely secure coal at a price closer to $39.21/ton rather than the $43.89/ton it was paying under the contract with Contura.

Contura was formed in a bankruptcy court split of Alpha Natural Resources Inc., but the two entities recently announced they would merge again.