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Huge gains at West Elk drive YOY increases in Uinta Basin coal production

Arch Coal Inc.'s West Elk mine surged ahead of its competitors in the second quarter to become the top-producing coal mine in the Uinta Basin as the region increased its year-over-year production.

Uinta Basin mines produced 7.6 million tons of coal in the second quarter, according to data compiled by S&P Global Market Intelligence, an increase of 1.3 million tons year over year and a slight boost from the 7.2 million tons produced in the first quarter of this year.

The area also increased output 9% in the 12-month period that ended June 30, mining 28.4 million tons of coal compared to 26 million tons in the prior 12 months.

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West Elk is almost single-handedly responsible for driving the basin's production increase, nearly tripling its output from 566,000 tons in the second quarter of 2016 to 1.5 million tons. The mine's production grew 60.3% in the 12-month period, from 3.6 million tons to 5.8 million.

The U.S. Forest Service released a supplemental draft environmental impact statement for the mine in June, moving the process for expansion forward. Arch asked the U.S. Bureau of Land Management recently for a reduced royalty rate for its West Elk mine but came up against some local resistance.

Arch posted a net income of $37.2 million in the second quarter of 2017.

Bowie Resource Partners LLC's Sufco mine, which was in the top spot in the first quarter of this year, increased output only slightly year over year but dropped in the recent 12-month period compared to the previous one. Sufco recently received an approval for a lease expansion that will extend the lifespan of the mine through 2030.

Bowie's Skyline No. 3 mine remained relatively static year over year and across 12-month periods.

Former Bowie Chief Commercial Officer Grant Quasha was recently appointed CEO and managing director of emerging Illinois Basin mine producer Paringa Resources Ltd.

The BLM is also considering a coal lease expansion for Peabody Energy Corp.'s Foidel Creek, also known as Twentymile. The mine increased its production from 946,000 tons in the second quarter of last year to nearly 1.2 million tons in the recent quarter. The expansion could signal a turnaround for the mine, whose failed sale to Bowie was a factor in Peabody's bankruptcy.

Murray Energy Corp.'s Lila Canyon and Rhino Resource Partners LPs and Royal Energy Resources Inc.'s Castle Valley No. 4 mines dipped slightly in output year over year. Castle Valley No. 3 increased in production year over year and jumped hugely from the first-quarter output.

Rhino reported a net income of $290,000 in the second quarter of 2017.