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Owner of Kemper power plant terminates contract with sole supplier of coal

Mississippi Power Co. informed Liberty Fuels Co. LLC, a wholly owned subsidiary of North American Coal Corp., to permanently cease all mining and delivery of lignite as part of the utility's decision to suspend the coal gasification portion of its controversial generation project in Kemper County, Miss.

Liberty Fuels was the sole supplier of coal to the Kemper project, which is $4.6 billion over budget and was supposed to fully go online more than two years ago. The plant has been burning natural gas for some time, but the clean coal technology has not been reliably running, leading to almost a dozen delays of Kemper's in-service date.

Mississippi Power also told Liberty Fuels to begin fulfilling its post-production obligations until the mine reclamation bond is released, North American Coal parent NACCO Industries Inc. announced Feb. 14. The terms of the contract specify that Mississippi Power is responsible for all mine closure costs, and Liberty Fuels is specified as the contractor to complete the mine closure.

The decision to close the mine does not materially impact NACCO's outlook for Liberty Fuels during 2018, but is expected to adversely affect North American Coal's long-term earnings.

NACCO said it will release its financial results for the fourth quarter of 2017 on March 7.