HEAVENER COKING COAL MINING PROJECT STILL ON HOLD.“Now it costs more to get it out of the ground than they can sell it for,”

  2014.6.9

 

By John Lovett

Times Record • jlovett@swtimes.com

 

Ouro Mining Inc. has a letter of intent with the Arkansas Department of Environmental Quality to begin surface-to-inseam drilling on its Heavener Coking Coal Project, where an estimated 65 million tons of high-grade coking coal straddles the Arkansas-Oklahoma border.

 

The project is still on hold, according to a recent email from John Fisher-Stamp, executive director of the Australian-owned Ouro Mining. Fisher-Stamp confirmed in late April that the mining company was “continuing to advance de-risk and advance the project.” The inseam drilling was expected to commence in early May.

 

Coal prices, even for the low to mid-volatile hard coking coal sought by the steel industry, have dropped from about $140 a ton in 2012 and 2013 to about $113 a ton the past two months. Australian mines have fired workers, an estimated 10,000 in the past two years, as supply has outpaced demand.

 

“Now it costs more to get it out of the ground than they can sell it for,” Marty Shell of Five Rivers Distribution said at the Fort Smith Port Authority meeting in April when the lack of coal shipments was discussed.

 

India, Japan and China are thought to have finally reached their limit on stockpiling the cheap coking coal from mines across the planet.

 

Gerdau North American Steel in Fort Smith uses scrap metal to recycle into new steel, so coking coal is not needed at the facility.

 

Farrell-Cooper Mining Company completed open-cut mining on the Heavener project in 2006 and 2008 when prices spiked to nearly $300 per ton. They were producing unwashed metallurgical grade coal for local and overseas customers.

 

Ouro Mining purchased rights to six coal leases, totaling 27.72 square kilometers, from Farrell-Cooper with intention to commence underground development on the Lower Hartshorne Coal Seam. Ouro Mining representatives have said that an April 2013 Associated Press report that 400 jobs would come from the project was incorrect.

 

According to the Ouro Mining Inc. website, the leases from Farrell-Cooper are adjacent to a potential additional 140 million tons of coal resources adjoining the northern boundaries. Farrell-Cooper would not offer comment for this report.

 

The coal is low to mid-volatile hard coking coal, which is sought after for the steel industry. When washed it gets a premium price. The websites states that Ouro Mining plans to build a coal washer on site, which is just north of the Kansas City Railway line. This railway line accesses the ports of New Orleans and Port Arthur, Texas, as well as a western seaboard port of Lazaro Garden in Mexico.

 

The coking coal can also be trucked to ports on the Arkansas River at Keota or Van Buren, and barged down the Mississippi river for offshore loading at New Orleans. The Heavener Coking Coal Project is situated in Le Fore County and Scott County and is part of the Arkansas Valley Coalfield.

 

According to the Office of Surface Mining Reclamation and Enforcement under the U.S. Department of the Interior, 25 bituminous coal beds are located and have been mined in eastern Oklahoma. The demonstrated coal reserves are 1.6 billion tons, or 0.3 percent of the U.S. coal reserves. About 8,000 square miles in Oklahoma have coal-bearing strata that are considered to be of commercial value. Seams range in thickness from 10 inches to 8 feet.