About 215 people will be out of work within the year as Canyon Fuel Co. idles its Skyline Mine in Carbon County.
St. Louis-based Arch Coal Inc., which has a 65 percent equity interest in Canyon Fuel, announced today that the mine will be shut down by the second quarter of 2004, although the idling process already is under way. The company cited "continuing weakness in the Utah coal market."
It did not note in its announcement any of the troubles of the past 22 months with water entering the mine or the controversy swirling over the water's source.
The mine produced roughly 3.5 million tons of coal last year.
"While we regret the need for this action, we support Canyon Fuel's decision to idle the Skyline Mine," Steven F. Leer, Arch's president and chief executive officer, said in a prepared statement. "With production in the southern portion of the mine nearing an end, Canyon Fuel is faced with initiating expensive development work in a new reserve area to the north in order to keep the mine operational. Without a solid portfolio of baseload contracts and evidence of an improving Utah coal market, we simply cannot justify such an investment at this time."
Arch Coal said Canyon Fuel will work to find jobs for affected workers at its other mines — it has two more in Utah — but added that the number of open positions is limited. The workers also will receive severance packages.
How long the mine will be closed has not been determined. It has a reserve base of about 50 million tons.
"As other coal reserves in the region are depleted, we expect the Skyline reserves to become increasingly strategic. However, the mine could remain idle for a period of several years before resuming operation. The timing of its reopening will depend entirely on the market," Leer said.
"We have a solid base of reserves at Skyline, and we expect the mine to resume production as a viable and competitive operation at some point in the future."
The timing of the phases of the layoffs also has not been determined. The company earlier this month shut down operations at one of two continuous miners, which are mining machines used to develop coal reserves into panels that are recovered by the mine's longwall mining system. A second continuous mining operation will be idled during the third quarter.
The longwall is expected to finish mining the remaining panels within the current mining area in the second quarter of next year and then will be shut down.
The mine has been the subject of controversy since August 2001, when water began pouring in. Meanwhile, water began dwindling from nearby manmade Electric Lake, owned by Utah Power and used to cool the Huntington Power Plant.
The utility believes the water in the mine is coming from Electric Lake and has said the future of the plant was in doubt because of the loss of water. The future of Deer Creek Mine, owned by Utah Power to supply the power plant, also could be at risk.
But testing has yet to reveal with certainty whether the water is coming from the lake or some underground source.
Canyon Fuel has been pumping thousands of gallons of water per minute from the mine, with costs as high as $500,000 per month. Company officials had warned Sanpete County commissioners that the mine's usefulness would be cut from 13 to seven years if the water blocked the company from accessing a rich coal seam called Flat Canyon.
Canyon Fuel also operates Sufco mine in Sevier County, which has about 295 workers and produces more than 7 million tons of coal annually, and Dugout Canyon in Carbon County, with 155 workers producing more than 3 million tons annually.
Coal from the mines is used by regional utilities to produce electricity and by other large industrial facilities in Utah, Nevada and California.
Arch Coal, the country's second-largest coal producer, has subsidiary operations in Utah, West Virginia, Kentucky, Virginia, Wyoming and Colorado.
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