Peabody to develop 8 million-ton coal mine
Production at the Bear Run mine, just south of Terre Haute, will begin later this year, and output is expected to total 2 million to 3 million tons of coal in 2010.
The mine will ultimately produce about 8 million tons a year, making it Peabody’s largest mine in the Midwest and the largest surface mine in the eastern United States, the St. Louis-based company said.
Development will cost $350 million to $400 million over a period of several years, Peabody said.
The company said it signed sales contracts with two major Midwest power generators for 90 million tons of coal.
The agreements are worth $6 billion over 17 years, or about $67 a ton, according to Jefferies & Co. analyst Michael Dudas.
More than a third of Peabody’s 9.2 billion tons of coal reserves are in the Illinois Basin, a coal-producing region that occupies parts of Southern Illinois, southwest Indiana and western Kentucky no credit check payday loan.
Dudas said the new mine and related sales agreement demonstrate the potential for expansion of coal output in the Illinois Basin as production from underground mines in Appalachia continues to decline.
The new Peabody mine will create 350 jobs in Sullivan County, Ind., where the unemployment rate is 10 percent. It will significantly increase coal production in the state. Last year, Indiana produced 26.6 million tons of coal, according to the state Department of Natural Resources.
Last week, Peabody announced plans to shutter the Vermillion Grove mine in eastern Illinois. The mine employed 160 workers, all of whom would be offered jobs at other mines, the company said.
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