Operations at the Viper Mine in Elkhart are shutting down
after the city of Springfield chose a cheaper coal supplier for its electrical
power plant.
The mine, which at its peak employed about 300 miners, now
is down to a skeleton crew responsible for dismantling equipment, Jim Smith,
president of Knight Hawk Coal, told Illinois Times.
Knight Hawk Coal operates the mine, which is owned by Arch
Resources. The company acquired the International Coal Group in 2011 for $3.4
billion, which included the central Illinois mine.
“The facts are pretty straightforward. CWLP – the city of
Springfield – has been the largest customer for that mine since it was built in
1982,” Smith said. “They were really the only remaining customer. Other smaller customers had switched to gas
or closed shop. They chose not to renew a contract, so we had no customer – we
had no other alternative.”
Smith said once the city decided not to renew Viper’s
contract, a decision was made to close the mine.
“We stopped producing in July, (but) we continued to ship
coal to the city. They agreed to buy what we had on the ground. And they've moved on,” he said.
But Doug Brown, chief utility engineer for City Water, Light
& Power, told IT that Knight Hawk wanted to increase the price of
its coal well above what the city had been paying.
“They basically came to us and said that they're going to
have to raise the price of coal to $65 a ton… we knew that was well above
market (rate),” Brown said. He said he told Knight Hawk the city would have to
issue a request for proposals in light of the price increase.
“We can't just take that to the city council and do that to
our customers. We have to be fully transparent and advocate for the lowest-cost
fuel we can in hopes that maybe some competitive bidding might bring their
price down,” Brown said.
Instead, Knight Hawk didn’t bother to submit a bid.
The city did receive bids from mines operated by Foresight
Energy, the owner of the Deer Run Mine in Hillsboro, and another from a mine owner
in southern Illinois, Brown said. The Hillsboro mine received the contract.
Brown said during the next four years, the typical CWLP
residential customer will likely see their monthly electric bill drop less than
15 cents, as opposed to raising rates to cover the increased costs that would
have resulted from continuing to purchase coal from Viper Mine.
“It's cheaper with the new contract. And we're going to save
about $30 million dollars over the course of the four-year contract,” Brown
said.
The Viper Mine in Elkhart is 20 miles from CWLP’s
generators, while the Deer Run Mine in Hillsboro is 54 miles. Even with the
additional trucking, the cost will be slightly less than what the utility has
paid in the past, Brown said.
But this is little solace to the Elkhart miners who have
lost their jobs.
State Sen. Sally Turner, R-Lincoln, said it is another
economic hit for an area that has suffered more than its share in recent years.
She noted that Lincoln College and Lincoln Christian College
have both closed and the state is considering shutting down Logan Correctional
Center, Illinois’ main women’s prison, and rebuilding it closer to Chicago.
“People don't know where they stand on their present jobs – such
as at the prison,” Turner said. “We just still don't know what's going to
happen. So, they're on pins and needles wondering: ‘Should we move, should we
go take a job somewhere else?’ That's hard, especially when you're just trying
to make ends meet. I don't know of any new businesses or industry coming into Logan
County.”
The closing of the mine increases the pain in an already
hurting community, she said.
“I was in high school when the coal mine started, and that
was huge. A lot of my friends went to
work out there. It's been a major employer for us for a long time. … That was a
good salary for folks in our area,” Turner said.
At the time of its closure, Viper was the most northern mine
operating in Illinois. However, the qualify of the coal limited its
marketability, Smith, the Knight Hawk Coal president, said.
Smith said coal from the Logan County mine generated fewer
British thermal units per ton compared to that extracted elsewhere in the
state.
“It's a poor-quality coal,” he said. “So, it doesn't travel well.
You couldn’t ship it overseas or anything. We've done that in the past when coal
markets were crazy, but there's just no remaining customers.”
While there are 50 million tons of coal yet to be extracted
from Viper Mine, Smith said it is unlikely it will ever reopen, even if demand
for coal were to go back up.
“It would be more economically feasible to mine coal farther
down the state,” he said.
Like all of the coal mines now operating in Illinois,
Viper’s workforce was not unionized.
Smith said a decision was made to shut down the mine
quietly.
“I know that the mayor there in town knows. Everyone knows.
… So, it's no secret, but we just did
not come out and formally announce anything. But just to put it on the record:
The city did not renew the contract, so we had no alternatives.”
