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Paringa's new Poplar Grove mine to only supply coal to LG&E/KU in 2018

Louisville, Kentucky (Platts)--12 Sep 2017 353 pm EDT/1953 GMT


Paringa Resources' new Poplar Grove underground thermal coal mine, on which construction recently began in western Kentucky, is expected to produce enough 11,200 Btu/lb coal to supply a "cornerstone" contract with Louisville Gas & Electric/Kentucky Utilities in 2018.

But it will probably no other potential customers until 2019, a company official said Tuesday.

Nathan Ainsworth, vice president of business development for the Perth, Australia-based company, said in an interview that the about $40 million mine in 2018 most likely will not produce more than tonnage needed to supply the first year of the five-year, 4.75 million st sales agreement with LG&E/KU, which are subsidiaries of Pennsylvania's PPL Corp. and Kentucky's largest power utilities.

Poplar Grove, in McLean County, is scheduled to begin supplying coal to LG&E/KU in mid-2018, but it expects to take a couple of years for the mine to ramp up to its targeted output of 2.8 million st/year.

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Ainsworth said while his company is talking to US electric utilities about additional sales from Poplar Grove and probably will respond to new requests for proposals in the coming months, it does not plan to actually make any new deliveries from the mine until 2019.

Early 2019 is when Paringa also plans to start construction on a second nearby deep mine, Cypress, that is part of its Buck Creek reserve in western Kentucky. Both Poplar Grove and Cypress will be room-and-pillar operations. Cypress' maximum output is pegged at 3.8 million st/year, for a two-mine total of 6.6 million st/year.

While Paringa is focusing on US electric utilities, Ainsworth added coal from Poplar Grove and Cypress also may be attractive to the export market.

--Bob Matyi, newsdesk@spglobal.com

--Edited by Valarie Jackson, valarie.jackson@spglobal.com



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