IC 8535 Cost Analyses Of Model Mines For Strip Mining Of Coal In The United States

This study estimates costs of producing bituminous coal and lignite by strip-mining methods in 12 hypothetical mines. Basic costs are developed by geographic area, rank of coal, and output capacity. Seam thickness and depth and type of overburden are considered typical for the area in which the hypothetical mine would be located. The cost analyses are based on the use of new equipment, the prevailing union wage scales, and the payment of all miscellaneous costs including royalties, contributions to the miners' welfare fund, and license and permit fees. All model mines are considered to have a life span of 20 years. Capital costs of bituminous strip mines with a capacity of 1 million tons per year range from $12.7 million in the Appalachian region to $16.0 million in the Interior province. The corresponding selling price, assuming a discounted cash flow return of 12 percent on investment, is $5.40 and $6.95 per ton, respectively. For bituminous coal strip mines producing 3 million tons annually, a capital investment of $24.9 million will render a selling price of, $3.46 per ton in the Interior province, whereas a similar mine in the Appalachian region requires a capital investment of $28.0 million to produce coal selling for $4.01 per ton. Subbituminous strip mines of 5 million tons of output per year range in capital costs from $28.7 million in the Southwest to $13.9 million in Wyoming and Montana. Coal produced in the Southwest would sell for $3.03 per ton, while coal from Wyoming and Montana would sell for $1.83 and $1.64 per ton, respectively. The capital costs for the strip mining of lignite range from $6.4 million for an output capacity of 1 million tons annually to $20.7 million for an annual capacity of 5 million tons. The corresponding selling prices of $3.01 and $2.12 per ton, respectively, Indicate the advantages of a large-capacity strip mine.