A proposed coal mining operation in western Arkansas would bring an investment of $50 million from a Canadian company that plans both above-ground and underground mining, reports the AP. British Columbia-based Velocity Minerals Ltd. said it plans to invest $25 million in the surface operation and the same amount for its underground venture. But the development is contingent upon tests in the mining area to ensure the coal seam will produce as expected. Velocity says the mine was in production in the 1980s, supplying a steel mill. When the mill ceased operating, so did the mine. Velocity said coal from the mine would supply the steel industry.
The Arkansas Democrat-Gazette reported Wednesday that the Arkansas Department of Environmental Quality has awarded permits to three active coal mines. Velocity would need state environmental permits to resume operations at the mine.
The Arkoma Basin includes 13,500 square miles in Arkansas and Oklahoma, and has been home to coal mining for a century. The Arkansas River flows through the coal producing area in both states, providing a way to ship the product, particularly if there is an overseas customer. Much of the states’ coal is still shipped by rail or truck.
Velocity wouldn’t provide the location of the mine. The company said it has entered into an agreement with the leaseholder on the mine for a 50 percent interest in exchange for the $50 million investment.
The company said it plans to begin with surface mining, then move the operation underground.
Velocity said it can produce 2 million tons of coal from the surface mine and that historical data suggest another 21 million can be mined underground. The company has a 12-month window to confirm the output is of the volume and quality expected.
Ed Ratchford, a geologist with the Arkansas Geological Survey, said the type of deposit described by Velocity would be in west-central Arkansas.
“The actual coal name is Lower Hartshorne,” Ratchford said.
The coal runs from Sebastian County, into Logan and Johnson counties, with some in northern Scott County.
Ratchford said coal used by steel mills can bring a price between $100 and $130 per ton.
“When you’re talking about the kinds of tons we’re talking about, there’s a lot of money involved there,” he said.
Jeremy Yaseniuk, who handles investor relations for Velocity, said the company can attract investors to back the venture.
Velocity said it has to raise $2.5 million by Nov. 15, after which the leaseholder can pull out of the deal if Velocity doesn’t have the money in hand.
Velocity lost $661,000 last year and lost $889,000 the year before.
Yaseniuk said money is available and that shareholders have “raised hundreds of millions of dollars for other projects.”