By Rick Sherman

March 21, 2017 - The Carbon County Commission in Utah has approved a lease agreement with Carbon Resources, LLC for a coal mine under development adjacent to the town of Scofield. The county owns the mineral rights to a section of the mining property previously known as the “Kinney Mine,” or the “Columbine Mine.” The lease agreement has been in effect since 1985 and was due for renewal, with a scheduled royalty rate increase to four percent or $1 per ton.

In its regular meeting of March 15, the commission agreed to rescind that increase to encourage and promote mining operations- and because, said Commissioner Jae Potter, “There’s been a war on coal for the past eight years.” He said that has had an effect on our local economy, adding, “If it had not been for the war on coal, I probably would not be inclined to reduce that.” He said the first coal that would be mined would be Carbon County coal and that would have a direct effect on the economy.

Mine developer Greg Hunt estimated the mining property contains 50 million tons of recoverable coal, with 22-25 million tons in the county-owned portion. He said once the mine is in operation, it would generate a $35 million annual benefit to Carbon County. He said the town of Scofield has annexed the surface property, “so they can tax us, which we’re pleased to do.”

Complex Geology

A geologist and mining engineer, Hunt noted past efforts to mine the property were thwarted by numerous underground faults. “It’s the most complex structure on the Eastern Wasatch, and most people who look at it say it’s too faulted to mine, too difficult to mine,” he added. But after studying the geology of the mining property, core drilling campaigns, and a previous seismic study, Hunt said he has a plan to cross between the faults without having to drive through rock, which would be cost prohibitive.

Hunt noted the price of coal is down and asked the county for a 20 year lease, with the production royalty rate remaining at 50 cents per ton or two percent, whichever is greater. The federal royalty rate is currently 12.5 percent on coal mine properties. Hunt also asked that the advance royalty rate with the county continue at $5,620 per year.

Deputy County Attorney Christian Bryner briefed the Commissioners on the agreement and the status of the mine development. “It has all the permits it needs in order to get it going. What it needs is an investor that can come in and help fund the purchase and installation of the necessary infrastructure to get the mine going.” He said Hunt estimates it would take about a year to get the mine up and operating, with a 20-25 year production life. The agreement prepared by Bryner is for a 10-year lease with four five-year extensions, which will provide the county the option of renegotiating the royalty rates.

On a motion by Commissioner Potter, the lease agreement was approved.