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The United Kingdom-based owner of a reopening metallurgical coal mine in Mingo County has entered into an agreement with a Kentucky company to produce coal reserves.

Bens Creek Group says its subsidiary, Ben’s Creek Operations LLC, entered into a contract with Mega Highwall Mining LLC to produce its metallurgical coal reserves for an initial 12-month period, allowing for a minimum production capability of 40,000 tons of coal per month.

Bens Creek Group is reopening the Glen Alum mine, raising the equivalent of $9.6 million (7 million pounds sterling) from investors to finance mining operations expected to begin in the fourth quarter of 2021.

The contract between Mega Highwall Mining LLC and Ben’s Creek Operations LLC will permit the former to start production in December 2021.

Founded in 2015, Mega Highwall Mining operates specialist highwall mining systems and will use a single highwall miner to meet the target sales volume of Bens Creek Group’s first offtake agreement.

Bens Creek Group announced last month it had entered into its first offtake agreement for its metallurgical coal with Integrity Coal Sales Inc., a Long Island, New York-based coal supplier to the global marketplace.

An offtake agreement is an arrangement between a buyer and a producer to sell or purchase goods to come from the producer.

The agreement is for 22,000 short tons of product per month for an initial 12-month period, from January to December 2022.

The surplus production of 18,000 tons per month could be sold under any future offtake agreements, the company noted.

“We are now well on our way to commence revenue generation from our significant mining asset,” Bens Creek CEO Adam Wilson said in a statement.

Wilson said the agreement with Mega Highwall Mining would allow Bens Creek to commission a second highwall miner and increase its metallurgical coal production.

In high-wall mining, coal is extracted from exposed horizontal seams.

The company will engage contractors alongside employees, and the total number of people working on the mine once it is up and running will be about 60 to 70, according to Llewellyn Angus of Belvedere Communications, a London-based communications firm.

Bens Creek was admitted to the London Stock Exchange’s AIM market last week, a move that Investment Week, a U.K.-based investments publication, said raised “questions about the market’s ESG [environmental, social and governance] credentials of the UK market.”

More investors are considering ESG factors when analyzing risk and profit opportunities. Such factors consider what effect a company might have on the environment, as well as the company’s conscientiousness on social and governance issues.

There will be no blasting at the site, which will consist mainly of high-wall mining, Angus said.

Funds raised will be used by Bens Creek to finance refurbishing the coal preparation plant and railroad, repairing infrastructure and acquiring mining equipment, Angus said.

Ben’s Creek Carbon LLC, a wholly owned subsidiary, has reclamation bonds for licensed permits with the West Virginia Department of Environmental Protection that amount to $1.5 million, according to Angus.

Metallurgical coal is used in steel production.

Research and Markets, a market research firm, projected the global market for steel to reach 2.2 billion metric tons by 2026 — up nearly 30% from the firm’s estimate for 2020 of 1.7 billion metric tons. The firm, in part, cited an expected rise in construction activity and subsequent rise in the demand for, and production of, a range of machinery production and metal goods fabrication.

Wilson said the global shortage of construction materials supports the company’s strategy and role as a supplier of metallurgical coal to the steel industry.

Mike Tony covers energy and the environment. He can be reached at 304-348-1236 or mtony@hdmediallc.com. Follow @Mike__Tony on Twitter.

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