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2 <br />2. Weak roof, During development mining, areas with sandstone channels in the roof and weak <br />roof require supplemental roof support and continuous miner cuts as short as 10 feet to install <br />roof support more quickly. Supplemental roof support includes 8 -foot bolts, trusses, cable bolts, <br />wood cribs and Burrell Cans. Additionally, the sandstone channels are wet, which causes the <br />floor to deteriorate. <br />The adverse conditions that increase costs for mine development and longwall production, and <br />roof control inside the six-inch or greater parting area are significant. In the interest of keeping <br />this decision document brief and to keep proprietary information confidential, the calculations <br />and details of the rationale supporting this Decision are recorded in an internal document. <br />BLM [Bureau of Land Management] is persuaded that the geologic conditions described in the <br />application and confirmed by the field office mining engineer's inspections of the mine are <br />severe and create a situation where resource recovery mould be reduced in absence of a royalty <br />rate reduction. The adverse conditions are anticipated to continue throughout the remaining life <br />of the West Elk Mine. <br />A royalty rate reduction in areas where the parting exceeds 6 inches will encourage MCC to <br />recover more coal and extend the mine life and increasing overall coal recovery. Without a <br />royalty rate reduction, it is possible that MCC would shorten the panels and recover less of the <br />coal that is split or even cease operations without recovering the area of the E seam that is not <br />split. We are persuaded that the split will continue to affect operations for the remainder of the <br />mine life; however, we are Iimiting relief to a 5 -year period so that the conditions can be <br />thoroughly re-evaluated on a periodic basis. <br />Therefore, in order to encourage the greatest ultimate recovery of the resource and in the <br />interest of conservation of natural resources, the royalty rate for leases COC 1362 and <br />COC 67232 is reduced from 8 to 5 percent in areas where the E -seam split is 6 inches or <br />greater in thickness, effective February 1, 2015, for a period of 5 years subject to the <br />limitations described below. <br />The following are the terms and conditions of the royalty rate reduction: <br />1. The lessee shall certify to the State Director, Colorado, prior to the end of each 12 -month <br />period following the approval date of this decision that the conditions justifying the need for the <br />royalty rate reductions continue to exist. The royalty rate reductions shall terminate upon the <br />date that the annual certification of continuing conditions is due but has not been filed by the <br />lessee. <br />2. The royalty rate reductions are transferable upon assignment of the leases. <br />3. Upon termination or expiration of the royalty rate reductions, the royalty rate reverts <br />automatically to the 8 percent rate specified in the lease documents without subsequent <br />notification to the lessee. <br />