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kerr coal company <br />box 487 ~ Walden, cDlo,edo 80480 ~ 1303) 7274721 <br />April 15, 1996 <br />Mr. Jerry Strahan <br />Bureau of Land Management <br />Craig District <br />455 Emerson <br />Craig, Colorado 81625 <br />RE: KERR COAL COMPANY - FEDERAL COAL LEASE C-22777 <br />Dear Mr. Strahan: <br />By this letter, Kerr Coal Company ("Kerr") requests approval <br />of suspension of federal Coal Lease C-22777 concerning the Kerr (P1arr) <br />Mine operations. This request is generated by the fact that the <br />Interstate Commerce Commission ("ICC") approved abandonment of the local <br />branch line railroad from Walden, Colorado, to the Colorado/Wyoming State <br />Line (27.03 miles), approved October 10, 1995. A copy of the ICC <br />decision document is enclosed. This rail line is the only line in the <br />region and, historically, 998 of the coal shipments from the Kerr Mine <br />were by rail. <br />Suspension Request Purpose <br />To reduce operating costs and to be competitive in the coal <br />market, Kerr has worked diligently on a feasibility study of the Highw~il <br />Mining System during the past year. Via innovation, the study applies <br />the Highwall system to the unique, steep pitching coal seam of the Kerr <br />(Mart) Mine are:. <br />The preliminary cost study indicates a dramatic cost reduction <br />to operations. however, coal marketing was based on shipments by rail <br />in calculating delivered prices. Local rail shipments are now severed <br />from use due to the ICUs approval to abandon the rail line. If Kerr is <br />to proceed, it is now necessary to readjust the mining/marketing study <br />to transport coal by some other means, e.g., trucking, or truck/rail. <br />To this end, Kerr respectfully requests suspension of Federal <br />Coal Lease C-22"/77 which is scheduled for Advanced Royalty Payment May <br />1, 1996, for the opportunity to reevaluate the mining/marketing challenge <br />associated with the Kerr Mine and related lease. <br />Exhibits <br />A copy of the preliminary study disclosing the Highwall Mining <br />Proposal is enclosed (less projected costs) for your review. <br />A copy of the ICUs decision document approving the rail <br />abandonment is also enclosed. <br />, <br />C~\MPDOCB\9V8PEND C-12777 <br />