Use Of Geostatistics In Prediction Coal Quality Ranges For An Underground Room And Pillar Mine ? Introduction

New underground coal mines have become increasingly expensive to open. A simple drift mine producing a raw coal product can cost as much as $50 million while a new shaft mine producing a washed coal product can cost up to $200 million. As a result, few if any speculative new mines are constructed. Normally, a long term coal supply agreement is needed to justify new mine projects. Negotiating a supply agreement prior to production start is difficult. Pricing must be based on estimated rather than historic costs and coal quality must be estimated from core hole samples versus actual shipments. Further in todays competitive coal markets, there is little margin for error in either price or quality.