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Amax, Cyprus, RAG American Mining Companies

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Amax, Inc., operated the Castle Gate mine.

Following is a brief history fo AMAX:

American Metal Climax, Inc. (AMAX) was formed in 1957 with the merger of American Metal Co. Limited and its longtime associate, Climax Molybdenum Company. American Metal Co. Limited began in 1887 when it was spun off from the Frankfurt-based Metallgesellschaft, a metals trading concern. Amco exported nickel and opened treatment plants for lead and copper. The fledgling company benefited from its German connections during this period, as Germany consumed one-third of U.S. copper exports. Following U.S. entry into World War I in 1917 the 49% German stake in Amco was seized by the U.S. Alien Property Custodian and resold, and all trade with Germany was halted. The huge profits generated by Allied military needs, however, more than compensated for the loss of Amco's German business. Use of the metal molybdenum also increased during the war. Molybdenum's special properties as an alloying metal in steel were first recognized during the late 19th century. By 1916 demand for its properties, battle-tough hardness and elasticity, was great. Max Schott, head of Amco's Denver, Colorado, office, promptly enlisted the aid of Amco's leadership to buy a mine in Climax, Colorado, that would eventually produce 75% to 85% of the world's molybdenum. The Climax Molybdenum Company was formed in 1917 by a syndicate that included American Metal Co. Amco's share of Climax was 10%. In 1974 American Metal Climax, Inc. officially adopted its nickname and became AMAX Inc. (AMAX, Inc. at Encyclopedia.com)

In May 1974 shareholders of American Metal Climax, Inc., voted to approve the name change to AMAX Inc. (New York Times, April 15, 1979)

June 28, 1988
"AMAX CREATES SUBSIDIARY TO MANAGE COAL INTERESTS -- Officials of AMAX Inc., which has mining operations in Utah, Wyoming and the Midwest, have created a new wholly owned subsidiary, Amax Coal Industries, that will be responsible for managing the company's coal and coal-related business interests. The AMAX subsidiaries that will come under the Amax Coal Industries umbrella are Amax Coal Co., Amax Coal Sales Co., Castle Gate Coal Co., Beech Coal Co., Meadowlark Inc., Ayrshire Land Co. and Ayrshire Collieries Corp. AMAX is the third largest coal producer in the United States, producing 38.6 million tons for steam generation in 1987." (Deseret News, June 28, 1988)

March 22, 1989
"PRODUCTION HALTED AT MINE NEAR HELPER -- UPI -- Castle Gate Coal Co., a subsidiary of AMAX Coal Industries, has indefinitely suspended production at the Castle Gate Mine near Helper, Utah, due to geologic problems, spokesman Jeffrey Weber says. Mining operations were halted March 22 after the U.S. Department of Labor, Mine Safety and Health Administration issued a citation for hazardous coal and rock bursts, Weber said. Thomas Blangiardo, president of Castle Gate, said the mine has experienced unusual geologic conditions for the past several months. 'These bursts currently present an uncontrollable and unstable mining environment for our employees,' Blangiardo said. 'We have evaluated and attempted various methods for destressing the coal to overcome this problem and have retained outside consultants to assist us in this process. However, to date, we have been unable to satisfactorily resolve this situation to the point where we can safely resume operations,' he said. 'We plan to continue evaluating geologic conditions and mining techniques in the hope of resuming mining operations at Castle Gate in the future.' Although coal production has been suspended, Blangiardo said the company will resume certain work, effective Monday, involving coal preparation, maintenance and other related activities. But after June 5, only about 17 of the mine's employees will remain at the property, while 156 hourly and 41 salaried workers will be indefinitely laid off, Swenson said. Castle Gate began operating the mine in 1986 and produced 544,000 tons of coal in 1988, he said." (Deseret News, April 9, 1989; April 13, 1989)

August 23, 1991
The following comes from the August 23, 1991 issue of the Salt Lake Tribune newspaper:

CASTLE GATE - AMAX Coal Industries is closing mine portals and other access points at its Castle Gate Coal Co. mine, idled two years ago. The company is taking the action to prevent accidents from unauthorized entry, spokesman Kevin Feeney said.

The mine will retain its operating status of "idle," allowing management to take a "hard look" at reopening if it could sell coal competitively, he said.

That likely will involve correcting the underground geological problems that led to the mine's closure or making a large expenditure to develop other coal reserves. At today's prices, such corrective measures would make the coal non-competitive.

The 1989 idling of Castle Gate Coal put 156 hourly and 41 salaried employees out of work.

Castle Gate Coal is maintaining its state mining permit in "inactive status," according to Lowell Braxton, associate director of mining for the Utah Division of Oil Gas & Mining. That means the mine doesn't have to remain active, but it must continue to meet state and federal environmental regulations as if it were operating, he said. "It's not unusual for companies like Castle Gate Coal to be in inactive status with the permit for a number of years as they evaluate their future," said Mr. Braxton. "But we still inspect the companies' mines on a monthly basis, and if they aren't complying with state and federal environmental regulations, we take action."

AMAX "indefinitely suspended" mining at Castle Gate Coal because it couldn't stop the unpredictable explosion of coal and rock at the face of its Hardscrabble Canyon mine, just north of Helper, Carbon County. Four months earlier, the federal Mine Safety & Health Administration had cited the company for hazardous coal and rock bursts. AMAX retained outside consultants to evaluate and "de-stress" the coal. But the company decided to idle the operation because the mine was unsafe.

In 1987, the last full year it operated, Castle Gate Coal produced 529,000 tons. That compares with 544,000 tons in 1988. AMAX originally projected Castle Gate Coal would produce 1.5 million tons a year. But that was before the geological problems made it impossible for mining to continue.

Cyprus Plateau

Lion Coal Corporation operated the Wattis mine until 1964. In late 1964 the mine was purchased for its salvage value by Mountain States Machinery of Salt Lake City. When the salvage company realized that only about ten percent of the total coal reserves had been mined, it renamed the Lion Coal Corporation to the Plateau Mining Company and extraction work began. In 1967 the Wattis property was sold to Plateau Mining Company (by that time owned by Star Point Holding Company), and the mine was returned to production. The Plateau company was acquired by United Nuclear Corporations on October 1, 1971. (Sun Advocate & Helper Journal, January 2, 1975, p. 3)

May 1980
Plateau Mining Company's parent company, UNC Industries, announced that they were interested in leaving the coal business. (Salt Lake Tribune, May 18, 1980)

Plateau Mining Company was purchased by Getty Mineral Resources Company, a subsidiary of Getty Oil Company. Plateau had shipped 200,000 tons of coal to Japan for use by steel and cement companies, and in 1981 had a contract to ship 100,000 tons to a Japanese utility for testing. (Mining Congress Journal, January 1981, Volume 67, Number 1, page 9)

July 1980
The Plateau Mining Company was reorganized as the Plateau Mining Corporation.

August 30, 1985
Plateau Mining Company was sold to Cyprus Minerals Company of Englewood, Colorado. (Salt Lake Tribune, December 29, 1985)

Cyprus Amax

Cyprus Plateau Mining Corporation was a subsidiary of Cyprus Amax Minerals Company.

November 13, 1993
"CYPRUS MINERALS-AMAX HOLDERS BACK MERGER -- Shareholders of the Cyprus Minerals Company and of Amax Inc. voted yesterday to approve the companies' proposed merger. The merger creates the biggest United States-based mining company and the nation's second-largest producer of coal and copper. The new company, with assets of more than $5 billion, will also have significant holdings in oil and gas, gold and lithium. The two companies had combined 1992 revenue of $2.8 billion. The new concern is named the Cyprus Amax Minerals Company. A new co-chairman, Milton Ward, said a primary goal of the merger was to cut costs. He said the merger would save at least $120 million a year in general and administrative expenses. The companies hope to complete the merger on Monday (November 15, 1993). The merger involves the exchange of a half share of Cyprus for each Amax share." (New York Times, November 13, 1993)

"On November 15, 1993, AMAX Inc. (Amax) merged with and into Cyprus Minerals Company (Cyprus) to create one of the world's largest natural resource companies. Cyprus Amax is a diversified mining company engaged, directly or through its subsidiaries and affiliates, in the exploration for and extraction, processing, and marketing of mineral resources. Cyprus Amax operates in three principal industry segments: Coal; Copper; and Other (which includes lithium, gas, iron ore, gold, and exploration). Cyprus Amax is among the world's largest producers of copper, molybdenum, and lithium, and is one of the nation's largest coal producers. Cyprus Amax also produces gas, gold and iron ore. Cyprus Amax was incorporated in Delaware in 1969 and operates primarily in the United States. As of December 31, 1993, Cyprus Amax employed approximately 10,750 employees. Its principal office is located in Englewood, Colorado." (Cyprus Amax Mineral Company, SEC Form 10-K, 1993)

"The Utah business unit consists of the Plateau and Orchard Valley mines. The Plateau operation, located near Price, Utah, mines underground reserves utilizing a longwall mining system. Plateau owns its production equipment, including a preparation plant, but leases coal reserves, mainly from the federal government. Plateau sells raw and processed coal, plus a blended product. Plateau's coal is transported from the mine by rail primarily to utility customers in the West and to Pacific Rim markets through West Coast ports. Cyprus Amax operates and owns 80 percent of the Orchard Valley mine in western Colorado. The remaining 20 percent interest is owned by Mitsubishi Corporation of Japan (15 percent) and Samsung Company Ltd. of Korea (5 percent). This underground mine extracts coal with owned continuous mining equipment. Orchard Valley's coal is transported from the mine by rail to utility customers in the West and Midwest and also is exported to Pacific Rim countries." (Cyprus Amax Mineral Company, SEC Form 10-K, 1993)

New Willow Creek Mine

Most of the initial mine development work for the new Willow Creek mine began in 1997 using continuous miners and electric shuttle cars. High productivity longwall mining systems for coal production began in 1998. Coal was hauled from the mine using a high speed main conveyor system fed by several face conveyors located at each of the active development areas, both continuous miner sections and longwall panels. A fire in November 1998 in the D Seam stopped production for about a year. An integrated program of geotechnical monitoring and a gob vent borehole network of surface holes was used to monitor ground conditions and remove methane gas in advance of mining. Another fire in July 2000 idled the mine. The mine was permanently closed in September 2002. Post-mining land use to industrial purposes was approved for the prep plant and mine buildings in 2004. Final reclamation was completed in April 2006. (Utah Division of Oil, Gas and Mining, Permit C0070038)

"Construction of the Willow Creek mine located near Price, Utah was approved during the fourth quarter of 1995. Site preparation has commenced and facilities construction will proceed over the next eighteen months. Longwall start-up is projected for mid-1998. Willow Creek's production will be marketed to Pacific Rim customers through West Coast ports. A portion of the production is also expected to be sold to Western and Midwestern utility customers." Cyprus Amax expected to spend $44 million in Utah primarily for the development of the Willow Creek mine. (Cyprus Amax Mineral Company, SEC Form 10-K, 1996)

Underground development started in September 1996. "The development of the Willow Creek mine in Utah is progressing on schedule and within budget. Approximately $50 million of the $130 million project was spent through 1996, and completion is expected in early 1998. It is anticipated that annual production will be approximately 5 million tons." (Cyprus Amax Mineral Company, SEC Form 10-K, 1997)

"The Utah operating unit, which is incorporated as Cyprus Plateau Mining Corporation, consists of the Willow Creek and Star Point underground mines both located near Price, Utah. Star Point completed longwall mining in the third quarter of 1997 and continues to operate at a reduced production level using continuous miners." (Cyprus Amax Mineral Company, SEC Form 10-K, 1998)

"Plateau Mining's construction of the Willow Creek mine commenced during the fourth quarter of 1995. Facilities construction, including refurbishment of the preparation plant, was completed in 1997. Longwall start-up is expected in the second quarter of 1998, and total capital expenditures was higher than expected due to geologic conditions that have increased the cost of underground development and reduced the saleable pre-production coal available as a credit to development costs. The planned life of the Willow Creek mine is at least 20 years. Willow Creek owns its production equipment and leases and subleases its coal reserves, mainly from the federal government." (Cyprus Amax Mineral Company, SEC Form 10-K, 1998)

The coal preparation plant of Cyprus Plateau's Willow Creek mine is described in the 1995 description of projected reclamation costs, as part of the reclamation bond prior to opening the mine. (Documents on file at Utah Division of Oil, Gas and Mining)

The preparation plant has been constructed on the site of the former town of Castle Gate. The area is covered to a large extent with fill resulting from the regrading of the townsite. The Willow Creek area has been historically associated with coal mining operations. Most of the miners and their families that worked in the Utah Fuel No. 1, No. 2, No. 3, and No.4 Mines lived in the old town of Castle Gate. Two mines and a coal preparation plant were located on or near the area of the current preparation plant. The Ketchum Mine, located in the draw to the northeast of the preparation plant entrance, was operated from near the turn of the century to the early 1930s. The Utah Fuel No.3 Mine, accessing the D Seam, was located just north of the raw-water pond. It opened in the early 1920s and then closed in 1937, due to flooding from the Price River. The old Utah Fuel Coal Plant, situated at the mouth of School House Canyon, began processing coal in 1938. That plant was closed in 1972 by its owner North American Coal Company. In 1974, the old plant was demolished by McCulloch Oil Company.

The 1996 Utah Coal Report noted that, in September 1997, "development of mains, gates and bleeders in the new Willow Creek mine property in Book Cliffs (which started cutting coal in September 1996) is preparing for a first long-wall startup in late 1997. Extensive surface work has also been completed, including new overland conveyors, a refurbished preparation plant, new bath house, shop, and warehouse and a new railroad spur to service the planned 5 million-ton-a-year production schedule." Shipments started prior to August 1997.

"On September 30, 1997, Cyprus Amax sold a 15 percent interest in its wholly-owned subsidiary, Cyprus Plateau Mining Corporation, to Mitsubishi Corporation for cash proceeds of $29 million. Cyprus Plateau operates the new Willow Creek and the existing Star Point mines in Utah. The Willow Creek mine will replace the existing Star Point mine, which is phasing out its mine life." (Cyprus Amax Mineral Company, SEC Form 10-K, 1998)

"Longwall start-up at the newly constructed Willow Creek mine commenced in mid-July 1998, with commercial production achieved on October 1, 1998. On November 25, 1998, an underground mine fire occurred at Willow Creek. There were no injuries, and all employees were safely evacuated and the mine was sealed in a remarkably short period of time. There was minimal damage to the mine and longwall, and continuous miner production is projected to restart in late March 1999. The majority of the Willow Creek workforce has been temporarily assigned to the nearby Star Point mine where production has been expanded to partially mitigate the absence of production from Willow Creek. The losses that have and are being incurred are expected to be partially offset by insurance recoveries expected to be realized in 1999 and 2000. (Cyprus Amax Mineral Company, SEC Form 10-K, 1999)

RAG American Coal Company

May 12, 1999
RAG International Mining GmbH purchased the coal assets and interests of Cyprus Amax Minerals Company, Amax Energy Inc., and Cyprus Amax Coal Company. This included the closed Wattis mine, and the Willow Creek mine of Cyprus Plateau Mining Company. (Documents on file with Utah Division of Oil, Gas and Mining)

June 30, 1999
Cyprus Plateau Mining Corporation changed its name to Plateau Mining Corporation.

RAG American Coal Company was a subsidiary of RAG AG, which was formed in 1968 as Ruhrkohle AG. In 2001, RAG AG was one of the world's leading hard coal producers and Germany's number one coal producer. Based in Germany, the company consisted of an international group of more than 450 companies active in mining, coal trading, engineering, power generation, and chemicals, and had over 220 subsidiaries around the world. After RAG American bought Cyprus Amax in 1999, its parent company RAG International became the second largest coal producer in the world. (International Directory of Company Histories, St. James Press, 2001.) (AG is an abbreviation for Aktiengesellschaft, the German translation for a corporation owned by its shareholders and traded on a stock market. Wikipedia)

The sale of Cyprus Amax to RAG was reported to have a value of $1.1 billion. Also reported was that the sale was actually a merger of Cyprus Amax and RAG American, with the latter being th name of the surviving company. At the time of the merger, Cyprus Amax had coal operations in Pennsylvania, Wyoming, Utah, Colorado and Illinois. RAG American Coal was a subsidiary of RAG International, one of six divisions of RAG AG of Essen, Germany, with 104,000 employees and sale totaling $15 billion. (Observer-Reporter, Greene County, Pennsylvania, July 29, 1999)

December 2, 1999
Phelps Dodge Corporation completed its acquisition of the remaining non-coal assets of Cyprus Amax Minerals Company on December 2, 1999. On December 14, 1999, the New York Stock Exchange filed a notification Securities and Exchange Commission of its intention to delist and deregister Cyprus Amax Minerals Company on December 29, 1999. (Cyprus Amax Mineral Company, SEC Form S-3, June 9, 2000)

May 17, 2000
RAG American Coal announced that it would close the Cyprus Amax office in Denver.

The longtime Denver presence of mining giant Cyprus Amax Minerals Co. ended Tuesday (May 16, 2000) as RAG American Coal Holding Co. said it will move the former Cyprus Amax coal headquarters to Maryland. RAG, which purchased the coal holdings last year for $1.1 billion, will move the Arapahoe County headquarters to suburban Baltimore, along with 60 executives. The other part of the Cyprus Amax headquarters - copper and molybdenum - left Denver late last year when the firm was acquired by Phoenix-based copper giant Phelps Dodge for $3.28 billion.

The business sales and headquarters relocations leave Denver with only memories of a rich mining heritage that began in 1916 when a Denver-based employee of American Metal Co. - later to be known as Amax - began checking out rumors of a big molybdenum discovery on top of Fremont Pass near Leadville. The claim turned into the Climax mine, once the world's largest moly producer until low prices forced its closure in the 1980s. Cyprus Minerals was formed when Amoco spun off its minerals holdings in 1985, and the firm later merged with Amax.

At its peak in the late 1980s and early '90s, Cyprus Amax employed about 400 at its Denver-area headquarters. Tuesday's announcement that RAG will move the coal headquarters to Maryland will leave Denver with an RAG regional office staffed by 20 employees at the Inverness business park. RAG American Coal is the domestic unit of RAG Coal International, Germany's largest coal producer and one of the biggest in the world.

RAG operates the Twentymile coal mine near Steamboat Springs, Colorado's largest, and 16 other coal mines throughout the U.S., including Utah and Wyoming. RAG President and CEO James F. Roberts said the headquarters move was made for better access to Eastern Seaboard customers and transportation centers, and to place it closer to its corporate parent in Essen, Germany. (Denver Post, May 17, 2000)

Mitsubishi Corporation owned 15 percent of the Willow Creek mine at the time of the fire in the mine, the mine's closure, and subsequent $83 million insurance settlement in 2001 for property damage and business interruption.

August 1, 2000
A fire and explosion at the Willow Creek coal mine killed two miners. The mine remained closed since that incident. In Willow Creek, pockets of methane -- a combustible gas often found in coal mines -- are unusually common. Crude oil also drips from the ceiling, vaporizing into a flammable cloud. Sparks from heavy machinery and rocks collapsing can ignite either one. The fire and explosion took place about 2,000 feet underground and two miles from the mine's portal. the two miners, Gordon Nielsen and Micah Stansfield, were two of 10 miners working in the D-3 section of the longwall mine. Longwall mining in the D-3 section had only started July 16. Under current ownership, the Willow Creek Mine has been operating since July 1998. Operated by Cyprus Plateau Mining Corp., a subsidiary of RAG American Coal, Willow Creek produced about 5 million tons of coal annually, much of which went to the Intermountain Power Project near Delta. The future of the mine remains uncertain. (Deseret News, August 2, 2000; April 10, 2001)

September 27, 2000
Utah Railway operated the last coal train to be loaded from the Willow Creek mine at Castle Gate. The mine was closed following the fire and explosion on July 31, 2000 where two workers were killed. (CTC Board Railroads Illustrated, January 2001, page 15)

August 5, 2004
RAG American Coal was purchased by Foundation Coal Holdings, Inc. The properties purchased included the closed Willow Creek mine, along with the closed Star Point mine. (Casper Star Tribune, August 5, 2004, "today") (link to the article)

Following is a corporate succession for RAG American Coal Company, which is now known as Alpha American Coal Holding, LLC, with Plateau Mining Company as a non-operating subsidiary.

March 1, 2004
RAG American Coal Company was changed to RAG American Coal Company, LLC.

July 30, 2004
The stock of RAG American Coal Holding, Inc., parent company to RAG American Coal Company, was sold to Foundation Coal Corporation.

July 30, 2004
RAG American Coal Company, LLC changed its name to Foundation American Coal Company, LLC.

August 9, 2004
RAG American Coal Holding, Inc. changed its name to Foundation American Coal Holding, Inc.

August 19, 2005
Foundation American Coal Holding, Inc. was changed to Foundation American Coal Holding, LLC.

July 31, 2009
Foundation Coal Holdings, Inc., merged with Alpha Natural Resources, Inc., and the surviving entity changed its name to Alpha Natural Resources, Inc.

July 31, 2009
Foundation American Coal Company, LLC changed its name to Alpha American Coal Company, LLC.

July 31, 2009
Foundation American Coal Holding, LLC changed its name to Alpha American Coal Holding, LLC.

Following these changes in 2004-2009, the current ownership structure of (non-operating) Plateau Mining Corporation is as follows:

Plateau Mining Corporation is a 100 percent subsidiary of Alpha American Coal Company, LLC;
which in turn is a 100 percent subsidiary of Alpha American Coal Holding, LLC;
which in turn is a 100 percent subsidiary of Alpha Natural Resources, Inc., which is a publicly traded company.