Members of the Knox County Council are considering a $60-million tax abatement to benefit Sunrise Coal.

Todd Davis, Sunrise Coal’s director of compliance and financial reporting, told council members Tuesday during their regular monthly meeting that the coal producer will this year embark on a major expansion that includes $60 million in new machinery and equipment and the additional of as many as 60 employees.

Davis said the planned improvements in Oaktown are the direct result of a new rail loop constructed at a mine in Gibson County. That loop, he said, allows Sunrise Coal to connect with a much larger market. Before, they were limited to using only CSX-owned rail lines. With it, they are able to ship on the Norfolk Southern line as well.

The coal producer began 2018, Davis said, with nine customers in four states and finished with 16 in seven states.

So Sunrise Coal is on target this year, he said, “to sell more coal than ever before.”

But with that growth, he said, comes the need for additional capital investment, both in equipment and in manpower.

“So we’re here tonight asking for a little bit of help as we go through this process,” Davis told the council.

In making his pitch, Davis pointed out the mine in Oaktown employs nearly 300 county residents.

The mine pays $75 million in payroll and benefits to its local employees. Those employees then pay to the county $205,000 each year in local income taxes.

Another 60 employees, Davis said, would increase the local payroll by $7 million and even more in benefits.

And they’re “good paying jobs,” too, he said.

The average miner here makes upwards of $75,000 per year and another $35,000 in benefits.

The company’s average hourly wage of $27 hour is also significantly higher, he pointed out, than the county average of $18.35.

“We provide a lot of good jobs in Knox County,” Davis said, “and we hope to provide a lot more.”

Sunrise officials are proposing to the county a 10-year abatement schedule, one that Davis argued would come with both “significant savings” to Sunrise yet still “significant revenue” to the county.

Without an abatement, the improvements would result in $2.9 million in personal property tax revenue to the county over the 10 year period.

With it, the county would receive just over $1 million; Sunrise Coal would save $1.7 million.

On a proposed 7-year schedule, the county would see $800,000 in revenue, and Sunrise Coal would save an estimated $1.3 million over ten years.

In response, councilman Randy Crismore called himself “a friend of coal,” but he acknowledged that many are not.

Amid an ongoing push for cleaner fuels, he asked Davis how confident Sunrise Coal leaders are in their future as a local producer

Davis, in turn, admitted that Sunrise’s margins are declining. Coal is selling right now for $40 per ton, down from $55 a few years ago.

The company’s profit margin is $10 per ton, a far cry from the $25 it once was.

They’ve been affected, he said, by a move toward cleaner fuels, specifically in natural gas.

But many coal producers, he said, haven’t been able to survive these difficult times; several, he said, have filed for bankruptcy over the last few years.

“But we have survived,” he said, adding that there are now fewer coal competitors. “And we have reserves that will take us out 15-20 years.

“We believe we still have a really good shot at being there in 15-20 years,” he said. “And the next five years look really good.”

Council president Bob Lechner said he appreciated Sunrise Coal and its investment in Knox County. The mine in Oaktown, he said, is a “tremendous asset” that has provided “wonderful benefits” in terms of property and income tax revenue.

If the council wants to consider the abatement, state law requires them to hold a public hearing to garner feedback. It’s also likely, he said, that the council will continue “internal discussions” and reach out with any additional questions that may arise.

“We want to help and assist you however we can,” Lechner told Davis, “whether that’s through an abatement or some other way.

“We plan on having you back so we can make a final decision.”

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