US coking coal mine, terminal disruptions affecting shipments

US met coal markets are facing tighter availability of key low-volatile hard coking coal supplies after several mining incidents and terminal disruptions affected shipments, leading to force majeure notifications.

Alpha Metallurgical Resources, the largest US coking coal producer, confirmed late June 23 one of its mines in West Virginia related to the Kepler preparation plant had suffered a temporary production halt lasting six days. Output had been already partially restored to one-third of capacity with plans to increase output back to full capacity and recover tons with extra shifts, Alpha said in a June 23 statement.

Alpha added that a mechanical failure at its majority-owned Dominion Terminal Associates (DTA) export shipping facility in Newport News, Virginia, had caused delays to coal shipments. The Hampton Roads terminal is co-owned with US miner Arch Resources, which owns a 35% stake.

"While both issues have been substantially resolved, they are expected to delay certain shipments that would have otherwise occurred within the second quarter of 2023," Alpha said.

"The temporary shutdown of production at Road Fork 52 lasted approximately six days, which will result in the delayed shipment of coal to customers who have received force majeure letters notifying them of these circumstances. Alpha expects to be able to make up these delayed tons in the third quarter."

Northern Appalachian supply

In Pennsylvania, Rosebud Mining Co.'s Mine 78 had been temporarily idled, due to geological reasons with potential to restart once monitoring and approvals are in place, according to a source close to the matter. Mine 78 is a key low-vol Northern Appalachian region mine located near Windber, in Somerset County, close to Pittsburgh and to several met coke plants in Pennsylvania and adjoining states.

Mining activities at the underground Mine 78 were recently halted while Rosebud reviewed the situation with the State Department of Environmental Protection and the US government's Mine Safety Health Administration. Mine 78 was operating in an underground area with proximity to an adjacent geological formation which may have compromised operations and safety, the source said.

Mine 78 produced 101,922 st in Q1, and just below 450,000 st in 2022 and around 587,000 st in 2021, according to MSHA data.

Closely-held Rosebud typically sells its range of coking coals with varying levels of volatile matter to North American end-users and to traders, including for blending and exports. The halt of Mine 78 has led to some inquiries and demand for alternative coals.

The idling comes as North American end-users typically start to prepare for 2024 contract requirements and consider pricing terms and qualities on offer, according to industry sources.

No immediate spot transactions were heard related to the incidents. Deals may follow with time for negotiations, and if suitable supplies are found. A shortage in prompt availability US coals of comparable quality has been noted, while longer-term, into August and September, supply may be aided from new mines. There may be less pressure from lower steel and ironmaking rates, with North American pig iron output down 4% on-year between January-May, according to World Steel Association data.

Alpha Road Fork

Alpha said it temporarily halted output at Road Fork 52 due to a ventilation issue at the underground mine. The mine in Wyoming County, West Virginia, temporarily halted production as a safety precaution and after review the matter was addressed with ventilation adjustments made and acceptable air quality levels restored.

The mine is expected to ramp back towards full capacity in the next several days as technical inspections are performed and system functions are verified, the statement said.

Road Fork 52 produced 542,011 st in Q1, and around 1.81 million st in 2022 and 1.47 million st in 2021, according to MSHA data.

Alpha said at DTA one of the stacker and reclaimer machines experienced a mechanical failure that caused it to be inoperable for three days while it was repaired, hampering train unloading capability and affected around 250,000 st of Alpha's shipments for export customers.

"These customers have received force majeure letters, and Alpha expects to be able to fulfill these shipments in early July," it said.

The repairs were completed and all systems at DTA are operating as normal, with the affected unit back to full capacity.

"We have been in communication with our customers to explain these circumstances and reiterate our commitment to serving them. Now that we are working back towards full productive capacity at Road Fork 52, we expect to swiftly make up lost time with some extra shifts, and we are already rescheduling vessels at DTA in the early days of July," said Alpha CEO Andy Eidson.