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Consol Energy sold more coal than ever into the export market in 2023

US miner Consol Energy Inc. has become a producer of coal for industrial and other markets, particularly abroad, moving away from its roots as a producer for US power plants, executives said on a Feb. 6 earnings call.

The company has been selling into crossover metallurgical coal markets, and it is moving more tons into industrial markets, which includes activities such as cement-making, executive said. New customers are increasingly critical to the US coal sector as power generators, long the sector's biggest customers, are eschewing coal generation for other energy resources to lower climate-impacting greenhouse gas emissions.

"We believe there are incremental opportunities to expand into this market, specifically to Middle Eastern, African and South Asian countries that are in a structural growth mode," Mitesh Thakkar, Consol president and CFO, said on the call.

The coal producer reported that higher prices for metallurgical coal allowed Consol to place 10% of the volume from its flagship Pennsylvania coal complex into crossover metallurgical coal markets during the fourth quarter of 2023. During times of relatively high metallurgical coal prices, buyers sometimes acquire lower-priced coal they might otherwise avoid due to lower heat content or other properties relevant to steelmaking.

The Platts US East Coast Low Vol HCC benchmark assessment was at $262 per metric ton FOB Hampton Roads as of Feb. 5, with Asian demand supporting prices. While that is well below the $550/t seen in mid-March 2022, the price generally moved between the low $100s and $200s per metric ton as recently as 2020 through mid-2021.

Consol CEO Jimmy Brock told S&P Global Commodity Insights in a March 2023 interview that industrial markets abroad are an increasingly important part of Consol's business and that the company wants to keep less than 50% of its revenue coming from coal-fired power generation markets. Overall, Consol reported that 58% of its total recurring revenues and other income in the fourth quarter of 2023 came from sales where the end user was not generating electricity for sale. That is a decrease from 64% in the third quarter of 2023.

Throughout 2023, Consol sold 60% of the coal from its Pennsylvania mining complex into export markets, more than ever. For 2023, 70% of Consol's total recurring revenues and other income came from selling its products abroad. The US Energy Information Administration expects US coal production to total 469.6 million short tons in 2024, with 19.8% being exported, according to its February short-term energy outlook.

The company sold 26.0 million short tons of coal from its Pennsylvania mining complex in 2023 compared to 24.1 million short tons a year ago. Consol plans sales volumes of 25.0 million to 27.0 million short tons in 2024. Fourth-quarter 2023 sales from the complex totaled 6.8 million short tons, up from 6.2 million short tons in the same period a year ago. Realized coal revenue from the Pennsylvania segment increased year over year to $509.0 million from $468.5 million.

Consol reported a net income of $157.1 million and basic earnings per share of $5.09 for the fourth quarter of 2023, down from $193.0 million in net income and basic earnings per share of $5.54 in the same period in 2022.

The Platts US East Coast Low Vol HCC benchmark assessment is an offering of S&P Global Commodity Insights.