latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/top-central-appalachia-coal-mines-increased-production-in-q1-20-58707216 content esgSubNav
In This List

Top Central Appalachia coal mines increased production in Q1'20

Blog

Major Copper Discoveries

Case Study

A Leading Renewable Energy Financing Bank Gains Important Insights on U.S.- based Opportunities

Blog

Exploring the Energy Dynamics of AI Datacenters: A Dual-Edged Sword

Blog

Despite turmoil, project finance remains keen on offshore wind


Top Central Appalachia coal mines increased production in Q1'20

While much of the U.S. coal sector pulled back on production in the first quarter, some of the top coal mines in Central Appalachia substantially increased production.

SNL Image

The top 25 coal mines in the region by production volume produced 7.6 million tons of coal in the first quarter, an S&P Global Market Intelligence analysis found. Total production from the mines increased 4.0% compared to the first quarter of 2019 and was up 14.1% compared to the fourth quarter of 2019.

In recent years, Central Appalachia has become a region largely focused on metallurgical coal and export markets. Other regions where thermal coal is sold for power generation were more impacted by low natural gas prices and a warmer winter suppressing demand for coal during the period.

The largest mine in the region, Coronado Global Resources Inc.'s Buchanan mine, produced about 1.3 million tons in the quarter, increasing from 988,264 tons in the prior quarter and 1.2 million tons in the year-ago period. Coronado's Powellton No. 1, Lower War Eagle and Eagle No. 1 mines were also top producers in the region.

SNL Image

Coronado suspended its U.S. operations in late March due to the economic downturn in Europe, Brazil and the U.S. caused by the coronavirus pandemic. The longwall operation at Buchanan was still running in a limited capacity as of May 8, according to a securities filing.

"The company continues to make shipments to its customers from existing inventories which should allow the company to meet all current customer contractual commitments as well as deliver on potential new sales opportunities," the filing said. "The company continues to monitor developments, including government requirements and recommendations at the international, national, state and local level to evaluate the duration for which the U.S. operations will remain idle."

The filing said that due to the global impacts of the pandemic on steel production and the resulting effect on price and demand for metallurgical coal, the company's operating results will be significantly below historical performance.

Contura Energy Inc. owns nine of the top 25 producing mines in Central Appalachia. Most of those mines increased production in the first quarter compared to the prior quarter, and aggregate production increased from 2.3 million tons in the fourth quarter of 2019 to 2.7 million tons in the most recent quarter.

"Even though the first quarter met coal price continued to be challenging, it was encouraging to see the demand for our met coal held up quite well," Contura Chairman and CEO David Stetson said on a May 11 earnings call. "Despite the announcement of many blast furnace idlings and coke plant slowdowns, our strong shipments continued well into April. However, pricing began to weaken significantly as the COVID-19 pandemic spread, and price volatility increased the last couple of weeks."

Arch Resources Inc. owns three of the top-producing mines in Central Appalachia: the Beckley Pocahontas mine, the Holden No. 22 surface mine and the Mountaineer II mine. In the first quarter, the company increased production at the Mountaineer and Beckley Pocahontas mines quarter over quarter but lowered production at Holden.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

Arch President and CEO Paul Lang said in April that the company expects a challenging market environment for the rest of 2020. After holding up reasonably well in the first quarter, steel markets have weakened considerably and major steel producers are curtailing output, Lang said on an April 23 earnings call.

"Those developments are starting to take a toll on global metallurgical markets," Lang said. "While steel markets should improve as the economy stabilizes and then begin to recover, we expect all of this to take some time."