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Majority of coal mines in Central Appalachia saw YOY production increase in Q2

Most of the top-producing coal mines in Central Appalachia saw some level of year-over-year output increase in the second quarter.

Just seven of the top 25 mines produced the same or fewer tons of coal than in the year-ago period, according to data compiled by S&P Global Market Intelligence.

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The region produced 9.2 million tons of coal during the quarter, a 9% uptick in year-over-year production and a 5.8% increase over the previous quarter. It also had an 11.5% increase over the 12-month period ending in the second quarter compared with the previous 12-month period.

Coronado Coal LLC's Buchanan No. 1 mine was the region's top producer, generating 1.2 million tons of coal during the quarter. The mine's second-quarter production decreased 13% year over year and was down from the nearly 1.4 million tons produced in the first quarter.

The company's Toney Fork Surface mine saw a 36% increase in year-over-year production, the fifth-largest uptick in the region during the quarter.

Arch Coal Inc.'s Holden No. 22 Surface mine had the second-highest production and an 11.1% year-over-year increase during the quarter. Arch CEO John Eaves said on a July 31 earnings call that production and logistic disturbances in Australia are helping the world's coal market maintain a "healthy balance."

The company reported increased seaborne demand as well, especially with India's growth in its steel sector. Eaves predicted that growth may make India the largest importer of seaborne metallurgical coal in the "not-too-distant future." The increase in exports has helped offset the lag in the domestic market as well, he said.

Alpha Natural Resources Inc. reported on Aug. 16 that the company had a strong first six months despite a tough first quarter. Its Republic Energy mine, the region's fourth-best producer, saw an increase from 325,000 tons produced in the first quarter to 421,000 in the most recent reporting period. Five of the company's six largest mines in the region reported quarter-over-quarter increases.

"We had a strong first half with an average price of $111.01 for metallurgical coal, $52.84 for steam coal, and Alpha is seeing a strong, stable market in the second half of 2018 and into 2019," CEO David Stetson said.

Four of the company's top six mines had higher year-over-year production during the quarter, while the Slabcamp and Black Castle Mining Company LLC mines saw a 17.4% and 16.7% year-over-year decrease, respectively, the two largest production declines among the region's top 25 mines. Workman Creek Surface mine had the highest production uptick among Alpha's mines, with a 35.1% increase to 385,000 tons.

Contura Energy Inc. reported Aug. 16 that it expects 2018 shipments to settle between 15.4 million and 16.8 million tons, about a quarter of which is expected to be metallurgical coal from Central Appalachia.

Contura and Alpha are expected to close on their merger before the end of 2018, forming the largest U.S. met coal supplier.

Alliance Resource Partners LP's CEO reported an "impressive" second-quarter performance with strong coal sales boosted by the domestic and overseas markets.

"Looking ahead, we anticipate market conditions should remain favorable for both domestic and international coal demand," President and CEO Joseph Craft said on a July 30 earnings call. "We expect to grow our production another 5% to 6%, or approximately 2 million tons, in 2019 compared to 2018."

Production out of the company's No. 4 mine was down 7.6% compared to the second quarter of 2017. Craft said most of the anticipated growth in production would come from the Illinois Basin.

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