Published: July 31, 2017 |

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Arch Coal CEO, John Eaves.
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Arch Coal’s thermal mines, including one of the largest surface mines in the country, are still in recovery mode, the CEO said in a call with investors recently.

The St. Louis-based firm’s net earnings from April to June were $37.2 million, down from $51.7 million in the first quarter of the year. The second quarter is an off season for coal producers, sitting in between winter and summer demand for electricity. Total revenue for the quarter was $550 million.

Arch operates Wyoming’s second largest mine by production, the Black Thunder Mine outside Wright. It declared bankruptcy last spring after taking on debt in the steel coal market. The coal industry as a whole in Wyoming then tipped into a precipitous decline. Five hundred miners lost their jobs in one day of layoffs at Black Thunder and a neighboring Peabody mine.

While production is up across Wyoming for 2017, Arch’s thermal mines in the Cowboy State — those that produce coal for electricity use — are still up against some of last year’s lingering challenges, including costs from low production and an overstock of coal.

But there are signs of optimism, said CEO John Eaves. The rest of the year includes high natural gas prices, a predicted average summer heat and the slow burnout of stockpiles,

“Natural gas continues to trade at levels above $3 per million BTU,” Eaves said. “At those levels, we would expect solid demand for PRB coal with a vast majority of PRB served plants dispatching in front of natural gas served plants.”

The company had higher costs due to lower volumes, he said. Repair and maintenance costs for the quarter were also high. A drag line at the Coal Creek mine in Campbell County was out of service for four weeks, Eaves said.

Eaves also said he expects improving demand to send coal overseas will help balance the national market. The stockpiles of coal sitting outside power plants will likely fall below 70 days of supply, or 40 supply days fewer than a year and a half ago, Eaves said.

Company leaders also nodded to the changing market share, with hotter burning coal likely seeing more success in the coming years.

“If you look back over the last five years, the market share has really gravitated more to the higher Btu coal,” Eaves said. “I think as we move forward, it’s going to continue to be challenging for the lower quality guys … Arch is producing close to an 8900 Btu coal, we feel like we’re pretty well positioned to grab some of that market moving forward.”

Arch also announced the sale of a subsidiary in the call Thursday, including the Lone Mountain mining complex in Virginia and Kentucky, for $8.3 million.

Source: (July 29, 2017) Casper Star Tribune

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