Published: August 5, 2022 |

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The energy shortage and the war in Ukraine are leading to strong demand and higher prices for CONSOL Energy Inc., which saw higher prices for its Pennsylvania-mined coal and more of it shipped in recent months.

The numbers are striking: CONSOL shipped 6.2 million tons of coal from its Greene/Washington underground complex at an average $72.18 per ton, up from 5.9 million tons and $44.02 average per ton in the second quarter of 2021. The average price is up from $59.60 a ton in the first quarter, although longwall moves and railroad delivery delays led to a drop in production of about 300,000 tons quarter to quarter.

The second-quarter average coal revenue is the highest since CONSOL became a standalone public company in 2017 when it split with the natural gas operations. It’s a turnaround from the Canonsburg-based company’s depths of 2020, when the economic shocks of the Covid-19 pandemic cut deeply into its business. Now, said CEO Jimmy Brock, CONSOL is benefiting from a robust market for coal among domestic power generators as well as the export markets thanks to both a shortage of coal and no one in the market able to increase supply.

Part of that stronger demand is coming from coal-fired power plants that had expected to be deactivated in the coming months and years but are remaining open to produce power, and will need coal to do that. Robert Braithwaithe, VP of marketing and sales, said that some of CONSOL’s customers had been concerned previously about reaching long-term coal contracts given the uncertainties around coal generation.

“Now they’re starting to get a sense that they will be needed. We’re starting to see longer-duration contracts because of that and higher volumes than they would have traditionally (bought),” Braithwaithe said.

And, CONSOL executives told Wall Street analysts during the second-quarter conference call Thursday, the coal market is likely to stay hot for the foreseeable future. CONSOL is nearly fully contracted for coal sales in 2022 and has 19.6 million tons contracted already for 2023, which is a large portion of the 24 million tons to 25 million tons that it expects to sell in 2022. It also has contracts representing about 7.6 million tons for 2025.

“We are very pleased with how 2022 has progressed to the point ... we remain even more excited by our future prospects,” said CFO Mitesh Thakkar.

CONSOL is poised to be able to sell even more coal in 2022 and beyond, both for power generation in its traditional line of business as well as metallurgical coal for steel manufacturing that it is getting into with the soon-to-be-operational Itmann mine in West Virginia. Itmann should be operational by the end of the third quarter, with a fifth longwall at the Pennsylvania Mining Complex in Greene and Washington counties up and running by the end of 2022.

While CONSOL has yet to announce how much coal it plans to produce and sell in 2023, it’s likely to be more than 2022’s 25 million or so tons and with less downtime because of the fifth longwall in operation.

A lot of the increase will go to the export market, where CONSOL has focused a lot of its marketing energy even before the latest energy crisis made American-mined coal even more at a premium.

A new market will be Europe, where the ban on Russian coal is expected to take effect Aug. 9. The United States and Colombia are expected to fill the gap from Russian coal. CONSOL is already seeing an uptick in demand from Europe.

“I think there’s still a lot of opportunity for us to move coal into Europe, potentially as early as late Q4 of 2022, which fits really well into our program with our fifth longwall coming online,” said Braithwaithe.

That’s in addition to CONSOL’s already strong markets, including India.

“India is still a growth market and we fully expect to ship coal into India for decades to come,” Braithwaithe said.

Source: Pittsburgh Business Times

About CONSOL Energy Inc.
CONSOL Energy Inc. is a Canonsburg, Pennsylvania-based producer and exporter of high-Btu bituminous thermal coal and metallurgical coal. It owns and operates some of the most productive longwall mining operations in the Northern Appalachian Basin and is developing a new metallurgical coal mine (the Itmann project) in the Central Appalachian Basin. CONSOL’s flagship operation is the Pennsylvania Mining Complex, which has the capacity to produce approximately 28.5 million tons of coal per year and is comprised of 3 large-scale underground mines: Bailey, Enlow Fork, and Harvey. The company also owns and operates the CONSOL Marine Terminal, which is located in the port of Baltimore and has a throughput capacity of approximately 15 million tons per year. In addition to the ~612 million reserve tons associated with the Pennsylvania Mining Complex and the ~21 million reserve tons associated with the Itmann project, the company also controls approximately 1.4 billion tons of greenfield thermal and metallurgical coal reserves and resources located in the major coal-producing basins of the eastern United States.

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