Column: Where will Trump and China drive commodities in 2025?
With no predictable mold for how this will work, the only certainties will likely be volatility and numerous factors working in opposing directions.
welve mines in Northern Appalachia cranked out more than 1 million tons of coal each in the third quarter, helping boost production from the region, and more than half of those mines are held by one company that dramatically increased its footprint in the basin late in 2013.
An SNL Energy analysis of U.S. Mine Safety and Health Administration data showed that the top 25 producing coal mines in the Northern Appalachia basin produced a cumulative 25.46 million tons of coal in the third quarter, up from 22.38 million tons in the year-ago period. In the 12 months ending with the most recent quarter, the mines produced 101.99 million tons of coal, up from 94.48 million tons.
The region has been expanding production as it continues to attract market share and employees from the Central Appalachia basin to the South. However, Northern Appalachia producers still struggle with intense competition from natural gas, as well as coal from regions where production is cheaper, such as the Illinois Basin.
Murray Energy Corp. owns seven of the 12 mines that produced over 1 million tons of coal in the third quarter. Its top producer in the third quarter, the Marshall County mine, produced 2.85 million tons of coal in the period.
Marshall is one of five mines that Murray acquired in a $3.5 billion buy from CONSOL Energy Inc. announced late in 2013. The Ohio County, Harrison County, Marion County and Monongalia County mines acquired in the same purchase also all reported output that placed them among the top 25 mines in the region.
Murray’s seven top-producing Northern Appalachia mines generated over 11.51 million tons of coal in the third quarter alone. The same mines produced 45.02 million tons in the 12 months ending in the third quarter.
For the 12-month period, the Century and Powhatan No. 6 mines were the only Murray operations in the region that reported decreased production.
In a statement to SNL Energy regarding the company’s increase in production broadly across its operations, Murray reported that increased productivity and increased production shifts boosted production at the mines formerly owned by CONSOL.
Despite increasingly focusing on its gas operations, CONSOL continues to hold the two top producing coal mines in the basin. The Bailey mine out-produced every mine in the region, reporting 3.10 million tons of coal in the quarter, an increase of 10.8% from the 2.80 million tons of coal production reported in the year-ago quarter.
“Our marketing effort for our Bailey coal brand is unfolding just as we had strategically envisioned,” CONSOL President and CEO Nick DeIuliis said during an Oct. 28 investor call. “We are out there tactically executing term business with must-run power plants that are in our core market regions for the next three years.”
CONSOL’s Enlow Fork mine reported production of 2.16 million tons, down from 2.43 million tons in the year-ago period. A CONSOL executive said during the Oct. 28 call that the mine had struggled with geological issues over the “last quarter or two.”
Alpha Natural Resources Inc. had three mines in the region that were among the top producers in the third quarter. Together those three mines produced 2.94 million tons of coal. The top producer, Cumberland, reported production of 1.60 million tons of coal in the quarter.
The company is expected to increase Cumberland’s coal production in the hope of offsetting the loss in production at the company’s Emerald No. 1 mine, which is nearing the end of its productive life. Emerald produced 1.08 million tons of coal in the third quarter, down from 1.29 million tons in the year-ago quarter.
During a recent investor call, Alpha President Paul Vining said the company is looking at other options for expansion in the Northern Appalachia basin but declined to comment further on those plans.
“We’re not going off the end of a cliff with Emerald shutting down, but we’re likely at some point in the future to be looking at — starting to move toward perhaps some development, some incremental or longer term investment that will create additional value beyond just a lot of the measures that we’ve taken in Cumberland,” Vining said.
Alliance Resource Partners LP, one of the few coal companies that has managed to avoid a collapse in market value and continue to report record earnings, reported that its Tunnel Ridge mine produced 1.53 million tons of coal in the third quarter, up from 863,485 tons in the year-ago period.
Alliance’s Mountain View mine produced 505,084 tons in the quarter, down from 546,391 tons in the year-ago quarter.
Oxford Resource Partners LP owns three mines among the top 25 coal producers in the region. The three mines — Snyder, Dairy Jean and Tuscarawas Strip — produced a combined 818,206 tons in the quarter. Westmoreland Coal Co. recently reported that it was acquiring Oxford’s general partner in Westmoreland’s first entry into the master limited partnership space.
Arch Coal Inc.‘s new Leer mine, which produces metallurgical coal, is also one of the top-producers in the region. Leer reported production of 654,610 tons in the quarter, up from 134,591 tons in the year-ago quarter.
“The start-up of Leer has been as good as we could have hoped,” Arch Executive Vice President and COO Paul Lang said during an Oct. 28 earnings call. “It continues to hit our numbers.”
Arch’s Sentinel mine reported production of 270,784 tons, down from 295,377 tons in the year-ago period.
Other top-producers in the region include mines owned by Buckingham Coal Co Inc, Mepco Holdings LLC and Northern Star Generation LLC.
