Engineering & Mining Journal

AUG 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

Issue link: https://emj.epubxp.com/i/1014254

Contents of this Issue

Navigation

Page 29 of 107

NEWS - THIS MONTH IN COAL 28 E&MJ • AUGUST 2018 www.e-mj.com Australian Met Operations Propel Peabody's Performance During the second quarter of 2018, Peabody Energy reported a 4% increase in revenues to $1.31 billion driven by a 20% increase in Australian met and thermal coal sales. "Peabody's diversified portfolio continues to generate substan- tial returns, led by 39% margins from the company's Australian platform, as we capitalize on continued strength in sea- borne metallurgical and thermal coal fun- damentals," said Peabody President and CEO Glenn Kellow. Australian sales volumes totaled 7.9 million tons, including 2.9 million tons of metallurgical coal sold at an average price of $143.98/ton, and 2.9 million tons of export thermal coal sold at an average price of $78.68/ton, with the remainder delivered under a long-term domestic contract. Peabody's Australian metallur- gical coal segment generated revenues of $417.5 million, a 45% increase com- pared to the prior year, largely due to sus- tained demand for quality metallurgical coal and healthy seaborne pricing levels. Vigorous seaborne thermal demand led to further strengthening in prices during the quarter, with Newcastle spot pricing reaching highs of approximately $116 per metric ton (mt) in the second quarter. Chinese thermal coal imports rose approx- imately 20%, or 19 million mt, through June compared to the prior year on sturdy industrial activity and an approximately 8% increase in thermal power genera- tion. Domestic coal production has been unable to keep pace with the increased power generation and industrial demands, along with customer restocking. India's coal production has also been unable to keep pace with growing elec- tricity demand, resulting in an 13% in- crease, or 9 million mt, in thermal coal imports through June compared to the prior year. Peabody reported that coal in- ventories at India's power plants remain below targeted levels. In addition, ASEAN imports increased compared to the prior year on contin- ued urbanization and general economic growth. Peabody expects this trend to continue as 56 gigawatts of new coal-fired power plants in 24 countries worldwide are expected to come online in 2018. The majority of new plants are located in the Asia-Pacific region, with additional plants announced in a number of other countries anticipated to come online in future years. The strong performance from its Aus- tralian operations helped offset the impact of lower U.S. volumes. Revenue per ton increased modestly compared to the prior year, but the tonnage decreased 5%. Con- ditions for the U.S. coal market remains challenged, according to Peabody, as utili- ty coal consumption declined 5% from the prior year, despite a 4.5% increase in to- tal load. Natural gas and wind generation continued to rise, along with an increase in nuclear generation driven by the timing of refueling across nuclear plants. In addi- tion, retirements continue to weigh on coal demand and account for an estimated 3% of the decline in year-to-date coal demand. PRB demand decreased 5% due to ongo- ing pressure from retirements and regional natural gas prices that continue to trade at a discount to quoted Henry Hub prices. While domestic demand has weak- ened, U.S. exports have continued to benefit from strong seaborne pricing, with thermal exports through May up 48% compared to the prior year. Alliance Reports Increased Coal Sales, Exports Alliance Resource Partners said strong second-quarter coal sales volumes led total revenues higher to $516.1 million, an increase of 29.4% compared to the second quarter of 2017. Alliance is now essentially sold out for its planned 2018 sales volumes and has increased its an- ticipated export sales for this year to ap- proximately 11.1 million tons. "Coal sales volumes increased sig- nificantly as we shipped substantially all of the 1.4 million tons impacted by weather-related transportation disruptions during the sequential quarter," said Joe Craft, president and CEO, Alliance. "U.S. coal market conditions remained favorable allowing us to secure new commitments for approximately 8.9 million tons to be delivered to domestic customers through 2021. We also continued to strengthen our international coal sales position, book- ing an additional 4.6 million tons for de- livery to the export markets over the next 12 to 18 months. Our operations have also performed well, increasing produc- tion volumes to meet additional demand while continuing to control per ton costs." In response to growing international thermal coal demand, Alliance brought the first continuous mining unit back into op- eration at its Gibson North mine during the second quarter and they currently antici- pate the second unit will commence pro- duction by the fourth quarter of this year. Coal production volumes increased 2.6% year-on-year to 9.7 million tons, primarily due to increased production at the Gibson South and River View mines and the resumption of operations at our Gibson North mine. Peabody's North Goonyella mine in Queensland exports 2.9 million mt/y of met coal extracted by a top-caving longwall method.

Articles in this issue

Links on this page

Archives of this issue

view archives of Engineering & Mining Journal - AUG 2018