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Coal production from top Northern Appalachia mines drops 25% in FY'20

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Coal production from top Northern Appalachia mines drops 25% in FY'20

Production at the top coal mines in the Northern Appalachian basin of the U.S. during the last quarter of 2020 fell short of the full-year 2019 totals but increased quarter over quarter, according to an analysis by S&P Global Market Intelligence.

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The top 25 mines in Northern Appalachia produced 19.2 million tons of coal during the fourth quarter of 2020, dropping 14.7% from 22.5 million tons in the prior-year period. Production rates improved from the 17.7 million tons of output from the top mines in the preceding quarter, but large production cuts at certain operations bit into the quarterly total.

For the full year, the top 25 mines in the region churned out 69.8 million tons of coal, decreasing more than 25% from 93.6 million tons produced in 2019. Total production from the region was the lowest on record dating back to 1984, according to S&P Global Platts.

The largest producer in the region was the Bailey mine, operated by Consol Energy Inc., which yielded 3 million tons of coal in the fourth quarter of 2020, declining 6.5% year over year. Consol President and CEO Jimmy Brock said on a Feb. 9 earnings call that the decrease was related to the coronavirus pandemic and difficulties within the rail supply chain.

The company expects lower output from its mines in the Northern Appalachian region in 2021 with "only a modest production recovery," Brock said. "Accordingly, we do not expect Northern [Appalachian] production to rebound to pre-COVID levels for the foreseeable future as operators in the region better align output with demand trends."

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Two of the top mines with the biggest dips in quarterly output were the Century and Monongalia County mines, overseen by American Consolidated Natural Resources Inc. Century produced 422,000 tons of coal and Monongalia County produced 160,000 tons during the recent three-month period, dropping year over year from 1.1 million tons and 1.2 million tons, respectively.

American Consolidated Natural Resources, formerly known as Murray Energy Corp., also oversees the Marshall County mine, which was the second-highest performer in the basin in the fourth quarter of 2020. Marshall County produced 2.2 million tons of coal during the period, decreasing 23.8% year over year and 18.5% quarter over quarter.

Third in the quarterly rankings was the Tunnel Ridge mine run by Alliance Resource Partners LP. One of the few mines in the basin to improve on previous totals, Tunnel Ridge produced 1.9 million tons of coal in the last quarter of 2020, 6% higher than the prior-year period. Production at the operation decreased 24.4% in 2020, in line with regional trends.

Alliance is establishing internal teams to determine how to best find new opportunities for business amid the transition away from fossil fuels, including how to capitalize on the mass deployment of electric vehicles, Chairman, President and CEO Joseph Craft III said on a Feb. 1 earnings call.

"We're trying to determine where best we fit. Whether it's on the power side, whether it's on the EV side, whether it's in royalties and trying to expand royalties beyond just oil and gas and coal," Craft said. "I do think in terms of using those skill sets we have."

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S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.