Coal production from the Illinois Basin's top mines decreased 20.0% for the 12 months ended June 30 as the COVID-19 pandemic added pressure to producers already facing a long-term decline in domestic markets as well as weak export markets.
The top 25 coal mines by production volume in the Illinois Basin produced an aggregate 72.1 million tons in the 12 months that ended with the second quarter, decreasing year over year from 90.2 million tons.
Much of the production decline occurred in the recent quarter, when producers were dealing with increased safety precautions at their mines and demand for coal decreased as the U.S. economy faltered. The top mines produced 14.0 million tons of coal in the three-month period, down from 18.4 million tons in the first quarter and 21.7 million tons in the second quarter of 2019.
Lively Grove, a mine owned by multiple power generating entities, climbed two spots in its ranking compared to the prior quarter to become the top producer in the region in the second quarter. Production from the mine in the 12 months ended June 30 increased 4.0% year over year.
Alliance Resource Partners LP's River View mine, the second-largest producer in the quarter, saw production fall 10.5% in the 12-month period compared to the prior year. The company's No. 1 and Gibson South mines reported production declines of 33.3% and 54.4%, respectively. Over the same time, the company's Cardinal mine increased coal production by 1.6%.
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"The first half of 2020 presented many challenges due to the COVID-19 pandemic, which negatively affected economic activity around the globe, resulting in lower demand for coal, oil and natural gas," Alliance President and CEO Joseph Craft said on a July 27 earnings call. "The entire energy industry, including Alliance, has had to react quickly to the rapid loss of demand."
Alliance temporarily idled all of its Illinois Basin operations early in the second quarter to mitigate impacts of the COVID-19 pandemic.
Foresight Energy LP, another large producer in the region, produced about 3.1 million tons of coal from three top Illinois Basin mines in the second quarter. Output decreased from 3.6 million tons in the prior quarter and 5.0 million tons in the second quarter of 2019.
Hallador Energy Co. reported 1.4 million tons of coal production in the second quarter from its Oaktown Fuels No. 1 and Oaktown Fuels No. 2 mines, down from 1.5 million tons in each the prior quarter and the comparable year-ago period.
Hallador was one of the few companies to post a profit in the second quarter despite factors related to the pandemic. The company expected shipment delays and interruptions to operations, and it amended its credit facility to improve liquidity to $52.6 million as of June 30, CEO Brent Bilsland noted on an Aug. 4 earnings call.
"During the quarter, we took several actions to improve liquidity, reduce cost structure, pay down bank debt, all while helping our customers manage their inventory levels," Bilsland said. "Decisive actions enable us to increase our financial capabilities and ensure consistency at a time when the world was experiencing great volatility."
The company also received a $10 million loan under the Paycheck Protection Program designed by the federal government to prevent job losses early on in the pandemic.