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Uinta Basin coal production declines 1% in 2019


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Uinta Basin coal production declines 1% in 2019

Uinta Basin coal production was down 1.0% in 2019 compared to output from the same mines 2018, an S&P Global Market Intelligence analysis shows.

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The 12 active mines in the region produced about 5.9 million tons of coal in the fourth quarter of 2019, down from 6.2 million in the third quarter and 6.5 million tons in the year-ago period, according to an analysis of federal data reported by miners. The relatively small U.S. coal-producing region mined a total of 26.2 million tons of coal in 2019, down from 26.5 million tons in 2018.

The largest operation in the region by quarterly volume was Murray Energy Corp.'s Lila Canyon mine. Lila Canyon produced 3.7 million tons of coal in 2019, increasing 41.2% year over year. Murray Energy is undergoing bankruptcy reorganization.

Arch Coal Inc.'s West Elk mine in Colorado produced 4.1 million tons of coal in 2019, down 12.7% from 4.7 million tons in 2018. Arch has been increasingly shifting its focus toward metallurgical coal.

Arch noted in its annual filing that the decline in production was due to weak international coal pricing and to accommodate customer delivery schedules and the company's longwall development requirements.

West Elk is planned to be part of a western U.S. coal joint venture Arch is working on with Peabody Energy Corp. In its announcement of the joint venture, Arch said the low-cost, higher-margin West Elk mine would enhance Peabody's Twentymile mine in Colorado.

Peabody's Twentymile operation reports data to the U.S. Mine Safety and Health Administration under the name Foidel Creek. The mine produced about 2.5 million tons of coal in 2019, down from 3.1 million tons in the prior year.

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Wolverine Fuels LLC operates two active mines in the Uinta Basin, Skyline No. 3 and Sufco. Annual production at the Skyline mine rose 8.7% to 3.9 million tons in 2019 while the amount of coal mined at Sufco declined 10.8% to 4.4 million tons.

Moody's Investor's Service recently noted that Wolverine is "undergoing a significant operational turnaround" that may outweigh the impact of weaker market conditions in the near term. However, the company also faces looming debt maturity and other coal-related risks. Wolverine is majority-owned by Galena Pvt Equity Resources Fund LP.

Royal Energy Resources Inc. increased coal production at the Castle Valley No. 3 mine by 514.5% in 2019 compared to 2018, but that was offset by a 52.1% decrease in production at Castle Valley No. 4. Cumulatively, the two Royal Energy Resources mines decreased production by about 7.9%.

Annual coal production also fell at the Deserado mine owned by Deseret Generation And Transmission Cooperative, the Trapper mine owned by multiple parties including Berkshire Hathaway Inc., and the Coal Hollow mine operated by Alton Coal Development LLC.

Tri-State Generation and Transmission Association Inc.'s Colowyo mine and Bronco Coal Resources LLC's Emery mine reported year-over-year production increases of 8.6% and 56.9%, respectively, in 2019.

Uinta Basin coal prices for the week ending Feb. 7 were $31.15 per ton and have been relatively steady through early 2020.