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Uinta Basin coal production decreases 3.6% YOY in Q4'20

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Uinta Basin coal production decreases 3.6% YOY in Q4'20

Coal production in the Uinta Basin decreased 3.6% year over year to 5.6 million tons in the fourth quarter of 2020 against a more drastic 14.3% drop in full-year production, according to data compiled by S&P Global Market Intelligence. The basin covers parts of Colorado and Utah.

Production in the basin decreased from 5.8 million tons in the fourth quarter of 2019 and was roughly in line with the previous quarter's total of 5.7 million tons. The basin produced 22.6 million tons of coal in 2020, slumping year over year from 26.4 million tons.

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American Consolidated Natural Resources Inc.'s Lila Canyon operation topped the list of active mines in the region, producing 986,459 tons in the fourth quarter, a slight drop from 1.0 million tons in the prior-year period. The Skyline No. 3 and Sufco operations were the next highest producers in the region, with 952,585 tons and 899,320 tons of coal output, respectively. The two mines are operated by Wolverine Fuels LLC.

Output at Sufco dropped from 1.4 million tons in the third quarter of 2020 but increased from 646,847 tons in the prior-year quarter. Output at Skyline No. 3 was relatively stable.

Lila Canyon owner American Consolidated emerged from Murray Energy Corp.'s bankruptcy proceedings during the recent quarter after filing for creditor protection earlier in 2020. Murray Energy's bankruptcy came amid ongoing challenges for the U.S. coal sector, which include competition from lower carbon-intensive power sources, weak thermal coal prices and the effects of the COVID-19 pandemic.

Arch Resources Inc., which owns the West Elk thermal coal mine, recently reiterated intentions to become a pure-play metallurgical coal company, similar to other producers in the region. "Arch began to shift its strategic focus towards steel and metallurgical markets nearly 10 years ago, and we've accelerated those efforts markedly in recent quarters," Arch President and CEO Paul Lang said during a Feb. 9 earnings call.

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West Elk production dropped 37.8% to 2.5 million tons for 2020. Output at the operation fell to 504,419 tons in the fourth quarter of 2020, dropping year over year from 1 million tons.

Elsewhere in the U.S. coal sector, Alliance Resource Partners LP has said it intends to consider investments outside of fossil fuels, leveraging cash flows to potential opportunities in areas including the battery sector. Alliance Resource President and CEO Joseph Craft said on a Feb. 1 earnings call that the company is assessing where it may fit best as regards the strategy.

"We've got this cash flow coming on — what are we going to do with it?" Craft said.