Two large metallurgical coal producers are eyeing coal mine expansions in the U.S., as the sector maps out a future under a presidential administration it hopes can help deliver further relief.
"We're going to keep putting coal mines in. We've got some [coal reserves] in our profile that is advantaged either quality-wise and/or geologically from a coal thickness standpoint. We think they work in any market," Ramaco Resources Inc. CEO Michael Bauersachs told S&P Global Market Intelligence. "At this point, you're going to see us keep bringing on production."
Warrior Met Coal Inc. is also putting capital into developing its metallurgical coal mines in Alabama.
"We have committed significant capital for investment back into our operations for the current year and we have taken significant other steps to position our company for stability and growth," COO Jack Richardson said at the Virginia Coal and Energy Alliance conference on May 21.
He said the company spent "a little north" of $100 million on capital investment in 2017 and is on track to do the same this year, as the company has "lots of opportunities" if the recent improvement in metallurgical coal markets remains supportive.
This week, Steve Winberg, the former coal official appointed to assistant secretary for the U.S. Department of Energy under President Donald Trump, said optimism is growing in coal country under a president who would rather "revive" than "revile" coal. He said the department is working on several initiatives to help fulfill Trump's goals of bringing back coal jobs and production, such as federal support for smaller, modular coal plants that can more nimbly compete with other fuels.
"My message to you today is that we have reason to be optimistic," Winberg said May 21 during "The New Vision for Coal" conference. "I think optimism in coal country was in pretty short order a year ago. I think it's fair to say that things have changed and they are continuing to change. ... President Trump and his administration truly understand the value and the necessity of coal and the coal industry."
A U.S. Department of the Interior official also offered a bullish outlook when he assured an audience of coal supporters that the agency is "dismantling the regulatory state brick by bureaucratic brick to revive coal."
The agency is committed to getting the "government out of your way" to put American coal miners back to work, Interior representative Tucker Davis told a crowd gathered at the Virginia Coal and Energy Alliance on May 22.
"Washington elites who wouldn't know a lump of coal if it hit them on the head declared war on coal," Davis said. "They set out beating down the coal industry with job-killing regulations and bans and trade policies. They almost drove the American coal sector to extinction."
However, on the railroad side of things, companies continued to fret this week over the ongoing closure of coal-fired power plants.
CSX Corp. President and CEO James Foote said the railroad is trying to come up with strategies that will prevent U.S. utilities from continuing to retire coal-fired power plants, even as a recent uptick in export demand has kept miners and rail providers busy.
"I think our corporate line on what's going to happen to our utility coal in five to 10 years is we don't have a clue. It's under pressure because of the economics of burning natural gas versus burning coal," Foote said, according to a transcript of a May 23 transportation conference. "Our challenge right now is how to work with all the parties involved — the coal mines, the utilities and us — to find a solution that makes these coal-fired plants competitive on the grid and have the ability to generate electricity ... that's competitive with natural gas."
David Zatezalo, head of the U.S. Mine Safety and Health Administration, said this week that the agency is looking to deploy technologies, including proximity detection for surface mines, seat belt detection devices and safety systems for conveyor belts, to reducing mining fatalities to zero from 2017's total of 28.
Contura Energy Inc. on May 24 reported net income of $58.3 million, or $5.66 per share, in the first quarter, compared with $31.0 million, or $2.89 per share, in the first quarter the previous year. It sold 3.8 million tons of coal in the quarter, compared with 4.3 million tons in the same quarter a year earlier.
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