Corsa Coal Corp. sees growth continuing through 2018 based on strong global metallurgical coal demand, according to guidance offered Dec. 14.
The coal producer released sales guidance for the next calendar year of 2.1 million tons to 2.8 million tons, a jump from the higher end of the range of projected 2017 totals.
Corsa reported a third-quarter net income of $6.8 million. At the time, CEO George Dethlefsen said the coal producer planned on selling 1.7 million tons of metallurgical coal in 2017 and expected to double its production over the next two years.
Dethlefsen said, "2017 has been a year of tremendous growth and record profitability for Corsa, driven by strong volume growth across all of our metallurgical segments as well as a healthy pricing environment."
For 2018, the company projects 81% of its sales to come from exports at the midpoint, compared to 19% from domestic sales at the midpoint. Corsa predicts a cash production cost per ton sold between $70 per ton and $74 per ton for its Northern Appalachia division and between $58 per ton and $62 per ton for its Central Appalachia division.
"The global supply and demand fundamentals for metallurgical coal remain very positive. The steel industry is enjoying high levels of production growth and profitability, and on the supply side, premium quality metallurgical coal remains in a supply deficit," Dethlefsen said. "We have built a diversified sales order book with exposure to Pacific basin prices, U.S. East Coast pricing and fixed prices domestically. With metallurgical coal prices at profitable levels and our growth story continuing to move forward, Corsa is well positioned for another outstanding year ahead."
Dethlefsen cited room for expected growth at the company's Acosta and Horning mines.
"In 2018, we are guiding towards metallurgical coal production growth of over 60% and an overall increase in premium low volatile metallurgical coal sales of over 50% as compared to 2017 forecasted levels," he said.
He noted that priorities for allocating free cash flow include metallurgical coal production growth and investments in mining equipment, while capital expenditures for 2018 will be focused on production increases at existing mines, new mine development and maintenance.
The president of Xcoal Energy & Resources also recently anticipated a strong 2018 demand for both metallurgical and thermal coal, though stronger global demand for thermal may be short-term.
