Warrior Met Coal Inc. has room to expand its operations and is putting capital into developing its metallurgical coal mines in Alabama, a company executive said.
Warrior sold about 6.5 million tons of coal and produced about 6.7 million tons in 2017, COO Jack Richardson said at the Virginia Coal and Energy Alliance conference on May 21. The company has an operational capacity to mine about 8 million tons per year but could raise that to 15 million tons.
"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," Richardson said.
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.
The company operates two metallurgical coal mines, the No. 7 and No. 4 mines in Alabama. Warrior, formed from the assets of Walter Energy Inc.'s bankruptcy reorganization, is advantaged over many other producers because its location gives it easy access to seaborne markets. Richardson said the company can get coal to Europe in about two weeks, compared to Australian producers that take about five weeks.
Richardson said market improvements have been driven by international demand from companies such as India, China and Indonesia, but he also praised the efforts of the Trump administration to roll back rules affecting coal mining. He said market indications for steel, and therefore metallurgical coal, suggest demand for metallurgical coal "should have legs" going into the future.
"Is coal making a comeback? I think we all know the answer to that," Richardson said. "All the signs in the market in the past year point to yes. … I think it's safe to say the foundation has now been laid to rebuild the nation's coal industry."
