A ship is docked at Norfolk Southern Corp.'s Lamberts Point coal terminal in Norfolk, Va. International demand helped boost coal production in Central Appalachia in the fourth quarter of 2017 year over year. Source: Associated Press |
Production at the top coal mines in Central Appalachia rose 9.2% year over year in the fourth quarter of 2017, driven in part by strong international demand for metallurgical coal.
While the strength of the international market continues to provide short-term optimism for the industry, long-term projections do not appear as positive for Appalachian coal. In its "Annual Energy Outlook 2018" released Feb. 6, the U.S. Energy Information Administration projected a 58 million-ton decline for Appalachian coal production between 2017 and 2050 if improvement in known energy technologies continues and current laws and regulations remain unchanged.
Steve Piper, director of energy research with S&P Global Market Intelligence, said a predicted surge in natural gas production could threaten the recent increase in demand that U.S. coal producers have enjoyed. Central Appalachia producers could be somewhat insulated because many of the remaining mines in the region have power plant customers nearby and would be less affected by low gas prices, he said.
According to data compiled by S&P Global Market Intelligence, the top 25 Central Appalachia mines produced 8.7 million tons of coal in the recent quarter, a slight increase from the 8.4 million tons produced by the same mines in the previous period.

Alpha Natural Resources Inc.'s Workman Creek surface mine saw a 140.7% increase in 2017 and a more than threefold increase in fourth-quarter 2017 output year over year. The coal producer expects to sell between 13 million and 14.6 million tons of coal in 2018, with a modest increase in focus on metallurgical coal over thermal.
CEO David Stetson said Alpha has the flexibility to scale up or down as demand warrants for metallurgical production.
Contura Energy Inc.'s Deep 41 mine saw a slight decline in fourth-quarter 2017 production year over year. The coal producer said it would be focusing on its Central and Northern Appalachian assets after selling its Powder River Basin mines to Blackjewel LLC in December 2017.
Alliance Resource Partners LP's No. 4 mine was down 3.3% in the fourth quarter of 2017 compared to the previous year but saw a 20.8% increase in full-year production. The coal producer reported an adjusted net income of $74.2 million in the recent quarter, a 38% drop year over year, though Alliance increased its cash distribution in the fourth quarter.
The highest-producing mine in the region, Coronado Coal LLC's Buchanan No. 1, also saw a fourth-quarter 2017 decline but a full-year increase in output. The producer's other major mines in the region saw year-over-year upticks in the fourth quarter and the full year.
Arch Coal Inc.'s Central Appalachia mines all increased production year over year in the fourth quarter. A company executive recently said the share of metallurgical coal in West Virginia output has been increasing and Arch is focused on finding ways to continue to invest in the state.

