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Met prices continue to climb as coal heads urge flexibility for the future


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Met prices continue to climb as coal heads urge flexibility for the future

Metallurgical coal prices continued to climb this week as some industry leadersurged companies to become more flexible to succeed in a new energy landscape.

This week, Quest Energy Corp CEO and Chairman Mark Jensensuggested U.S.producers would need to structure themselves in a way that allowed them toadjust production to meet flexible demand.

Speaking at the S&P Global Platts 39th Annual CoalMarketing Days Conference on Sept. 20 in Pittsburgh, Jensen said more nimbleoperations like Quest have been able to thrive despite the broader industrydownturn by focusing on quality and keeping costs down.

"We knew we weren't going to be bigger and better thaneverybody else because we didn't have the resources," he said. "We'reas big as we ever were right now."

Jensen's comments came about a week after President andCEO Colin Marshall told S&P Global Market Intelligence that his would take a similarapproach in the months and years ahead, promising a more nimble, flexiblepresence in the Powder River Basin.

"We used to make 90 million tons because we were goingto ship 90 million tons, but now we have to figure out how to make money whenit goes up and down, which means we're building in flexibility in things we'dnever contemplated before … we're finding that our costs are much more variablethan we thought that they were," Marshall said outside a conference inDenver.

Industry insiders were also some advice on how best topromote coal in the future, with Jon Davies, president of Davies Public Affairs,telling the Platts audience in Pittsburgh that the issue of clean coal is a"spin that just isn't going to work."

The rise in metallurgical coal pricing and cautious optimismabout the future came as rating agencies offered modest support for some U.S.producers, including upgrades for Foresight Energy LP and

Even as the industry enjoyed some market improvement thisweek, U.S. producers continued to face familiar challenges from competingenergy resources and the prospect of looming regulatory threats spurring asharp decline in production through the first half of the year.

In Colorado, where the outgoing president of the state'smining association blasted the local and federal government for theirhandling of the coal sector, industry advocates pushed back on the possibilityof executive environmental action.

Incoming Colorado Mining Association President Stan DempseyJr. penned a letterto the state's Gov. John Hickenlooper asking for more consideration of localcoal communities before considering an executive order promising climate changemitigation action.

"In the Delta County area, two of three coal mines areclosed and 1,000 jobs have been lost. Reductions in workforce have occurred innorthwest Colorado as well," Dempsey wrote. "These communities arecrying out for relief from the incessant regulation that is stripping theireconomies."

Adding to coal's challenges in the west, the U.S. Bureau ofLand Management announced Sept. 20 that its Greens Hollow coal leasesale in Utah has been postponed for a maximum of 45 days, after environmentalgroups filed an appeal and petition for stay.

Farther west, the future of the Gateway Pacific coal exportterminal became murkier after project opponents appealed to Washington stateregulators to expand the boundaries of a local aquatic reserve to include thearea where the project would have stood.

Back in Washington, supporters of a bill to fund strained pensions andhealthcare programs for coal miners with funding for the Abandoned Mine Landprogram took a step forward with the passage of the legislation out of committeebefore heading to the Senate floor.

In what National Mining Association spokesman Luke Popovichcalled a "sign of the times" for a struggling industry, Kentucky CoalAssociation President Bill Bissett announced his resignation from the coal advocacy group.

Future events

National Coal Council Fall Meeting: The advisory board willhold its annualfall meeting Oct. 4 and 5 at the Hilton Milwaukee City Center.

S&P Global Plattsand S&P Global Market Intelligence are owned by S&P Global Inc.