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Central Appalachia quarterly coal production nears three-year high: MSHA

Houston — Coal mines in Central Appalachia saw a near-three-year high in production volumes for the second quarter, as the metallurgical and export markets continue to remain strong, according to preliminary US Mine Safety and Health Administration data.

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Despite the largest mine in Central Appalachia producing at a two-year low, mines in the region produced 20.37 million st of coal in Q2, up 1% from the 20.17 million st produced in Q1 and 0.9% from the 20.2 million st in the year-ago quarter.

It was the highest quarterly volume since 22.59 million st was produced in Q3 2015.

Combined with Q1, total CAPP coal production for the first half of 2018 is at 40.54 million st, up 4.6% from H2 2017 and 1.8% above the first half of 2017. The half-year total is the most since 41.3 million st was produced in H2 2017.

Despite the higher volumes in Q2, only 251 CAPP mines have reported production data to MSHA, compared with 281 mines in operation in the previous quarter and 258 mines in the year-ago quarter.

The Coronado Coal-owned Buchanan mine, located in Buchanan County, Virginia, produced 1.21 million st in Q2, down 11.7% from 1.37 million st produced in Q1 and 13.1% lower than the 1.39 million st in the year-ago quarter. It was the lowest quarterly volume for the low-vol metallurgical underground mine since 1.2 million st was produced in Q2 2016.

In the latest quarter, 12 mines produced coal for the first time since 2015, including one that was in operation for the first time since Q1 2004 and six that were operating for the first time ever.

The six mines produced 122,152 st of coal in Q2, led by the Gobco No. 14 surface mine, owned by Mountain Fuels Inc, and the underground Putney Darby Mine No. 1, owned by JRL Coal Inc, which produced 49,577 st and 42,743 st, respectively.

The top 15 mines in Central Appalachia all produced more than 300,000 st and combined to produce 6.64 million st in Q2, compared with only 13 mines that produced over 300,000 st in the previous quarter. The last time more than 15 mines produced 300,000 st or more was when 17 did so in Q1 2014.

Only three of the top 15 mines saw decreases from the previous quarter -- the Buchanan mine was down 11.7%; Alliance's Mine No. 4 was down 0.1%; and Arch's Mountaineer II mine was down 23.3%. Five of the top 15 producing mines saw year-on-year decreases.

ALPHA REMAINS LARGEST CAPP COAL PRODUCER

Kingsport, Tennessee-based Alpha Natural Resources remained the largest coal producer in the region for the second quarter in a row with Lexington, Kentucky-based Blackhawk Mining right behind it.

Alpha's 20 mines produced 3.52 million st in Q2, up 5.8% from 3.32 million st in the prior quarter but down 2.5% from 3.6 million st in the year-ago quarter. Alpha has been the largest CAPP coal producer in nine out of the last 12 quarters, according to the data.

The company's largest mine, Republic Energy, produced 420,531 st in Q2, up 29.5% from 324,651 st in Q1 and also up 1.9% from 412,764 st in the year-ago quarter.

Blackhawk's 26 mines produced 3.47 million st of coal in Q2, up 4.4% from 3.32 million st produced in the previous quarter and 5.1% higher than the 3.34 million st produced in the year-ago quarter. The company's American Eagle mine output jumped 24.2% to 487,458 st compared with Q1, but production was down 13.2% from 561,657 st in the year-ago quarter.

SURFACE PRODUCTION HIGHEST SINCE Q3 2015

Surface mine production in Central Appalachia was at 8.85 million st, up 8.1% from 8.19 million st produced in the prior quarter and the highest quarterly volume for surface mines since 9.51 million st in the third quarter of 2015. Surface production represented 43.5% of the total CAPP production, up from 40.6% in the previous quarter and 40.5% in Q2 2017.

Arch Coal's Coal-Mac mine was the largest surface mine with 662,053 st produced in Q2, up 8.6% from 609,482 st in the previous quarter and the most since 737,802 st in Q3 2014.

The remaining 11.52 million st was produced by underground mines, led by Buchanan, down 3.9% from 11.98 million st produced in Q1 and down 4.1% from 12 million st in the year-ago quarter.

Alpha was the largest surface producer in Q2 with its six mines producing 1.5 million st, up 15.4% from 1.31 million st in the previous quarter but down 0.5% from a year ago.

Blackhawk remained the largest underground miner with its 18 underground mines producing 2.35 million st of coal, up 4.6% from the previous quarter, but down 4% from 2.45 million st in the year-ago quarter.

--Tyler Godwin, tyler.godwin@spglobal.com

--Edited by Valarie Jackson, valarie.jackson@spglobal.com