Arch coal production stays down in PRB

GILLETTE (WNE) — The amount of thermal coal shipped from Arch Energy Resources, the bulk of which comes from its Powder River Basin mines, dipped further as the industry’s slow start continued through the first half of the year.

The roughly 9.7 million tons mined from Black Thunder marked the lowest production number at the mine this millennium, and its first time notching fewer than 10 million tons in a quarter, according to Mine Safety and Health Administration data.

After shipping 12.8 million tons — primarily from Black Thunder — during the first three months of the year, Arch sold 11.1 million tons in the following three months, marking a decline of more than 5 million tons when comparing April through June’s production to the same months last year, according to an Arch earnings report.

About 1 million tons of its quarterly total came from its West Elk Mine in Colorado, according to MSHA data.

The coal Arch did sell went for a negative margin, costing slightly more to produce than it was sold for. Arch officials credit the decreased demand for thermal coal to a combination of lower natural gas prices and utilities making it through winter with relatively full stockpiles of coal.

The continued downturn was expected by company officials who, after the disappointing start to the year, anticipated a strong back half of the year. Part of the unfavorable cost associated with coal sales to start the year came from the mines stripping more than they sold. That means upfront work was put into stripping and sitting on coal, minimizing the cost and labor that will go into selling it in the coming months.

Arch officials said during the earnings call that they also expect cost savings due to “reducing the headcount aggressively,” through attrition and furloughs, particularly at Black Thunder.

This story was published on July 30, 2024.