Corsa Coal sees upturn in met coal in 2016
Published by Jonathan Rowland,
Editor
World Coal,
US coal company, Corsa Coal, is beginning to see signs of life in the metallurgical coal and steel markets, according to its latest results statement, covering the full year and 4Q15 period.
“We are beginning to see signs of improvement in the metallurgical coal and steel markets with domestic [US] steel prices recovering and spot seaborne metallurgical coal prices rising in early 2016,” said George Dethlefsen, Corsa’s CEO.
“We believe that supply cuts will serve as a catalyst for improved metallurgical coal pricing 2016 and expect to see the domestic market recover faster than the seaborne market, given the extreme financial distress of metallurgical coal producers and the potential for significant supply disruption,” Dethlefsen continued.
A number of large US metallurgical coal producers – including Alpha Natural Resources and Arch Coal – have entered Chapter 11 bankruptcy protection over the last 12 months. This has created a situation where further supply cuts are likely in the near future, while also leaving producers highly vulnerable to supply disruptions as mining companies defer CAPEX and fail to invest to reserves or permitting efforts.
Corsa’s coal production bases are in geographical proximity to over 50% of US coke production capacity, the company said, as well as a short rail distance and multiple options to access export terminals at Baltimore. This location boosts “Corsa’s ability to take advantage of any recoveries in coal pricing,” the company said.
Corsa expects metallurgical coal sales of 600 000 – 700 000 short t from its Northern Appalachian (NAPP) mines. The NAPP operations cut costs per short ton by over 20% from US$84.84 to US$67.68 last year. This more than offset a 17% decline in average sales price per short ton, which dropped from US$92.39 to US$77.11.
Further cost reductions are expected in 2016 as a result of sealing its idled mines and other inactive deep mining operations to reduce idle mine costs. These stood at US$2.94 million in 2015 but will “dramatically decline in 2016 as a result of these mines being sealed”.
Edited by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/coal/01042016/corsa-coaa-sees-upturn-in-metallurgical-coal-in-2016-499/
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