Steel Products

CRU: Two Metallurgical Coal Miners to Produce Less at Higher Cost

October 6, 2023

Because of a series of problems encountered in Australia and the United States, Coronado and Arch have both reduced their coking coal output guidance. They also warned of higher costs.

Coronado Global Resources now forecasts production between 16.2 Mt and 16.4 Mt this year, compared with a previous range of 16.8 Mt and 17.2 Mt.

The downward revision is partly due to a rock intrusion in the coal seam at Buchanan mine (Virginia, US) which slowed production rates and impacted yield. Those adverse conditions have been addressed and operations are returning to normal, the Australian company said.

Describing such obstacles as not uncommon, Coronado says it will endeavour to recover the lost tonnes this and next quarter.

At Curragh (Queensland, Australia) a mechanical failure occurred in the propel unit of a dragline last month. Repairs are expected to be completed by the end of October, the Brisbane-headquartered company said.

Mine production will be impacted because of resulting delays in moving waste. “Coronado is revising its plans for the balance of 2023 and full-year 2024 to mitigate as much as possible the impact from these dragline repairs,” it said.

The company also told the financial markets it now anticipates average mining costs to be between US$97 and US$102 per metric ton sold, up from the previous guidance of US$84 and US$87 per metric ton sold due to lower production, reduced sales volumes, and inflation in the US and Australia.

On market prices, Coronado Global Resources said: “Based on the upward index trends, the company expects to see further support for increasing its pricing for metallurgical coal for the remainder of 2023 and into 2024.”

In the US, Arch Resources has lowered expected coking coal sales volumes to between 8.6 million tons and 8.9 million tons at an average cash cost of US$88 /ton to US$91 /ton. That contrasts with a previous 8.9 million tons and 9.7 million tons, and US$79 /ton to US$89 /ton.

The St Louis-headquartered company blames mining challenges at its new Leer South mine, West Virginia, for the revision.

“While we remain enthusiastic about Leer South’s long-term outlook, the conditions in the first longwall district … continue to constrain advance rates,” added CEO and president Paul Lang. “In light of these conditions, we are moderating our volume and cost expectations for the balance of the year, even as we continue to benefit from a strengthening coking coal price environment.”

Learn more about CRU’s services at www.crugroup.com