Consol down $11M after mine idlings

CONSOL Energy blamed scale-backs in the face of softened coal markets after reporting an $11 million net loss for the September quarter compared to a net income of $167 million in the corresponding 2011 quarter.
Consol down $11M after mine idlings Consol down $11M after mine idlings Consol down $11M after mine idlings Consol down $11M after mine idlings Consol down $11M after mine idlings

Consol chief executive J Brett Harvey. Courtesy Consol Energy.

Justin Niessner

Adjusted earnings on the period were $210 million compared to $441 in the third quarter of 2011.

Consol said the loss was due to a series of planned and unplanned idlings which would also have a residual impact during the fourth quarter.

One unplanned item was the previously announced collapse of two newly installed conveyor belts that move coal from the Enlow Fork and Bailey mines to the Bailey preparation plant, all in southwestern Pennsylvania.

The incident caused a total of four longwalls to be idled for approximately three weeks, at which point one rebuilt conveyor belt was restarted.

Production from these mines was 60% of normal levels for most of the remainder of the quarter.

The company said its Q3 net income would have been $53 million higher had the conveyor belt incident not occurred.

Much lower sales from the company’s flagship Buchanan mine in Virginia also reduced Q3 profitability.

The lower level of production impaired costs per ton, causing an increase of $1.46 per ton from Q3 2011.

The company said it expectd costs per ton to decrease as its mines returned to more normal schedules.

After investing a projected $1.5 billion in coal and gas projects this year, Consol expects to end 2012 with no cash on its balance sheet and nothing drawn against its revolving credit facilities.

“The return of Bailey and Enlow Fork mines to normal production at the beginning of the fourth quarter will certainly be helpful for Consol’s earnings going forward,” Consol chairman and chief executive Brett Harvey said.

“Strengthening spot gas prices and a projected sequential increase in both coal and gas production will also be helpful.

“The steel market, though, remains challenging for all of the categories of our metallurgical coals.”

Buchanan is expected to restart the week of November 5 with a five-day work week schedule, while the Amonate mine, also in Virginia, is likely to remain idled for the remainder of 2012.

Consol’s long string of cuts and closures of late also included idling of the Blacksville and Fola mines and a one-week idling of the Robinson Run mine, all in West Virginia, on weak thermal markets.

Low-volatile and high-vol coal production dropped 43% and 30% respectively on the quarter compared to last year, with low-vol output reaching 800,000 tons and high-vol reaching 700,000t over the period.

Thermal coal production slipped as well to 10 million tons on the quarter compared to 12Mt in Q3 2011.

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