Emerald will now operate only through the second panel in district D. It will be conducting development work with minimal production during the first quarter of 2015, likely resulting in higher overall Eastern cost of coal sales per ton during that period.
The company expects Emerald to cease production near the end of 2015.
Alpha chairman Kevin Crutchfield said that while coal markets remained “extremely challenging” in the third quarter, the company continues to be proactive by thoughtfully rationalising its production base, reducing costs and maximizing efficiency.
“Our continuing cost reduction efforts in the East and other corporate actions are yielding strong results, including multi-year lows in Eastern adjusted cost of coal sales at $US61.69/t in the third quarter, allowing us to reduce our Eastern cost of coal sales guidance for 2014 by $US2 to a midpoint of $63/t,” he said.
“Although costs in the Powder River Basin were lower in the third quarter compared to the second quarter, they once again came in above our expectations, primarily due to rail underperformance, which continues to hinder shipment volumes.”
Coal revenues came in at $US920 million for the September quarter compared with $US1 billion in the previous corresponding quarter.
In October, the company’s subsidiary, AMFIRE Mining Company, entered into an asset purchase agreement with Rosebud Mining Company, to divest almost all of AMFIRE's assets in Central Pennsylvania for total consideration of some $US86 million, including $US75 million in cash and assumption of certain liabilities.
Rosebud was described as “a regional operator with synergies in both geography and transportation”
The transaction is expected to close by year end.
Total 2014 AMFIRE production through September was estimated at 1.7 million tons, including 1.2Mt of metallurgical coal.
Alpha president Paul Vining said: “While we are pleased with our operational and cost performance in the third quarter, coal pricing remains highly challenging across all regions in both domestic and export markets.
“For the third consecutive quarter, the Asian hard coking coal benchmark remained at near $US120 per metric ton. Thermal markets continue to experience soft prices, with API2 in the low $US70s per tonne - well below the break-even point for most US producers - and domestic Central Appalachia thermal declining to the low $US50s
“Given the continued price weakness in these two thermal markets, we are continuing to assess our Central Appalachian thermal production for 2015.
“Northern Appalachia has been the strongest thermal market in the third quarter on a relative basis, with prices in the mid-$US50s, despite strong competition from the Illinois Basin and softening natural gas prices.”
