Consol's earnings up 155%; Enlow Fork breaks 10 million tonnes

Consol Energy’s earnings almost doubled in the final quarter as its Enlow Fork Mine broke the 10 million tonne barrier.

Staff Reporter

The leading producer of bituminous coal in the United States, Consol Energy, has reported almost doubled earnings in the fourth quarter to June 2000.

Meanwhile, Consol's Enlow Fork Mine in Greene County became the first underground mine in the US to produce more than 10.2 million tonnes of coal in a year. The mine produces steam coal for electricity generation, utilising two longwalls and four continuous mining systems.

Earlier, Enlow Fork set a new monthly record for underground bituminous coal mines in the United States with its production of 1.1 million clean tonnes in June.

Consol's earnings of US$36.8 million for the fourth quarter were 155% above the net income of $14.4 million reported in the same quarter a year ago.

"We ended the year on a very strong note," said . Brett Harvey, president and chief executive officer. "The results for the fourth quarter reflect strong operating performance at our mines, the expansion of our coalbed methane gas business and our aggressive cost reduction programs."

Harvey said productivity at Consol mines averaged 47.7 tonnes per man-day for the quarter, up 16.5% from a year ago. Margins on coal were $4.08 per tonne, versus $3.23 for the same period a year ago.

Company-produced coal sales were 18.4 million tonnes, up slightly from 18.1 million tonnes in the year-ago quarter. The company said supply and demand were in relative balance in most of its main market areas. Average realised price received for coal was 23.40 per tonne, versus $24.93 per tonne for the same period a year ago, primarily the result of lower contract sales prices.

"In the last two quarters of the fiscal year, we produced margins for coal over $4.06 per tonne, despite a decline in averaged realised prices," said Harvey. "Employees are focused on reducing costs and improving productivity. Their efforts helped overcome the decline in realisation in the period to period comparison."

Costs per tonne of coal produced were improved $2.39, falling to $19.31 per tonne for the quarter just ended compared with $21.70 per tonne for the same quarter a year ago.

Employees on June 30 totalled 6,426, down 16% from 1999 and reflecting the closure of seven mines in Indiana County.

"We have spent the past year in activities that have recast this company," Harvey said. "We have significantly reduced Consol Energy's cost base, we have drawn down our coal inventories, and we have diversified our portfolio of energy products. We are on track to do what we said we would do."

Harvey continued, "In the next year, we expect to further reduce procurement costs. Our goal is to make Consol Energy a leading energy company. To further enhance efficiency, we have begun a pilot program to test an Enterprise Resource Planning system. We anticipate that a full system can be implemented over the next three years if the program is successful."

"While the coal prices we realised were down versus a year ago, spot prices and short-term contract prices for our coal have clearly improved since the third quarter," Harvey said. "With coal prices strengthening and with gas prices forecast to remain at high levels, we expect to achieve our goal of 10 to 15% growth in earnings in FY01."

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