Massey profits despite frustrating worker shortages

MASSEY Energy’s corporate strategy of having in production a high percentage of the most mineable reserves in Central Appalachia and utilising modern and well-conditioned equipment paid off for the producer during the September quarter – reporting a $US24.2 million net income. But Massey chief Don Blankenship said labour shortages leading to a widespread productivity decline had continued to frustrate management.
Massey profits despite frustrating worker shortages Massey profits despite frustrating worker shortages Massey profits despite frustrating worker shortages Massey profits despite frustrating worker shortages Massey profits despite frustrating worker shortages

Maintenance at Logan's Fork. Courtesy Massey Coal Services/Studio 19 Photography - E.M. Mazzocchi.

Angie Tomlinson

“Massey achieved record revenue per ton during the third quarter, and earned a margin per produced ton of $6.79, despite continuing company-specific and regional operational challenges," Blankenship said.

“The difficult re-start at Aracoma and the delayed start-up of the dragline hindered margin growth. In the longer term, we expect margins to expand significantly as both the company-specific and regional challenges are met.

“As productivity at the Aracoma longwall increases over the next several weeks, as the dragline operation matures, as the labour shortages abate and as several cost-cutting capital projects are completed, we expect margins per ton to increase."

During the quarter, coal revenues increased by 11% to $462.4 million and net income increased slightly on the previous year to $24.2 million.

In September, the company sold its Falcon reserves, located in Boone County, West Virginia, to a privately held company for approximately $31 million.

For the full year Massey expects shipments of about 39 million tons, average cash cost per ton of $41.75–42.25 and average sales price per ton of $48.50–49.00. Other income is projected to be in the range of $75–85 million for full year 2006, including the gain from the sale of the Falcon reserves.

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