Walter commits future output

FLORIDA producer Walter Industries said Wednesday its Tuscaloosa Resources subsidiary had committed 1.2 million tons of coal – half of its annual production capacity – for 2009-2011 for about $100 per short ton FOB.
Walter commits future output Walter commits future output Walter commits future output Walter commits future output Walter commits future output

Jim Walter Resources Mine No. 4.

Donna Schmidt

The company’s Alabama outfit has an annual production capacity of 800,000t through surface mining.

“We acquired TRI as part of a strategy to pursue bolt-on acquisitions of coal companies with geographic proximity to our core metallurgical coal assets in Alabama," Jim Walter Resources chief George Richmond said.

“This three-year commitment will add significantly to TRI's operating income and cash flows."

Last month, the company noted in its quarterly report it anticipated a very strong year thanks to metallurgical coal pricing at an all-time high.

It settled 2 million metric tons of output from its 2008-09 tonnage in excess of $315 per metric ton with the expectation of settling another 1.1Mt at a similar price in the near future.

It also has another 600,000t that will be available in the second quarter of next year that will be priced later this year.

“Continuing supply constraints and robust demand in the international steel market have set the stage for ongoing strength in metallurgical coal pricing beyond the 2008-09 contract year,” said Richmond.

“With about 1 million tons of incremental production capacity scheduled to begin coming online in the second half of 2008, and approximately 2 million additional tons coming online in the first half of 2009, we are very well positioned to take advantage of the strong market for our coal."

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