Patriot's portrait continues improvement

DESPITE second-quarter challenges including two longwall moves, the closure of an operation and an increase in regulatory activities, Patriot Coal reported a revenue increase on higher sales prices.
Patriot's portrait continues improvement Patriot's portrait continues improvement Patriot's portrait continues improvement Patriot's portrait continues improvement Patriot's portrait continues improvement

A continuous miner underground. Courtesy Patriot Coal.

Donna Schmidt

For the quarter ended June 30, the Missouri-based producer reported revenues of $US539 million, versus $507 million in second quarter 2009.

Sales totaled 8.1 million tons, made up of 6.2Mt thermal and 1.9Mt metallurgical. Year-on-year, this was slightly lower than the 8.3Mt reported in 2009, which included 7.3Mt thermal and 1Mt met.

While the moves, mine closure and changing regulations environment all played a role in the trip, purchased coal and coal sold from inventory all brought sales volumes up to near last year’s levels.

“Although heightened regulatory oversight is impacting results, Patriot is cooperating with the agencies to improve our already strong safety program," chief executive officer Richard Whiting said.

"Looking forward, we are encouraged by improving thermal coal markets. And as global economies improve, we expect the benefits of higher metallurgical coal prices we experienced during the quarter to continue."

One event which made a mark on the second quarter was a major roof fall at the Harris operation in West Virginia; Patriot ultimately decided to close the mine.

“The mine was near the end of its mine life and had been expected to remain in production through mid-2011,” adding that safety conditions led to the decision as roof conditions continued to deteriorate post-fall.

Overall, the producer said the second quarter was a good one for safety, with seven of its operations recognized by the West Virginia Office of Miners’ Health, Safety and Training for 2009 calendar year performances.

In addition, the Samples highwall miner operation, part of its Paint Creek complex, earned the 2009 District 4 Pacesetter Award from the US Mine Safety and Health Administration.

Looking ahead, Whiting said Patriot is holding on to its previously-announced met sales guidance of 7.5Mt.

“Production from our Black Oak mine, as well as incremental Panther production sold as met, are expected to offset the loss of Harris tons," he said.

"We intend to open the Black Oak mine this year, installing the initial continuous miner unit by the end of the third quarter. A second unit is expected to be operational in early 2011."

The company also noted that it has several organic met coal projects in various development stages which use its current infrastructure, including a planned mine in the Peerless seam at the Kanawha Eagle complex, several projects which will feed into the Rocklick complex, and progress with the Washington mine in Logan County.

“As we move through 2011, we will move forward on these projects in a disciplined manner," Whiting said.

For full-year 2010, Patriot’s sales volumes are expected to be between 32 and 34Mt, with sales of 16 to 18Mt to come from the July-December period. This estimate includes metallurgical coal sales of about 7.5Mt.

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