August 10, 2020 Read More →

U.S. miner Contura Energy looks to accelerate exit from thermal coal market

S&P Global Market Intelligence ($):

Contura Energy Inc. is speeding up the exit of its thermal coal operations to focus on metallurgical coal as the COVID-19 pandemic continues to impact the broader coal sector.

The company recorded a second-quarter net loss of $238.3 million, or a loss of $13.02 per share, down year over year from a net profit of $24.3 million, or $1.25 per share. The company also noted a noncash asset impairment charge of $162 million. Contura, which completed its exit of the Powder River Basin earlier this year, continues to streamline operations and focus on coal used by steelmakers rather than power generators.

“We recognize that the world is transitioning toward an economy that relies less on fossil fuels for power generation, and we therefore have accelerated our strategic exit from thermal coal mining,” CEO David Stetson said during an Aug. 7 earnings call. “To put a finer point on our strategic direction for the next couple of years, I expect our portfolio optimization initiatives … will make us the leading pure-play met coal company by the end of 2022.”

Stetson said the transition is well underway and that once the company’s portfolio is optimized, Contura expects to be able to ship up to 14 million tons of metallurgical coal annually, with less than 1 million tons of thermal coal shipments per year.

Earlier in the year, the company announced it was shortening supply agreements for coal from its Cumberland mine and would not invest in a new impoundment project at the site. Contura will continue to market the Pennsylvania thermal coal mine for sale until the end of 2022, when its customer contracts expire, and will cease production if it does not find a buyer.

The company also said it plans to idle its Kielty mine and the Delbarton prep plant in West Virginia due to uneconomic pricing and cost structures. The mine is expected to cease production in the next six weeks. At the same time, the company has made progress on three of its new metallurgical coal mining operations, Stetson noted.

[Taylor Kuykendall]

More ($): Contura accelerates exit from thermal coal due to global pivot from fossil fuels

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