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Arch Coal expects lower Q4 results owing to reduced shipments, output

Arch Coal expects lower Q4 results owing to reduced shipments, output

Photo by Bloomberg

22nd January 2014

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – US coal producer Arch Coal this week said it expected that lower-than-planned shipments in the Powder River basin (PRB) and reduced production levels at the Mountain Laurel complex, in Appalachia, would impact on its fourth-quarter financial results.

In the PRB, Arch said shipment levels fell by more than 15% from third-quarter levels owing to rail service issues on the joint line. Arch pointed out that shipments for the three months ended December 31 were impacted as its current mix of sales contracts were skewed more heavily toward customers using the rail operator with the majority of the shortfall.

Arch also noted that this shipment shortfall, predictably, increased fourth-quarter unit costs in the region. Further, the lower-than-expected shipments in the fourth quarter caused thermal volumes for 2013 to be below the company's previous expectations.

"Although rail disruptions impacted our PRB operations in the fourth quarter, we would expect to make up a majority of those shipments during 2014 as rail service improves throughout the year," Arch president and CEO John Eaves said on Tuesday.

Arch previously reported that it had encountered challenging geologic conditions in the current longwall panel at the Mountain Laurel complex. Owing to these conditions, output at the mine decreased by 40% quarter-on-quarter and as a result, the company's full-year 2013 metallurgical coal sales volumes were slightly below the low-end of its previous expectations.

Meanwhile, earlier this month, Arch said its eastern US operations president Charles Snavely would retire following a 35-year career in the coal industry. Gary Bennett would succeed Snavely as president of eastern operations taking up responsibility for all aspects of Arch's eastern subsidiary operations as well as the eastern engineering group.

Both Bennett and Snavely would report to Arch's senior VP of operations Kenneth Cochran.

Edited by Creamer Media Reporter

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