Alliance Reports Record Production

Two underground mines—one new, the other newly acquired—helped drive Alliance Resource Partners to record coal production and sales in the third quarter, and the company’s president and CEO, Joe Craft, is forecasting coal market improvement for the U.S. in the second half of 2013.

Output was up by almost 500,000 tons in the third quarter at the new Tunnel Ridge longwall mine in Pennsylvania, while Onton No. 9, in western Kentucky, also showed gains, Craft said in a conference call.

For the quarter, Alliance produced 9 million tons and sold more than 8.9 mil-lion tons at its mines in the Illinois Basin, Northern Appalachia and Central Appalachia, representing increases of 17.7% and 7%, respectively, over the third quarter of 2011. Craft said Alliance expects to produce 34.4 million to 34.9 million tons in 2012.

The earnings picture could have been even brighter, however, if the Pontiki underground mine in eastern Kentucky had not been idled on August 29. The company closed Pontiki after the federal Mine Safety and Health Administration cited Alliance for the failure of a beltline between two coal stacking tubes. The prolonged shutdown—Pontiki still was not back in operation by the end of October—cost the company an estimated $24.1 million in losses and charges in the latest quarter.

Craft said repairs at Pontiki were expected to begin “shortly” and be com-pleted by the end of the year, with the goal of restarting the mine. He cautioned that the market outlook for Pontiki beyond 2013 “is uncertain and there are significant risks about long-term viability of the mine.”

There are no such worries about Tunnel Ridge, Alliance’s newest major steam coal producer. The mine will con-tinue to ramp up to 6.2 million tons in 2013 and 6.5 million to 6.8 million tons in 2014.

Craft predicted the coal burn will improve in 2013, “assuming continued strength in gas prices and normal weath-er patterns.” The timing of the improve-ments, he added, “will depend on the strength of economic activity both domestically and abroad.”

As featured in Womp 2012 Vol 11 -