Alliance CEO Offers Encouragement
“We’ve pretty much reached the bottom on the domestic coal side, and opportunities going forward are going to be more positive with each passing month,” he declared.
Alliance is doing its part to balance that equation by pulling back a bit, similar to what Foresight Energy and Hallador Energy/Sunrise Coal have done, on production at some high-sulphur coal mines in the Illinois Basin (IB). Alliance has additional capacity, for instance, at its Gibson County Coal underground mining complex near Princeton in Gibson County, Indiana.
While Craft sees brighter days for his company and coal in general in the U.S., he made it clear, however, not everyone will prosper. Already in 2015, Patriot Coal and Walter Energy have filed for federal bankruptcy protection in the teeth of the toughest coal market in years, and other companies may soon follow.
Though it continues to perform well above industry norms in virtually every category, Alliance has not gone unscathed by the chaos. “We have been caught up in the downdraft of some of the weaker coal stocks in the past six months,” Craft acknowledged. “Most of our coal industry counterparts are under extreme duress due to high leverage, significant exposure to the metallurgical coal markets, or both. Neither of these attributes apply to us.”
Craft acknowledged the industry’s many challenges, but decried “doomsday reporting” that attempts to portray the coal industry as dead and buried. That is far from the truth, he said. Although natural gas eclipsed coal for the first time earlier this year as the top electric generation fuel in the U.S., coal reclaimed the mantle in June, and Craft predicted it continue to do so for the rest of this year.
“For the next five to 10 years, we’re going to have a very stable domestic utility market,” he said.
Second-quarter production was about 9.5 million tons, down a bit quarter-overquarter. But for the first six months of 2015, Alliance produced and sold a record 20 million tons, slightly above production and sales volumes compared to 2014.