Low coal prices and high operational costs at the mine are causing the company to consider reducing production by 10 million tons per annum beginning in 2015, consistent with its strategy of matching production to demand.

“Both domestic and international coal pricing is currently depressed due to overcapacity that should work through as supply comes into balance with current demand,” Cloud Peak president and chief executive officer Colin Marshall said.

“While I believe Cloud Peak Energy is well-placed to benefit from expected future price increases, we are conscious that we need to be prudent and manage costs and capital carefully to weather this extended period of low prices.”

Cloud Peak reported the consideration in its second-quarter results, which were substantially lower than the same quarter last year, just scraping into profit.

The company reported a net income of $4.7 million for Q2 2013 compared to $33.7 million for Q2 2012.

Adjusted net loss earnings per share were 2c for the second quarter.

Cloud Peak said its total revenue declined 3.8% for the quarter to $330 million, driven by a 19.6% decline in revenues from its logistics services business due to lower international prices for seaborne delivered coal.

Adjusted earnings before interest, tax, depreciation and amortization was impacted by higher costs due to the timing of several large planned maintenance outages completed during the quarter, down from $65.6 million in Q2 2012 to $37.3 million in Q2 2013.

“After successfully completing several large scheduled maintenance outages in the second quarter, we anticipate higher shipment rates in the second half to meet our contracted positions,” Marshall said.

“With higher shipments we expect to be able to run at lower costs per ton in the second half of the year thereby increasing our profitability compared to our year-to-date performance.”

Tons sold from the company’s three operational mines matched last year’s 20.1Mt but were sold at a slightly lower price of $13.05 due to market conditions, which, when combined with maintenance jobs and a number of other logistical factors, resulted in a higher cost per ton.

During the quarter the Bureau of Indian Affairs approved the company’s exploration and option agreements with the Crow Tribe and work is underway to start the exploration drilling program that will allow mine plans to be developed.

Cloud Peak said it was in discussions with Ambre Energy, its 50% partner in the Decker mine, regarding the potential sale of Cloud Peak’s 50% holding in the project.

The timing of any closing was uncertain and anticipated to depend on Ambre’s ability to finance the cash collateral necessary to replace Cloud Peak’s outstanding reclamation and lease bonds for the mine, the company said.

Cloud Peak exported approximately 1.2Mt of coal to Asia in Q2 2013 compared to 1Mt in the second quarter of 2012.

For the full year, the company hopes to increase its expected Asian exports to approximately 5Mt.

“It was encouraging that the US Army Corp of Engineers resisted the strong political and non-governmental organization pressure to conduct a programmatic environmental impact assessment of the proposed West Coast port projects,” the company said in its results announcement.

“We are optimistic that once completed the EIS for SSA Marine’s Gateway Pacific terminal, where we have an option for up to 16 million tons of capacity, will allow legitimate concerns to be mitigated so the project can deliver considerable economic benefits to the US, allow US coal to compete internationally and provide reliable energy supply to our customers in South Korea, Taiwan and Japan.

Marshall added: “While the first half of the year was slow due to reduced shipments, we now believe we are well-placed to increase shipments in the second half to meet our guidance range.”