The company’s net income fell to $US3.2 million for the period, down from $37 million during the same period last year. Revenue was also affected, with a drop to $556.1 million from $582.5 million in 2005.
Positively, however, the Virginia-based operator reported an increase in produced tons sold, from 10.2 million tons in 2005 to 11.6Mt this year. This quarter’s numbers are also slightly up from first-quarter sales of 10.1Mt.
While Massey chief Don Blankenship faults loss of production resulting from Aracoma’s idling as part of its shaky performance in the quarter, he was able to put a silver lining on the situation.
“The good news is that the Aracoma longwall returned to production July 19 and is operating normally,” Blankenship said.
He said the company, looking to reduce costs, is also reviewing its operations from an economic perspective: “With the Aracoma longwall in operation again, the company is taking a fresh look at all other mining operations [and] has elected to idle four underground mining sections and to discontinue production at the Rockhouse longwall after it completes its current panel in mid-August.”
He went on to note that it will also reduce staff numbers and the training of new miners at its less profitable mines.
“Central Appalachia coal mining has been, and continues to be, under significant cost pressure,” said Blankenship.
“Labour, productivity, environmental and regulatory factors are increasingly difficult to forecast. We are disappointed that these pressures continue to impact our financial performance and we are determined to implement a variety of cost-reduction initiatives.”
Massey also reduced its guidance for anticipated 2007 shipments from 48-50Mt to 43-46Mt, estimating a lower per-ton realisation of $51-53. However, it did not adjust its guidance for average cash costs per ton of $37-40, mainly due to several planned occurrences of a positive nature.
“Costs in 2007 are likely to be favourably impacted by several factors, including a full year of production at the Aracoma longwall and the new dragline, and the idling of the higher cost mines,” the company said.
