In a public guidance update relating to its expectations for 2010 and 2011 results, the Appalachian-based producer said it now expects to ship approximately 39 million tons at an average $US71 per ton. The average cash cost of shipped tons is anticipated to be $60/t.
"Our operations have continued to struggle since April," Massey chairman Don Blankenship said, referring to the April 5 explosion at the UBB mine in Raleigh County, West Virginia that killed 29 workers.
"As we have noted earlier, increasingly stringent enforcement actions by MSHA across our operations and throughout the central Appalachian region have resulted in lost shifts and loss of productivity.”
The company noted that it had idled its highly productive Revolution longwall in June for a planned panel move, but the operation is still down pending approval of its ventilation plan.
“As a result of these and other factors, we now expect our third-quarter shipments to approximate 10 million tons and we expect to report an operating loss for the quarter," he said.
Massey remains confident, Blankenship stressed, that it will realize operational improvements in going forward.
"As the Upper Big Branch investigation winds down, we have refocused management time and attention on our ongoing operations, and we are initiating actions to improve productivity and re-establish operating consistency in all our mines,” he said.
“In addition, our early negotiations with metallurgical coal customers give us reason to expect pricing in 2011 will be favorable to what we have realized in 2010. Our guidance for 2011 remains unchanged."
Several operational enhancements are planned by the producer over the next several weeks, including the restart of the Revolution longwall as well as recommencement of work at the Sprouse Creek processing plant.
Massey’s new Zigmond processing plant is also scheduled to come online, and production at the Laurel Creek property is about to begin.
Spotlight on Massey’s improvements
In its update, the company said Revolution is expected to restart production in the fourth quarter and is budgeted to produce 1.3 million tons annually.
Sprouse Creek, under the Rawl Sales resource group umbrella, is now refurbished and modernized. Now ready to restart, the facility will process metallurgical coal mined at the Round Bottom highwall mine and the Long Pole deep mine.
The Zigmond processing plant – the replacement for the Bandmill plant which was destroyed by fire in August 2009 – has been designed to process 1200t of coal per hour. Once online, it will service multiple mines, including the Aracoma deep mine and the Hernshaw, Cedar Grove and Highland surface mines.
Finally, Laurel Creek will also be seeing progress in the short-term future. The property was acquired as part of a reserve trade with Foundation Coal (now Alpha Natural Resources) in July 2009.
Massey said its immediate plans for the mine include a single section underground operation with a production budget of 375,000tpa from the Coalburg thermal seam. Mined coal will be processed and shipped through its Delbarton processing plant.
Production at Laurel Creek is expected to begin late in the fourth quarter of 2010 or early next year.
