Total coal division unit costs were improved $US1.80/t in the first quarter 2015, compared to the same quarter 2014.
Consol’s thermal coal marketing strategy continues to see success by contracting additional volumes and building a portfolio that targets power plants expected to not only survive, but to also potentially increase their consumption of coal despite a tightening regulatory environment, according to Consol CEO Nicholas DeIuliis.
“The playbook of yesterday's coal marketing era of bigger is better, does not necessarily equate to success today, and Consol has embraced this changing dynamic by concentrating our footprint and strategically partnering with the power plants that will be around for many years to come,” he said.
“Despite the prominence of shale gas growth and increasing gas demand over the years, coal's market share may be declining, but it's not going away. That said, the industry has clearly changed, and it has changed permanently. Consol will continue to benefit by strategically partnering with the must-run power plants that will survive and run even harder as they make up capacity that is scheduled to come offline.”
The Bailey Mine produced 2.9Mt in the first quarter, compared to 3.1Mt produced in the year-earlier quarter. The Enlow Fork Mine produced 2.6Mt in the first quarter, compared to 3.1Mt produced in the year-earlier quarter. The Harvey Mine produced 1.0Mt in the first quarter, compared to 0.2Mt produced in the year-earlier quarter.
Challenging geological conditions, lower recovery rates, and lower tonnage at the Enlow Fork and Harvey mines contributed to higher costs in the quarter for the Pennsylvania Operations of $42.73/t, when compared to $40.29/t in the year-earlier quarter.
Consol expects second quarter 2015 total unit costs to be modestly higher due to continuing geological challenges, as well as scheduled longwall moves, which result in lower forecasted tons.
However, the company expects the geological conditions to improve in the second half of the year as the company mines through these areas and moves into longwall panels with fewer challenges, which should result in costs improving.
The Buchanan mine continued to operate on a reduced schedule of two shifts per day and produced 1.2Mt during the first quarter, compared to 1.1Mt produced in the year-earlier quarter.
The reduced schedule allowed the Virginia operations to optimise its cost structure, which is reflected in much lower all-in unit costs during the first quarter 2015 of $42.31/t, compared to $66.41/t in the year-earlier quarter.
Better utilisation from previously completed efficiency projects, which reduce travel time to the face of the longwall, are continuing to help improve unit costs. The Buchanan mine is able to quickly ramp up to the full production capacity rate of 5.2Mt per year when market conditions warrant.
Consol expects Virginia operations total unit costs to increase to the low $50/t range due to lower forecasted quarterly tons for the remainder of the year, compared to the first quarter, and the company planning to bring back a development section to the mine late in the second quarter, or early third quarter.
The Miller Creek complex produced 0.6Mt for the first quarter, which is in-line when compared to the year-earlier quarter.
