Arch Coal posted a loss of US$2.1 million dollars in the second quarter ended June 30, compared with net income of $2.5 million for the same period last year.
Its six monthly figures are even worse, with Arch recording a net loss of $17.2 million, compared with net income of $3.9 million in the previous year.
The poor results have, however, been accompanied by an $18.5 million reduction in total debt in the June quarter, one of Arch's top financial priorities. Further debt reduction is expected in the second half.
Other than the idled West Elk mine in Colorado, the company said nearly all its other mines had performed well.
Steven Leer, Arch Coal's president and chief executive officer, said he expected the West Elk mine to be operating at normal productivity levels with a month.
"Black Thunder continues to produce and ship coal at record levels, and in the east the Mingo Logan and Hobet 21 mining complexes had strong quarters. Furthermore, coal prices have finally begun to strengthen after an extended slump. That upward movement is particularly important since we are now entering the principal coal-buying season when utilities will make commitments for coal to be supplied in 2001," Leer said.
Revenues for the quarter totalled $340 million and coal sales totalled 25.2 million tonnes, compared to $391 million and 27.4Mt in the second quarter of 1999. The company said changes in revenues were due in part to West Elk's idling as well as the company's strategic decision to increase its emphasis on lower-cost and lower-priced production in the Powder River Basin of Wyoming.
Leer also said the company was aggressively pursuing cost savings at every operation.
"We recently initiated an effort to cut 6% from our annual operating costs by targeting the one, two or three processes at each mine that have the potential to deliver the greatest savings," Leer said.
"We have made a good start and fully expect this effort to deliver significant benefits in the future."
Meanwhile, the US energy market is beginning to show signs of growth. Leer said the price of natural gas had roughly doubled since last year and electric generation had risen 4.8%. He said prices in the Powder River Basin had risen 10% since May.
Arch was almost completely sold out for calendar 2000 with around 20% of projected production for next year currently uncommitted. The company said the strengthening price picture should enable it to achieve a higher price for tonnage for delivery in 2001.
"It is our firm belief that low-sulfur coal is the best, lowest-cost and most environmentally sound option for meeting America's future electricity needs," Leer said.
