US miner Contura Energy's met coal sales were stable in the second quarter, with higher domestic contract pricing offsetting weaker export sales as the company readies itself to bring on new low-vol and high-vol A tons.
Contura sold 3.2 million st of met coal in Q2, compared with 3.3 million st in Q1, according to an Aug. 7 quarterly report.
Sales rose from 3.06 million st in Q2 2019, despite an interruption to mining this April for up to four weeks due to the coronavirus pandemic.
The company declined to publish coal production and shipment guidance for the year, citing uncertainty in global steel markets.
The group sold 6.5 million st in the first half, with stable operations expected for the second half, CFO Andy Eidson told analysts on a call.
Contura, which is the biggest US coking coal miner, followed other US miners in reporting positive met coal sales cash margins in Q2, albeit narrower than prior quarters as benchmark coking coal spot prices touched multi-year lows.
Miner Ramaco, which sold a greater proportion of its met coal in the North American contract-based market, saw Q2 sales averaging at $91/st, with cash costs at $74/st.
Contura's average Central Appalachian met coal sales prices fell 12% to $81.61/st and cost of sales rose slightly to $74.41/st, compared with Q1, despite increased costs for idling.
"While our domestic business continues to benefit from annual fixed price contracts, the lower second-quarter realizations were primarily driven by our export business, where prices declined as a result of COVID-19 related demand reduction," the company, based in Bristol, Tennessee, said.
Furlough
"Even with a weeks-long furlough in April, our team increased our cash quarter-over-quarter, lowered our overall debt, and kept costs roughly on par with our stellar first-quarter cost performance," CEO David Stetson said in the statement.
"As we look to the back half of 2020, we believe these steps to streamline our company will serve us well despite any additional market fluctuations that may occur."
Contura is watching the global steel markets closely, with Stetson citing PMI data recovery in key markets such as Brazil, the US and Europe.
There are a few signs of improvements in the steel market compared with a few months ago, and steel prices around the work are increasing, Contura's SVP of met coal sales, Dan Horn, told analysts on the call.
Development at new metallurgical coal mines remained on schedule, said Jason Whitehead, Contura's chief operating officer, who outlined three major mine projects.
The low vol Road Fork No. 52 mine added a second production section in mid-June, with plans to move to three sections by early 2021, he said.
The high vol Lynn Branch mine completed initial underground cuts, and expects to be in production by the fourth quarter, while the Black Eagle high vol A project, is progressing to the main reserve block, and is anticipated to be in production by next year.
Contura in June completed the acquisition of the Feats Loadout facility served by the CSX railroad, based in west Virginia.
The facility adds transportation optionality to its existing network, with potential for greater low vol HCC sales through Dominion Terminal Associates terminal, it said.
