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Researched by Industrial Info Resources (Sugar Land, Texas)--Strong demand from abroad for metallurgical coal and a growing export market for thermal coal are spurring increased capital projects and mergers and acquisition (M&A) activity in the U.S. coal sector. Coal and gas producer CONSOL Energy Incorporated (NYSE:CNX) (Canonsburg, Pennsylvania) has pointed to growth in coal export markets as being at the root of major capital projects, while the strong coal market paved the way for Arch Coal Incorporated's (NYSE:ACI) (St. Louis, Missouri) acquisition of International Coal Group and is also driving capital spending for the company.
In a press release issued last week, CONSOL Chairman and CEO J. Brett Harvey said: "Strategically, CONSOL Energy is participating fully in the growth of global coal markets. In 2011, we plan to export 10 million tons, which should generate over $1 billion in revenue." The company exported approximately 6.8 million tons of coal in 2010.
"In the second quarter," said Harvey, "our Baltimore Terminal loaded a near-record 41 vessels and shipped 3.4 million tons of coal. To accommodate future growth, we are expanding our terminal, we are developing the BMX Mine in the Pittsburgh seam, and we are re-starting our Amonate Mining Complex. All three of these coal projects are driven by increased worldwide coal demand." The company's BMX mine will produce an estimated 5 million additional tons of coal per year for the company. The estimated $100 million mine expansion is part of a larger $500 million series of expansions planned for CONSOL's Bailey and Enlow Fork mines.
Arch Coal's $3.4 billion acquisition of International Coal Group (ICG) earlier this year boosted the company into being one of the world's top 10 met coal producers. In a conference call last week, Arch Coal Chairman and CEO Steven Leer discussed the strengthening of both global and domestic steel markets and the subsequent increased demand for met coal. "Steel utilization remains high enough to support increased met exports," said Leer. "Global crude utilization reached 83% in June, on par with levels achieved during 2008, and the U.S. steel utilization now stands at 75% of total capacity. About two-thirds of U.S. coal exports will serve the met market, but one-third, or roughly 35 million tons, will move into the global thermal trade, which we believe is growing as well."
While the company's ICG acquisition boosted its metallurgical coal production, Arch has capital spending plans to boost production even more. Leer said: "Our goal is '15 by 15'--that is, to grow our met coal volume by at least 15 million tons by 2015, and we are working towards that goal with the ongoing development of the Tygart 1 mine. We have also begun the engineering and permitting of additional met reserves. Second, we have also started to focus on and then realizing the full potential of our thermal volumes."
The Tygart 1 mine is a grassroot underground coal mine that was planned by ICG. Ground has been broken on the 3.5 million-ton-per-year mine, and a 1,300-ton-per-hour prep plant will be built as well. Initial production from the mine is expected by the end of the year, but construction/ramping up will continue through 2014.
While the fate of coal-fired power generation in the U.S. remains uncertain, a restored steel market both domestically and abroad, and increasing thermal coal exports are providing strong incentives for U.S. coal producers to increase production, resulting in strong capital project spending.
For further discussion of the strengthening metallurgical coal markets, see July 27, 2011, article - Increasing Coal Exports Drive Patriot Coal's Metallurgical Coal Mine Expansion.
Industrial Info's Mining Tracker provides comprehensive industry intelligence on the Mining Industry worldwide, with an emphasis on plant locations, key management contacts and major capital and maintenance spending opportunities in an easy-to-access online database solution.
View Project Report - 300022294 300028496 024001075 024000268
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
In a press release issued last week, CONSOL Chairman and CEO J. Brett Harvey said: "Strategically, CONSOL Energy is participating fully in the growth of global coal markets. In 2011, we plan to export 10 million tons, which should generate over $1 billion in revenue." The company exported approximately 6.8 million tons of coal in 2010.
"In the second quarter," said Harvey, "our Baltimore Terminal loaded a near-record 41 vessels and shipped 3.4 million tons of coal. To accommodate future growth, we are expanding our terminal, we are developing the BMX Mine in the Pittsburgh seam, and we are re-starting our Amonate Mining Complex. All three of these coal projects are driven by increased worldwide coal demand." The company's BMX mine will produce an estimated 5 million additional tons of coal per year for the company. The estimated $100 million mine expansion is part of a larger $500 million series of expansions planned for CONSOL's Bailey and Enlow Fork mines.
Arch Coal's $3.4 billion acquisition of International Coal Group (ICG) earlier this year boosted the company into being one of the world's top 10 met coal producers. In a conference call last week, Arch Coal Chairman and CEO Steven Leer discussed the strengthening of both global and domestic steel markets and the subsequent increased demand for met coal. "Steel utilization remains high enough to support increased met exports," said Leer. "Global crude utilization reached 83% in June, on par with levels achieved during 2008, and the U.S. steel utilization now stands at 75% of total capacity. About two-thirds of U.S. coal exports will serve the met market, but one-third, or roughly 35 million tons, will move into the global thermal trade, which we believe is growing as well."
While the company's ICG acquisition boosted its metallurgical coal production, Arch has capital spending plans to boost production even more. Leer said: "Our goal is '15 by 15'--that is, to grow our met coal volume by at least 15 million tons by 2015, and we are working towards that goal with the ongoing development of the Tygart 1 mine. We have also begun the engineering and permitting of additional met reserves. Second, we have also started to focus on and then realizing the full potential of our thermal volumes."
The Tygart 1 mine is a grassroot underground coal mine that was planned by ICG. Ground has been broken on the 3.5 million-ton-per-year mine, and a 1,300-ton-per-hour prep plant will be built as well. Initial production from the mine is expected by the end of the year, but construction/ramping up will continue through 2014.
While the fate of coal-fired power generation in the U.S. remains uncertain, a restored steel market both domestically and abroad, and increasing thermal coal exports are providing strong incentives for U.S. coal producers to increase production, resulting in strong capital project spending.
For further discussion of the strengthening metallurgical coal markets, see July 27, 2011, article - Increasing Coal Exports Drive Patriot Coal's Metallurgical Coal Mine Expansion.
Industrial Info's Mining Tracker provides comprehensive industry intelligence on the Mining Industry worldwide, with an emphasis on plant locations, key management contacts and major capital and maintenance spending opportunities in an easy-to-access online database solution.
View Project Report - 300022294 300028496 024001075 024000268
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
