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Arch Coal’s Appalachian met coal shipments rise in 4Q14 and 2014

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Appalachian operations

Arch Coal, Inc. (ACI) has a significant presence in Appalachia. The company produces thermal as well as met (metallurgical) coal used in steelmaking.

Arch Coal mines from its following seven active mines in the Appalachia Region:

  1. Vindex (Maryland, met coal)
  2. Sentinel (West Virginia, met coal)
  3. Leer (West Virginia, met coal)
  4. Beckley (West Virginia, met coal)
  5. Coal-Mac (West Virginia, thermal coal)
  6. Mountain Lorel (West Virginia, met and thermal)
  7. Lone Mountain (Virginia, thermal coal)

These mines are connected by CSX Corporation (CSX) and Norfolk Southern (NSC). Arch Coal idled Cumberland River Complex in the region in 3Q14 as part of a cost-cutting exercise.

Alpha Natural Resources (ANR) is the largest Appalachian producer. ACI, ANR, and Peabody Energy (BTU) are part of the iShares Russell 3000 ETF (IWV).

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Shipments from Appalachia

During the quarter, the company’s Appalachia segment shipped 3.6 million tons of coal. The shipments included 1.9 million tons of met coal and 1.7 million tons of thermal coal. During full year 2014, the segment shipped 14.5 million tons of coal, which included 6.9 million tons met coal, compared to 14.2 million tons with 6.8 million tons of met coal in full year 2013.

Demand from European steelmakers drove the increase in met coal shipments during the year. The company’s Leer mine started operating in the last quarter of 2013. Shipments in 2014 also benefited from the first full year of the mine. The company expected the mine to ship 3 million tons of met coal in 2014.

Price per ton

Arch Coal’s selling price per ton for Appalachia came in at $69.27 in 4Q14. This was marginally lower than 4Q13’s $69.54 since met coal benchmark prices tumbled to $119 a ton in 4Q14, compared to $152 a ton in 4Q13.

However, the pricing came in higher than 3Q14’s $68.72 due to a higher share of high-value met coal in the product mix. The prices averaged $68.77 in 2014 compared to $73.07 in 2013.

What about revenues and cost measures? We’ll look at those in the next part.

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