Arch Coal’s Powder River Basin operations
Arch Coal, Inc. (ACI) operates two surface mines that produce thermal coal in the Powder River Basin (or PRB) in Wyoming. The Black Thunder mine is the second largest coal mine in the United States, after Peabody Energy’s (BTU) North Antelope Rochelle mine in Wyoming. Arch Coal sold more than 100 million tons of coal from Black Thunder alone in 2013.
The company’s other mine is the PRB is Coal Creek mine. In 2013, the mine produced 8.5 million tons of coal.
Arch Coal (ACI) sold 29.3 million tons of Powder River Basin coal in 4Q14. This was up from 4Q13’s 26.4 million tons and equal to shipments in 3Q14. The higher shipments were on account of seasonal demand and demand for restocking at utilities.
Rail performance in the region improved in 4Q14, helping coal producers in the region. The company sold 111.2 million tons of Powder River Basin coal in 2014, marginally lower than 2013’s 111.7 million tons.
Price per ton
Revenue per ton for Powder River Basin coal came in at $12.86 in 4Q14, higher than $12.28 per ton in 4Q13. However, pricing was lower compared to 3Q14’s $13.03 per ton since warmer weather led to a drop in natural gas prices close to $3 per million British thermal units (or MMBtu).
The fall in natural gas prices is negative for coal since natural gas is a replacement for coal in electricity generation. The price per ton for 2014 came in at $12.86, up from $12.44 for 2013.
What about revenues, cost, and profitability for Powder River Basin coal? We’ll look at that in the next part.