Peabody today reported net income of $179.2 million for the second quarter of 2023, compared to $268.5 million in the first quarter. The second quarter results included a $33.7 million provision for losses at the North Antelope Rochelle mine (NARM) and the Shoal Creek mine during June. Peabody had adjusted EBITDA of $358.2 million in the second quarter of 2023 compared to $390.6 million in the prior quarter.
“In the second quarter of 2023, our diverse operational platform allowed us to successfully execute on our plan despite continued volatility in the markets,” said Peabody President and CEO Jim Grech. “The strength of our seaborne portfolio is evidenced by our solid quarterly results notwithstanding a challenging pricing environment.”
The company’s seaborne thermal segment shipped 4 million tons, including 2.6 million export tons. Export shipments were 500,000 tons higher than the prior quarter as the longwall move at the Wambo mine in Australia was completed and wet weather which impacted the first quarter was abated. The average realized export price was 6% lower than the prior quarter due to sales mix and a decline in average seaborne thermal benchmark prices.
Peabody’s seaborne met segment shipped 2 million tons at an average realized price of $190.13/ton. Tons sold were 700,000 tons higher than the prior quarter primarily driven by higher sales from the Coppabella and Moorvale JV in Australia as rail and port congestion and heavy rains impacted the first quarter.
The Powder River Basin (PRB) segment shipped 18.9 million tons at an average realized price of $13.71/ton. Tons sold declined by approximately 3.1 million tons compared to the first quarter, due to the impact of lower customer demand as a result of low natural gas prices, higher utility inventories and a tornado at NARM impacted train loadings.
The other U.S. thermal segment shipped 3.8 million tons at an average realized price of $53.63/ton. Tons sold decreased by approximately 700,000 tons compared to the first quarter, due to lower customer demand from lower natural gas prices and higher utility inventories.
On June 20, 2023, Peabody announced that Shoal Creek, in coordination with the Mine Safety and Health Administration, had seled two longwall panels in the J panel area of the mine impacted by a fire in March involving void fill material. Peabody has resumed development in the new L panel area where better mining conditions are anticipated. A new longwall kit for the mine is expected to be delivered by the end of the year. As a result of the fire, the company wrote off $29 million of equipment and underground development assets.
A few days later, June 23, 2023, NARM sustained damage from a tornado which led to a temporary suspension of operations. The mine resumed operations on June 25, 2023, and operations have largely returned to normal. As a result of the tornado, the company wrote off $5 million of buildings, equipment and parts inventory. The company said it anticipates that incremental repair and clean-up costs will be recognized in future periods.
Peabody continues to advance redevelopment efforts at North Goonyella with key project milestones and critical path items on track. Activities to date have included procuring equipment, refurbishment and replacement of surface infrastructure, Zone A remediation, completion of drilling program for Zone B re-ventilation and advancing work necessary to re-enter Zone B (sealed mine workings). The next significant milestone, re-ventilation and re-entry of Zone B, is currently targeted for mid-September subject to regulatory approval.
Since commencing redevelopment in late 2022, the company has invested $53 million of the initial approved redevelopment capital expenditures which includes further ventilation, equipment, conveyors, and infrastructure updates in anticipation of reaching development coal, subject to regulatory approvals, in the first quarter of 2024.
North Goonyella is a premium-grade hard-coking coal longwall operation in Queensland Australia with more than 70 million tons of reserves. It is expected to reweight Peabody’s long-term production and revenue toward metallurgical coal when the longwall production commences in 2026. The project is expected to generate attractive returns at historical long-term metallurgical prices solely for 20 million tons of longwall production over five years, with further options to develop the remaining reserves.