In late 2014, Corsa said it expected to sell 2.3 million to 2.6 million tons of metallurgical and steam coal this year. Now, it is forecasting total sales of approximately 1.6 million to 1.8 million tons.
The company reduced its met coal sales outlook after halting production at the Kimberly Run and Barbara B underground mines earlier this year in Somerset County, Pennsylvania. Both mines were placed under “management review for closure.”
Unfavorable foreign exchange movements, low dry-bulk chartering rates and softening oil prices have combined to pressure U.S. metallurgical coal demand, Corsa said. The company estimated in early May that approximately half of domestic coal production for domestic and export markets is unprofitable.
Corsa added that since, on average, Central Appalachia met coal producers have higher cost structures, “the great majority of the at-risk production is weighted toward that region with Northern Appalachia production making up the smallest portion of the at-risk production.”
In 2014, Corsa sold 1.64 million tons of coal, earning $4.7 million. That was lower than the $18 million it earned in 2013. However, total revenue last year increased to $140 million, from $102 million in 2013.
“The fourth quarter of 2014 was a time of transition for Corsa, as we continued to make operational changes” to integrate the acquisition last year of PBS Coals into its Northern Appalachia division while also adjusting to changing market conditions, said George Dethlefsen, company CEO. “Our priorities for 2015 include realizing additional synergies from the PBS acquisition, productivity improvement initiatives, broadening and enhancing customer relationships, and continuing to be a leader in safety and environmental compliance.”
Later this year, Corsa plans to open its new Cooper Ridge surface steam coal mine in Tennessee. The mine is targeted to produce about 200,000 tons a year, with sales geared more heavily toward the industrial market.
Paul Caldwell, Corsa chief financial officer and corporate secretary, said the company has been successful of late in attracting new business. “We think our volumes will probably increase in 2016 because we’re increasing our customer base. We’re going to get some growth from that.”
Thus far, most of the sales expansion is on the met side. “These are new met coal customers, new export coal customers for met coal, we’re working with,” he added. “We’re trying to find new customers in Canada and Europe and South America. That’s where we can compete to some extent.”
