The company’s Vectren Fuels subsidiary is expected to produce 7.3 million tons this year, up from 6.2 million tons in 2013, while sales are projected to rise to 7.6 million tons in 2014, compared with 6.2 million tons last year. Vectren owns the Oaktown Nos. 1 and 2 mines in Knox County and the Prosperity mine in Pike County. All three are continuous miner operations.
During the first three months of 2014, Vectren’s mining sector narrowed its loss to $1.1 million from a loss of $6 million a year ago. With the relatively new and more efficient Oaktown mines ramping up production, company officials are confident that mining costs will decrease, allowing the mining sector to turn a profit soon.
Coal mining revenue totaled $81.5 million in the first quarter, the company said, compared with $63.1 million in the corresponding period of 2013. The higher revenue mainly was attributed to additional sales of 300,000 tons in the most recent quarter as well as an increased sales price per ton.
While additional cost improvement measures still are being implemented at Prosperity, the company said substantial progress was made in the second half of 2013 and continued into the first quarter this year. The execution of a revised mining plan at Prosperity has resulted in significant improvement in the mine’s production costs.
Jerry Benkert, Vectren executive vice president and chief financial officer, told analysts during a May 12 conference call the company’s coal mining results “were much improved in the first quarter.” Vectren Fuels realized an average sales price of $44/ton in Q1 and already has sold 7.2 million tons this year at an average price of $44/ton, he said.
According to Carl Chapman, Vectren chairman, president and CEO, some utilities “are really starting to pick up buying right now because of coal pile situations” following the extremely cold winter that helped to burn down stockpiles.
