Alliance Resource Partners said its financial performance during Q1 2021 was generally in line with its expectations, despite 950,000 tons of delayed shipments impacting earnings and cash flow by approximately $13 million. “Our coal operations’ efficiency initiatives continued to provide cost reduction benefits,” President and CEO Joe Craft said.
“Improved coal market fundamentals and favorable weather patterns during the 2021 quarter supported buying activity by domestic and international customers, allowing our marketing team to secure new commitments for the delivery of approximately 5.4 million tons through 2023.”
Alliance’s coal sales volumes were lower in the Illinois Basin and Appalachian regions compared to both the 2020 and sequential quarters. In Q1 2021, Illinois Basin coal sales volumes decreased 5.9% and 13.3% compared to the Q1 2020 and Q4 2020, respectively.
Reduced sales volumes from the Warrior and River View mines reflected weather-related delays during Q1 2021. In Appalachia, weather-related delays also impacted sales volumes at the Tunnel Ridge mine as tons sold in Q1 2021 decreased 5.8% and 20% compared to Q1 2020 and Q4 2020, respectively.
Total coal production volumes increased 7.5% to 8 million tons in Q1 2021 compared to 7.4 million tons in Q4 2020. Increased coal production and reduced coal sales volumes during Q1 2021 led total coal inventory higher to 1.8 million tons at the end of Q1 2021, an increase of 1.2 million tons compared to total coal inventory of 600,000 tons at the end of 2020.
“Economic activity continues to improve in the U.S. and globally as vaccine distribution accelerates and lockdowns ease,” Craft said. “As we anticipated, increased economic activity has resulted in improved energy demand, benefitting all of our business segments.
“Our domestic coal markets further benefited from the impact of the February polar vortex, as coal-fired generation in U.S. power regions increased 70%-80% and utility stockpiles in our markets fell by approximately a third as utilities leaned on coal during this time of surging demand as a reliable source of power.”
International coal markets continued to strengthen, and the company said it expects to have additional export sales opportunities this year. ARLP currently has contract commitments for approximately 26.4 million tons in 2021 and it is increasing the midpoint of its targeted total coal sales volumes for this year to 31 million tons.