Sandra Callahan, TECO CFO and senior vice president of finance and accounting, said that although the company’s average selling price of coal was about $94/ton in the second quarter, it was still below the slightly less than $96/ton average price expected for the full year. The reason for the lower quarterly pricing, she said, was that TECO Coal’s sales mix was more heavily weighted to steam coal “due to the timing of metallurgical coal shipments which will occur in the second half of the year.” The company is forecasting 2012 production costs of $83 to $87 a ton.
TECO Coal typically ships about 3.5 million tons of met coal annually, most of it domestically.
Callahan said TECO Coal is “margin driven and not volume driven.” The company’s future production “will be based on market conditions and per ton profitability. We’ll mine what the market demands and is willing to pay an appropriate price for it. That means that we can’t provide an outlook on future volume until we see what the market is.”
For 2013, TECO Coal already has 2.5 million tons of steam coal contracted and price in a range of $75 to $82 a ton. “For various reasons, including more surface sources, less washing, less depth, thermal coal costs less to mine than met coal, and is profitable at these prices,” she said.
TECO Coal’s planned 2013 met coal production has not been priced yet, as the normal contract cycle for domestic met coal is late third quarter or early fourth quarter. For 2014, TECO Coal has 1.2 million tons of steam coal contracted and priced above $80 a ton.