Arch Coal loses money despite strong Utah showing
Arch Coal, Inc. reported a net loss of $295 million in the fourth quarter of 2012, but not because of poor performance by its mines in Utah and Colorado.
Just the opposite. In what the St. Louis-based company calls its "Western Bituminous Region," Arch earned a record cash margin of $18.68 per ton in the fourth quarter, largely because its expenses per ton of coal were reduced by 20 percent.
Arch Coal's Western region includes one mine in Colorado (West Elk) and three in Utah Sufco, Skyline and Dugout Canyon. Operated by Arch's subsidiary, Canyon Fuel Co., the Utah mines are by far the state's largest producer and employer. Together, they yielded more than 9 million tons of coal in 2012 and provided employment to 724 people at year's end, according to data on the federal Mine Safety and Health Administration (MSHA) website.
The three Utah mines had produced 11.7 million tons of coal in 2010.
"Arch achieved several notable milestones while managing through a tough 2012," said John Eaves, the parent company's president and chief executive in Arch Coal's quarterly report, released Tuesday. "Looking ahead, we are seeing signs that a coal market rebound is possible in the second half of 2013. â¦ We are proactively responding to increased interest for Western bituminous coal after several years of weakness."
The results from Utah mines were bolstered, Eaves said, by the resumption of mining using a longwall machine at the Skyline mine in October. In addition, costs were cut at Dugout Canyon when a longwall was idled late in 2011, resulting in the layoffs of 114 miners, after the voracious mining machine excavated the final portions of a seam.
For the quarter, Arch Coal's net loss of $295 million, or $1.39 per share, represented a sharp decline from the same period a year earlier, when the company reported net income of $62 million, or 29 cents per share. Revenues totaled $968 million.
For all of 2012, Arch reported a net loss of $77 million, or 36 cents per share, on revenues of $4.2 billion from sales of 141 million tons of coal. In 2011, Arch said it had $4.3 billion in revenues on coal sales of 155 million tons.