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December 16, 2014

SunCoke Energy to downsize coal mining business

SunCoke Energy is to implement a phased plan to scale-back its coal mining business in a bid to focus on its core competencies of processing and handling raw materials for industrial customers.

SunCoke Energy is to implement a phased plan to scale-back its coal mining business in a bid to focus on its core competencies of processing and handling raw materials for industrial customers.

SunCoke Energy chairman and CEO Fritz Henderson said: "While we plan to continue pursuing opportunities to sell all or a portion of our coal mining business, the challenging coal price environment has led us to make these hard decisions.

"I’ve been very impressed by and thankful for the leadership and commitment of our coal team, which has consistently achieved high levels of productivity, safety and regulatory compliance during this difficult time."

Initially, as part of its downsizing plan, the company will idle certain mines with immediate effect to cut production from 1.1 million tonnes a year to about 500,000t a year of mid-vol coal.

"The company will idle certain mines with immediate effect to cut production from 1.1 million tonnes a year to about 500,000t."

This phase will require around 175 redundancies.

SunCoke plans to pursue a sale or explore alternatives such as retaining contractors to mine, or purchasing all its coal requirements to supply its Jewell Coke facility.

In order to further minimise costs, SunCoke will also reduce operations at its coal preparation plant by 50%. The company’s downsizing plan is expected to considerably cut on-going costs to supply coal to its Jewell Coke operations.

SunCoke expects to incur one-time cash costs of $25m to $35m for its plans to downsize coal operations, including the previously disclosed estimated expense of about $10m, mainly which is largely for contract terminations.

As part of the plans, the company anticipates capital expenditures of $5m to $10m in 2015 for demolishing its coal preparation plant and installing additional coal-handling and storage equipment, to enable third-party coal purchases for its Jewell facility.

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