Next year could be a ‘bridge year’ for the US coal industry with the industry expecting 2011 to be the year mining profits pick up.
Speaking to miningweekly.com, Consol Energy CEO Brett Harvey said things should get better following the close of 2009.
“We think 2010 is a bridge year to, I think, a tightened market and a volume-constrained market based on the financial capabilities of our competitors, as well as the pressure from the federal government and the state governments, for a new environmental push at a much higher threshold,” Harvey said.
In the third quarter of 2009 Consol – the fourth largest coal producer in the US – experienced a year-on-year earnings drop due to reduced coal volumes.
Its approach to overcoming the difficult times has been to only match its output market.
“Our shareholders need to be aware that we are not going to mine this coal unless we have a place to put it – we are going to manage our inventories, we are not going to put ourselves in a distressed position,” Harvey said.
Consol lowered annual output levels twice in 2009 by a total of seven million tonnes to 58 million tonnes.
Reduced volumes, in turn, have increased pressure on costs, especially for the company’s metallurgical coal, Harvey said.
In 2010, Consol will concentrate capital expenditure on projects already in progress that could help improve efficiency.
On the thermal coal front, US demand is expected to remain soft, given the high stockpile levels.