SunCoke Energy (NYSE: SXC), a major producer of metallurgical coke and metallurgical coal, said May 1 that it is curtailing production at certain coal mines to meet a current slack market.
SunCoke also reported first quarter 2012 net income attributable to shareholders of $16.9m, up from $11.9m in first quarter 2011.
“Our Adjusted EBITDA more than doubled in the first quarter 2012, reaching $55.8 million due to solid performance in our cokemaking business,” said Fritz Henderson, Chairman and CEO of SunCoke Energy. “The successful startup of the new Middletown plant [in Ohio], the improvements that have taken hold at our Indiana Harbor facility and the continuing strong performance of our other domestic cokemaking facilities have given us greater confidence in our outlook for 2012 despite disappointing results in our coal mining business.”
Henderson added: “With our coal business facing higher production costs and a weaker pricing environment, we are taking action to mitigate the impact of these challenges by scaling back production at higher cost mines, idling certain mines, redeploying resources and lowering capital spending to reduce costs and conserve cash.”
In the first quarter 2012, revenues rose 44.4% to $481.3m versus first quarter 2011. This increase was primarily due to higher sales in the Other Domestic Coke segment reflecting increased coke production and the pass-through of higher coal costs. An increase in coke production was driven by the startup of the new Middletown coke facility, which serves the adjacent AK Steel Middletown works and began operations in October 2011. It also came from operating improvements at the Indiana Harbor facility. Revenues also benefited from higher coal sale prices.
The Coal Mining segment consists of metallurgical coal mining activities conducted in Virginia and West Virginia. A substantial portion of the met coal produced by these coal mining operations is sold to SunCoke’s Jewell Coke segment for conversion into metallurgical coke. Beginning in first quarter 2012, intersegment coal revenues for sales to the Jewell Coke segment are reflective of the contract price Jewell Coke charges its customer. Prior year periods have been adjusted to reflect this change.
Coal production in the first quarter was 375,000 tons, up from 335,000 tons in the year-ago quarter. The sales price per-ton last quarter for this coal, excluding transportation costs, was $171.30/ton, up from $151.70/ton in the year-ago quarter.
In 2012, expected domestic coke production is in excess of 4.3 million tons, with coal production projected to be about 1.6 million tons.
SunCoke is the largest independent producer of metallurgical coke in the Americas. Its cokemaking facilities are located in Virginia, Indiana, Ohio, Illinois and Vitoria, Brazil, and its coal mining operations, which have more than 114 million tons of proven and probable reserves, are located in Virginia and West Virginia.