The TECO Coal unit of TECO Energy (NYSE: TE) remains at the more than 90% contracted level for its expected 2012 sales of between 7 million and 7.3 million tons, TECO Energy reported in its May 1 first-quarter earnings statement.
The average selling price across all coal products is expected to be more than $96 per ton, which reflects substantially all of the planned 2012 metallurgical sales contracted and priced. The product mix is expected to be about 50% specialty coal – which includes stoker, metallurgical and PCI coals – with the remainder being utility steam coal. Met coal volumes are expected to be at, or slightly above, 2011 levels. The fully-loaded cost of production is expected to be $83 to $87 per ton.
TECO Coal reported first quarter net income of $9.8m on sales of 1.4 million tons, compared to $8.2m, on sales of 2.1 million tons in the same period of 2011. Results reflected an average net per-ton selling price, excluding transportation allowances, of almost $96 per ton, compared to more than $81 per ton in 2011.
In the first quarter, the all-in total per-ton cost of production was $87, compared to $76 per ton in the year-ago period. Costs in the first quarter reflect costs associated with idling a section of a mine and other costs associated with reducing production in January, and thus are at the high end of the 2012 cost range. Compared to 2011, costs also reflect higher surface mining costs due to increased diesel fuel usage as a result of trucking coal and overburden further due to the lack of new surface mine permits; higher royalty and severance fees, which are related to selling costs; and spreading fixed costs over fewer tons.
TECO Coal has coal mining operations mainly in eastern Kentucky. Its major operations include Clintwood Elkhorn Mining, Perry County Coal and Premier Elkhorn Coal.