The PBS Coals unit of Russia-based steel giant OAO Severstal sold less coking coal concentrate in the third quarter and recorded a huge, 90% plunge in steam coal sales during the first nine months of this year.
Severstal on Oct. 26 reported third-quarter production figures for its various divisions, with no narrative description of those results. PBS Coals, which Severstal acquired in 2008 to secure supplies of then-scarce met coals largely for its own operations, runs a series of smallish surface and deep mines in and around Somerset County, Pa. These operations produce mostly coking coal, with some steam coal produced as an adjunct to that work. Note that coking coal concentrate is basically coking coal run through a prep plant.
In the third quarter, PBS Coals sold 499,903 tonnes of coking coal concentrate, down from 653,423 tonnes in the second quarter of this year. In the first nine months of this year, coking coal concentrate sales came in at 1.7 million tonnes, down from 1.9 million tonnes in the first nine months of 2011.
The average selling price for the coking coal concentrate of PBS Coals in the third quarter was $143/tonne, up from $136/tonne in the second quarter. For the first nine months of this year, the average selling price for the coking coal concentrate was $143/tonne, against $166/tonne in the first nine months of 2011.
As for steam coal sales, the third quarter figure was 54,688 tonnes, actually up from a mere 304 tonnes in the second quarter. But in the first nine months of this year, steam coal sales came in at 64,767 tonnes, a huge drop from 648,149 tonnes in the January-September period of 2011.
PBS Coals and its affiliate, RoxCoal, had announced on July 20 that they would immediately idle a portion of their deep and surface mine operations. PBS attributed the necessity for the resulting worker layoffs to coal market conditions and increased pressure from the U.S. Environmental Protection Agency, which has resulted in increased costs.
“The decision to idle our surface mine operations is a difficult one, but in an effort to manage our inventory and to balance coal production with expected customer demand and shipping schedules, we are faced with making adjustments which unfortunately will impact our workforce,” said D. Lynn Shanks, President and CEO, in the July 20 announcement. “Both the foreign and domestic coal markets remain soft due to weak economic growth and activity. Additionally, the escalating costs and uncertainty generated by recently advanced EPA regulations and interpretations have created a challenging business climate for the entire coal industry.”