Cliffs expects to hit 2013 coal sales target, despite weak prices

Cleveland-based Cliffs Natural Resources (NYSE: CLF) (Paris: CLF) said Oct. 24 that it is maintaining its full-year 2013 North American Coal expected sales and production volumes of approximately 7 million tons.

The company produces thermal and metallurgical coal in southern West Virginia and met coal from its Oak Grove longwall mine in Alabama.

The sales volume mix in 2013 is anticipated to be about 70% low-vol met coal and 21% high-vol met coal, with thermal coal making up the remainder. Cliffs is maintaining its full-year 2013 North American Coal revenues-per-ton outlook of $100-$105.

On the other hand, it is decreasing its North American Coal full-year cash-cost-per-ton expectation to $85-$90 from its previous expectation of $90-$95. The decrease is driven by continued improvement in cost structure and production volumes. Full-year 2013 depreciation, depletion and amortization is expected to be about $17 per ton.

In 2014, Cliffs expects to sell 6 million to 7 million tons from its North American Coal business, comprised of about 68% low-vol met coal, 23% high-vol met coal and 9% thermal coal.

For the third quarter of 2013, North American Coal sales volume was 1.6 million tons, a 2% decrease from the 1.7 million tons sold in the year-ago quarter. The decrease was driven by lower sales tons at Oak Grove in Alabama. In the prior year’s third quarter, Oak Grove sales volume was higher due to catch-up commitments related to a force majeure caused by tornado damage to its above-ground prep plant. The decrease was partially offset by higher sales at the Pinnacle longwall mine in Wyoming County, W.Va., and the Logan County, W.Va., operations due to strong production volumes.

North American Coal’s 2013 third-quarter revenues per ton were down 23% to $98.95, versus $128.88 in the third quarter of 2012. The year-over-year decrease was primarily driven by lower market pricing for met coal products and customer mix. The decrease in market pricing was partially offset by favorably-priced annual and carryover contracts.

Cash cost per ton in the third quarter of this year decreased 34% to $76.16, from $114.56 in the year-ago quarter. The decrease was primarily due to improved production volumes and the resulting favorable impact on the mine’s cost-per-ton rate, as well as lower maintenance and contractor spending.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.