- Write by:
-
Saturday, November 16, 2019 - 10:47:08 AM
-
681 Visit
-
Print
Mining News Pro - U.S. miner Contura Energy Inc.’s $800 million bet on international coal markets is souring.
According to Mining News Pro - In November 2018, when Contura bought Alpha Natural Resources and became America’s biggest supplier of metallurgical coal, global prices for the fuel were climbing — bolstered by demand, particularly in China. Since then, trade tensions have escalated, curbing purchases of both steel and the coal used to make it. On Thursday, the miner reported $40 million in third-quarter earnings, less than half of what analysts estimated, and suspended share buybacks.
The stock plunged by the most ever and was trading at a record low Friday. It’s fallen 87% this year.
Contura has “endured an incredibly tumultuous and unnerving 2019, marked by management changes, asset sale challenges, and most importantly, a significant deterioration in met coal market fundamentals,” Mark Levin, a coal analyst at Seaport Global, said in a research note. “As a result, the stock has come unglued.”
The collapse of Contura, which declined to comment, reflects the broader struggles in America’s coal country. U.S. power plants are burning less of the fuel as utilities shift to cheaper natural gas and renewable energy. And the met coal export market that miners were depending on to weather this downturn at home is weakening. At least four U.S. companies have shuttered mines since August and five have gone bankrupt this year.
This is not the market that Bristol, Tennessee-based Contura had envisioned. Coal prices, now near a two-year low, came in “significantly below expectations” in the third quarter, Chief Executive Officer David Stetson said in a call with investors Thursday. “Contura, as well as the industry as a whole, experienced weakening demand for our products.”
On top of lower coal prices, Contura reported higher production costs at mines where it makes the type of coal burned at power plants. The company blamed lower worker productivity due to vacations and the time needed to move around equipment for that.
The company’s shares plunged 49% on Thursday. They were down another 7.1% to $8.71 at 1:54 p.m. in New York.
Contura said it expects production costs to come down next year and noted that much of its output for 2020 is already sold. But prices may not prove high enough to generate significant cash flow for the miner, said Andrew Cosgrove, a mining analyst with Bloomberg Intelligence. “They’re still looking at burning cash,” he said.
Short Link:
https://www.miningnews.ir/En/News/446145
Oxford Economics Australia has released data showing mine maintenance spending may be hitting its peak. But what does it ...
Japan’s top steelmaker, Nippon Steel, is sticking to its plan to close a deal by year-end to buy US Steel, which it ...
Nutrien, the world’s biggest fertilizer producer, beat first-quarter profit estimates on Wednesday, on strong demand for ...
Australia will spend A$566 million ($373 million) over the coming decade to map out resource deposits with a focus on ...
Equinor on Wednesday said it has entered an agreement with Standard Lithium to acquire a 45% stake in lithium projects ...
Copper briefly traded through $10,000 a ton as investors raised bets on Federal Reserve rate cuts, and Goldman Sachs ...
Albemarle, the world’s largest producer of lithium for electric vehicle batteries, could look at reducing capital ...
Coal India Ltd., the world’s largest producer of the commodity, reported a 26% increase in fourth-quarter profit, driven ...
Emerging North American gold producer Contango ORE is boosting its landhold in Alaska with the acquisition of Canada’s ...
No comments have been posted yet ...