TORONTO (miningweekly.com) – US coal miner James River Coal late on Monday said it had idled production at several locations in Central Appalachia as a result of a continued weakness in the domestic and international coal markets, and furloughed 525 employees from its Eastern Kentucky operations.
The Richmond, Virginia-based company said it did not know when it would restart the idled operations, indicating that it entirely depended on an improving coal market.
The affected operations are at the McCoy Elkhorn complex, in Pike and Floyd counties, the Bledsoe complex, in Leslie and Harlan counties and the Long Branch surface mine, in London.
James River early last month said it had become more cautious of the metallurgical coal market, after it posted a 42% drop in second-quarter revenue.
CEO Peter Socha, at that time, said the metallurgical markets had “clearly weakened” during the past several months.
In the US, thermal coal markets are under pressure from stricter emissions legislation currently under consideration and a move by power generators to switch to cheaper natural gas to generate steam. The metallurgical coal markets, a significant portion of which is destined for the export market to Asian smelters, are also under pressure as China’s growth had slowed, and the market is laden with a supply surplus.
However, Socha said the thermal market showed “some signs” of improvement.
James River's second-quarter revenue declined to $160.1-million, down from $277.3-million in the same period a year earlier.
The company posted a net profit of $52.6-million, or $1.16 a share, boosted by a pretax gain of $101.2-million. The results compared with the net loss of $25.8-million, or $0.74 a share, for the second quarter of 2012. The pretax gain was owing to the company in May swapping $90-million in debt for $123.3-million in 10% notes due in 2018.
The adjusted loss was $1.04 a share, well below 14 Nasdaq analysts' average expectation of $1.33 a share.
Other US coal miners such as Arch Coal, Consol Energy and Peabody Energy had also posted wider second-quarter losses.