TORONTO (miningweekly.com) – The world’s largest private-sector coal miner, Peabody Energy, on Thursday reported an adjusted third-quarter profit, after aggressive cost-cutting measures had resulted in significant savings in the face of weak commodity prices, boosted by improved shipments from its Australian operations.

The company’s stock rose 4.36% to $18.67 in premarket trading, after it surprised analysts with adjusted earnings per share of $0.05, compared with Wall Street expectations of a loss of $0.04 a share.

Successful cost containment resulted in Peabody reporting its lowest US unit costs in three years and Australian unit costs improving 18% since early 2012.

For the quarter ended September 30, revenues fell about 13% to $1.8-billion, compared with the $2.06-billion in the same period last year, as a result of lower realised pricing in the US and Australia.

Australian price decreases were partly offset by a 6% rise in shipments to nine-million tons, including four-million tons of metallurgical coal and 3.1-million tons of seaborne thermal coal. US volumes were in line with the previous year, resulting in lower revenues owing to decreased realised pricing.

The company had also cut its full-year capital spending target to $350-million from $400-million, mainly owing to weak coal prices, and is focusing on sustaining existing operations.

Peabody reported a net loss attributable to common shareholders of $26.1-million, or $0.10 a share, compared with net income of $42.9-million, or $0.16 a share, a year earlier.

Peabody chairperson and CEO Gregory Boyce said that Australian mines continued to widen its competitive advantage in the seaborne coal markets as inflation and exchange rates moderated, and a new government fostered policies to improve the competitive position of the resource sector.

"Metallurgical coal fundamentals are improving and continued build out of new generation is driving record thermal coal demand. Supply rationalisation is continuing as higher cost mines in the US and China close, and other exporting nations face increased domestic demand and rising costs,” Boyce said, painting a potentially optimistic picture for the company’s supplies of thermal and metallurgical coal.

Within the thermal coal market, Peabody expected about 75 GW of new coal generation to come on line in 2013, requiring about 50-million tonnes more global seaborne thermal coal.

Longer term, yearly world coal demand was estimated to rise to about 1.2-billion tonnes by 2017, driven by an expected 400 GW of new coal generation, along with rising global steel production. Steel production was expected to grow 15% during this period, requiring an additional 150-million tonnes a year of metallurgical coal.