Arch says Leer South to underperform expectations

2nd October 2023 By: Creamer Media Reporter

Coking coal miner Arch Resources has moderated its volume and cost expectations, owing to ongoing challenges mining the first longwall district at its Leer South mine, in West Virginia.

The miner lowered its 2023 guidance to between 8.6-million and 8.9-million tons and its average metallurgical cash cost guidance to between $88/t and $91/t.

"While we remain enthusiastic about Leer South's long-term outlook, the conditions in the first longwall district – which, as previously discussed, represented the most capital-efficient access point for the Lower Kittanning reserve base – continue to constrain advance rates," said CEO Paul Lang.

However, the South Leer mine continues to benefit from a strengthening coking coal price environment. Despite underperforming relative to initial expectations, Leer South has generated about $470-million in segment-level adjusted earnings before taxes, interest, depreciation and amortisation (Ebitda) since its startup, compared with an initial capital investment of $400-million.

Arch also says it expects its adjusted Ebitda for the third quarter to be about 10% lower than the total reported in the second quarter. The firm will announce its September quarter results on October 26.

The company in September 2021 started production at the four-million-tonne-a-year premium-quality, high-vol A metallurgical coal mine.