Arch Coal, Inc. (NYSE: ARCH) announced today that it has discontinued longwall operations at its Mountain Laurel mine in Logan County, West Virginia, three months earlier than planned. The move is expected to reduce Arch’s fourth quarter coking coal volumes by between 150,000 and 200,000 tons and its fourth quarter operating results by approximately $20 million versus previous expectations.
As previously discussed, Mountain Laurel had encountered challenging geologic conditions in its final longwall panel. Once removed from the mine, the longwall system will be refurbished and relocated to the Leer South mine, which is expected to commence longwall production in the third quarter of 2021.
Today’s announcement accelerates Mountain Laurel’s planned transition to a room-and-pillar operation. Mountain Laurel currently has three of five continuous miners operating efficiently in the new configuration, and now expects to complete its transition to a room-and-pillar mine early in the first quarter of 2020. No changes in the mine’s workforce are anticipated.
“We believe Mountain Laurel has a bright and profitable future as a continuous miner operation,” said Paul A. Lang, Arch’s president and chief operating officer. “As we have stated in the past, Mountain Laurel has a world-class work force; extensive, low-cost reserves; and some of the most advanced coal-preparation, coal-handling and coal-blending facilities in the United States. In effect, we are launching a brand new mine at Mountain Laurel – one that should benefit from a lower cost structure, better product quality and a more consistent operating performance – for a very modest capital investment.”
With the completion of the transition, Mountain Laurel’s cost structure should decline by around $10 per ton when compared to its average cash cost in the first nine months of 2019. As indicated, the more flexible mining configuration and enhanced coal-blending capabilities should also lead to a significant improvement in the mine’s future product quality.
“We believe that this accelerated transition sets the stage for a stronger operational start and lower per-ton costs for Arch’s core coking coal segment in 2020,” Lang said. “Over the longer term, we expect the new mining configuration – combined with the progression of the Leer mine into thicker coal and the ultimate startup of Leer South – to drive incremental improvements in the average mining cost, product quality and profit margin of our already high-performing coking coal portfolio.”
U.S.-based Arch Coal, Inc. is a top coal producer for the global steel and power generation industries. Arch operates a streamlined portfolio of large-scale, low-cost mining complexes that produce high-quality metallurgical coals in Appalachia and low-emitting thermal coals in the Powder River Basin and other strategic supply regions.
