Southern Coal Corp is seeing an uptick in demand for high-quality steam coal this year, but the metallurgical side of its business continues to lag, which is why the company has temporarily idled its Tams No 1 mine in Raleigh County, West Virginia.
Jay Justice, Southern's executive vice president in Roanoke, Virginia, said in a Wednesday interview that, on the whole, production so far in 2014 has been something of a wash for the company, which is owned by the Justice coal mining family of Central Appalachia.
"On average, our steam coal production probably has been better than I thought and steam demand is better than I thought, and met is a little worse," he said.
Southern is getting the production it expected out of two eastern Kentucky surface mines that were reopened and/or expanded early this year.
Justice said the Bevins Branch mine is on target to turn out about 800,000 st of steam coal this year, while Beech Creek, a high-vol met mine, should produce around 500,000 st. Both mines are in Pike County, for years the largest coal-producing county in eastern Kentucky's Central Appalachian region.
Bevins Branch and Beech Creek are shipping coal with average specifications of about 13,000 Btu/lb and less than 1% sulfur, he said.
The company is experiencing a rise in demand for high-quality steam coal on the industrial and stoker side, he said.
"Everything we're producing out of Bevins Branch and Beech Creek is going to the AEP contracts," Justice said, referring to long-term coal supply agreements with Columbus, Ohio-based American Electric Power, one of the largest electric utilities in the US.
On the met side, Justice said the company's Bishop surface mine in McDowell County, West Virginia, is still producing, "and we're still producing in Virginia at a surface mine and underground mine" that have high-vol met coal.
Because of market conditions, "we actually have our low-vol operation idle right now," he added. That would be the Tams mine near Beckley.
Tams "probably ran a little bit in the second quarter" before it was closed, he said. The intent is to restart production as soon as the met market improves.
Tams produced 50,756 st in the first quarter of 2014, according to the US Mine Safety and Health Administration, and 290,422 st in 2013.
Southern's output totaled 5 million st in 2013. The company anticipates total production this year of about 6 million st.
