Alpha Metallurgical Expects Rise in Coal Cost of Sales — Commodity Comment

[ad_1]

By Robb M. Stewart

Alpha Metallurgical Resources Inc. flagged coal shipments of up to 17 million next year, but cautioned the cost of sales in its core metallurgical segment were rising.

On guidance:

The Tennessee-based mining company, which has operations across Virginia and West Virginia, said it lifted its 2021 cost of coal sales forecast in light of increased labor costs, inflationary pressure for certain supplies, such as steel used in roof support and diesel fuel, as well as higher royalties and taxes due to higher sales prices.

The metallurgical coal segment cost of sales are now expected to be between $73 and $77 a ton, while the cost of coal sales for its “all other” category is expected to remain in an existing target range of $45 to $49 a ton.

Alpha sold 15.5 million tons of coal in 2020, including almost 13.1 million tons of met coal, down from 17.2 million the year before. It reported a total cost of coal sales of $66.57 a ton for the year, with a met coal cost of $70.19 a ton.

The mining company said it expects 2022 coal shipments of 15.4 million to 17 million tons, with the met segment volume expected to be between 14.8 million and 16.2 million tons. It said it expects the 2022 met segment cost of coal sales per ton to be between $88 and $92, and costs for the all other category to be in the range of $58 to $62 a ton.

“In higher pricing environments, costs of coal sales increase due to a number of factors outside our direct control, including royalties and taxes,” said Jason Whitehead, executive vice president and chief operating officer. “Similar to many other companies, we’re also experiencing some inflationary pressure with the cost of materials increasing.”

On the 3Q:

In the third quarter, the company said its met segment cost of coal sales increased to an average of $76.62 a ton from $69.94 in the prior quarter. Cost of coal sales for its all otter category increased to $47.47 in the third quarter from a second quarter average cost of $42.77 a ton.

Write to Robb M. Stewart at robb.stewart@wsj.com

[ad_2]

Source link