Consol Energy Inc., the second-largest U.S. coal producer by market value, will resume mining at its Buchanan and Blacksville mines on May 1 after beginning to sell to India and negotiating higher prices with steelmakers.
Consol renegotiated sales contracts with steelmaking customers for 457,000 tons of low-volatility metallurgical coal, according to a statement today. The company also contracted 224,000 tons of new sales at $119 a short ton. Consol announced in February plans to idle its longwall mining operations at Blacksville and stopped longwall operations at Buchanan in March.
Consol reported first-quarter net income of $97.2 million, or 42 cents a share, down 49 percent from $192.1 million, or 84 cents, a year earlier. That was 16 cents less than the average estimate of 12 analysts compiled by Bloomberg. Sales fell 4.7 percent to $1.37 billion.
Mild weather and competition from natural gas drove down demand for coal, according to J. Brett Harvey, the Pittsburgh-based company’s chief executive officer.
“The very warm winter, weakened economy and low natural gas prices have quickly turned a tight coal market into a surplus,” Harvey said in the statement.
Consol expects to sell 4.1 million to 4.2 million tons of low-volatility metallurgical coal this year, compared with a previous forecast of 4.5 million to 5 million tons. The company sold 1 million tons of the fuel in the first quarter, compared with 1.4 million tons a year earlier. Operating costs per ton rose 36 percent to $70.86.
Metallurgical coal is used in steelmaking, while power utilities burn the thermal variety of the fuel to generate electricity. Peabody Energy Corp. is the largest U.S. coal producer by market value.