More Production Cuts Likely For Wyoming's Coal Mines This Year As Profit Margins Collapse
Wyoming’s largest coal mines are likely to make more cuts to production in 2019, financial reports show.
Peabody Energy, which operates the North Antelope Rochelle, Rawhide and Caballo mines in Wyoming, is dropping its midrange production expectations by about 10 million short tons, according to the firms’ most recent earnings report. Arch Coal, the owner of Black Thunder and Coal Creek in Wyoming, is reporting mid-range guidance of about 5 million short tons less than last year, according to financial reports. Arch also cut production at Black Thunder outside Wright last year by 10 million tons.
The firms are responding to a tougher market for coal, one that’s narrowed year by year as coal plants that buy the Powder River Basin coal have shuttered. They are also reacting to declining margins – the amount of money they are making for every ton of coal excavated from the Wyoming soil.
Peabody’s per ton margin for its Powder River Basin mines went from $2.97 in 2017 to $2.37 last year and a projected $1.70 for 2019, based on midpoint guidance. Arch’s fell as well, from $1.96 in 2017 to $1.10 projected for this year. It’s likely that the Arch Coal cuts are coming out of Coal Creek, a lower heat mine south of Gillette, while production the higher quality Black Thunder mine will likely remain about the same, based on the company’s financial reports and recent earnings call.
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