Walter expects coking coal sales to fall in 2015

OREANDA-NEWS. Walter Energy's coking coal sales will fall by as much as 12pc this year, reflecting global market weakness and the idling of Canadian operations.

Metallurgical coal sales this year will total 8.5mn-9mn t, down from 9.67mn t in 2014, US-based Walter said today.

Walter's 2014 sales were 12pc lower than in 2013. US sales rose by 10pc to 7.83mn t but volumes from its Canadian operations fell by more than half, to 1.85mn t, after the US-based coking coal producer idled its higher-cost Canadian operations in the second quarter.

Total production last year fell to 9.3mn t from 11.6mn t in 2013, reflecting the Canadian mine idlings as well as slower operations at Walter's undergound mine in Alabama in the fourth quarter as it moved longwalls.

Low-volatile US hard coking coal sales last year totaled 4.88mn t, which sold at an average price of \$118.28/t. That compared with 4.26mn t sold the prior year at an average price of \$150.86/t. Average cash cost of production rose to \$62.37/t from \$59.83/t.

Mid-volatile US coking coal sales totaled 2.35mn t sold at \$111.82/t compared with 2.22mn t in 2013 sold at \$141.64/t, with average production costs falling to \$75.26/t from \$77.99/t. Canadian mid-volatile sales fell to 657,000t sold at \$125.19/t from 1.65mn t sold at \$144.96/t. Canada's average mid-volatile cost of production fell to \$92.08/t from \$113.04/t.

Low-volatile pulverized coal injection sales, all from Canadian operations, fell to 1.19mn t sold at \$108.22/t from 1.96mn t and sold at \$127.91/t in 2013, with average cash costs of production falling to \$89.12/t from \$91.36/t.

"We remain focused on improving our operational performance while implementing cost-containment measures," Walter's chief executive Walter Scheller said. "For the full-year 2014, we aggressively reduced costs, both in operational and administrative areas, all while improving production efficiency at our mines."

The company expects to cut selling, general and administrative costs by 10pc this year and keep capital expenses in line with 2014's \$93mn, which was 39pc lower than 2013. Despite the drop in costs, Walter's full-year loss widened to \$470.6mn from \$359mn in 2013.