Arch expects production for 2012 to fall by more than 3 million tons, but maintains its expected sales volume of thermal coal at 128-134 million tons for the year. The company also said that capital spending will drop by $30-$40 million annually.
Other Appalachian miners like Patriot Coal Corp. (NYSE: PCX) and Alpha Natural Resources Inc. (NYSE: ANR) have been hammered recently as well. Miners with less exposure to Appalachia, including Peabody Energy Corp. (NYSE: BTU), James River Coal Co. (NASDAQ: JRCC), Consol Energy Inc. (NYSE: CNX), Walter Energy Inc. (NYSE: WLT), and Cloud Peak Energy Inc. (NYSE: CLD), have not fared much better, but for different reasons.
The big reason for the decline of the coal miners is, of course, the rock-bottom price for natural gas which has led to fuel-switching at many power generation plants. Arch blames “current market pressures and a challenging regulatory environment” for driving coal consumption to a 20-year low.
Arch expects to take a non-cash write-down of about $425 million in the second quarter, and a $14 million charge for severance and related costs.
Shares of Arch are down less than -1% just minutes before today’s opening bell at $6.15 in a 52-week range of $5.62-$28.76.
Paul Ausick
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