Cloud Peak announced today a net income of $12.9 million in the third quarter of 2018, up from $2.6 million in the same quarter last year. This leaves the company with a year-to-date loss of $24.9 million.
The company operates Antelope, Cordero Rojo, and Spring Creek Mines.
At the Antelope Mine, heavy rains over the second quarter caused spoil failures, which is a collapse or shifting of material put aside when coal is excavated from a pit. When these spoil piles failed, equipment had to be diverted to deal with the problem and away from coal production.
As a result, shipments from the Antelope Mine were reduced, and Cloud Peak is not expected to ship from the mine in the fourth quarter.
“We expect to have the Antelope Mine operations back to normal by the end of the year,” said Cloud Peak President and CEO Colin Marshall.
Shipments were 13.1 million tons in the third quarter this year, which was down from 15.5 million in the third quarter 2017, a drop the company attributed to the problems at the Antelope Mine.
Cloud Peak exported 1.5 million tons during the third quarter this year at prices higher than 2017. They have contracted 4.9 million tons for delivery overseas in 2018.
During the quarterly earnings conference call, Marshall discussed how Japanese coal-fired plants are testing coal from the Powder River Basin, possibly opening greater export opportunities in the future.
“The interest is there,” Marshall stated.
The majority of exports are bound for South Korea, and the Japanese market could be a longer-term opportunity, coming to fruition in 2020.
The Japanese “are slow and steady and deliberate in the way they move,” Marshall said.
Marshall also discussed port access, which is an ongoing issue on the West Coast. The Trump Administration has recently began discussing the possibility of using military bases as ports for coal exports, but Marshall said, if that is pursued, it’s also a long-term opportunity.
“We’d say that it’s great the admin is supporting coal exports,” Marshall said.
He also expressed the possibility that the Millennial Terminal in Washington is “worth watching.” The port was nearing approval when Washington state decided to deny the permit. The issue is now winding through the courts.
