Arch Resources will move forward with an accelerated plan to close Coal Creek Mine following a reported $78.5 million loss for the final quarter of 2020, according to a quarterly earnings report released Tuesday morning.
The company said it will strive to fulfill existing contracts throughout 2021 with the goal of beginning the closing and final reclamation of Coal Creek Mine’s active pit south of Gillette in 2022.
The report further indicates that a similar plan is underway for Black Thunder Mine, though the report fails to specify when or if any closures can be expected. Regardless, mine closures fall in line with Arch’s existing plan to reduce its operational footprint in the Powder River Basin (PRB) amid decreasing sales, per the earnings report.
In the final quarter of 2020, Arch sold around 13 million tons of PRB coal with total revenues coming in at approximately $361 million.
This is millions of tons less than the amount sold in the fourth quarter of 2019 and about $189 million less in revenue, according to the report.
With the final quarterly results in, Arch is set to close out 2020 having reported losses every quarter during the fiscal year, totaling $345 million, the report stated, adding that approximately $45 million of those losses were spent on beginning the accelerated closing process for Coal Creek Mine.
Shrinking revenues has spurred action focused on Arch’s upper echelon employment circles as well, with the company taking steps to reduce its number of corporate staff by 25% through a “voluntary separation program” that is expected to reduce overhead by $10 million, according to the report.
Despite the doom and gloom outlook for thermal coal, however, Arch’s PRB thermal coal mines have generated in the past and continue to produce significant levels of cash well above capital expenditures during the fourth quarter, the report stated.
But it’s not enough to stave off mine closures.
“We expect our thermal mines to continue to generate sufficient levels of free cash to fund their own final reclamation and closure costs,” said Arch CEO and President Paul Lang.
Lang calls it a strategic pivot carried out with the utmost sense of urgency, the objective being to continue harvesting value and cash from Arch’s thermal assets as the company focuses on reducing thermal operations.
“We are tremendously proud of the accomplishments of our talented, dedicated, and resilient thermal operating teams, who have shown their mettle again and again in a difficult and declining demand environment,” Lang said in the report. “We value and appreciate their staunch commitment to operating at the highest level while adjusting effectively and nimbly to the realities of the current market environment.”