Arch Resources closed out its most recent quarter with $89.1 million in net income with thermal coal segments showing a significant improvement over the previous quarter, the company announced Tuesday.
During the third quarter of 2021 (3Q2021), gross margins for Arch’s Legacy Thermal assets came in at $58 million, an increase of more than 40 percent over the previous quarter that will allow the coal giant to advance its long-term reclamation and retirement plans for operations in the Powder River Basin, according to an Oct. 26 quarterly earnings report.
“We continue to maintain tight capital discipline in our legacy thermal segment and to work to reduce our long-term closure obligations in a systemic and measured way,” said Arch CEO and President Paul Lang in a statement. “While we do that, we are simultaneously continuing to move aggressively to capture the still-significant value of these high-quality assets in an increasingly tight market environment.”
Sales volumes this past quarter across Arch’s thermal coal segments showed a 25 percent increase over the same period last year with the company effectively selling out its thermal mines for 2022 at “record-high pricing levels,” per the report.
Over the last three months, Arch’s thermal assets committed 66.5 million tons of coal priced at $14.03 per ton, according to the report.
As of Oct. 26, Arch remains committed to transitioning away from thermal coal towards steel and metallurgical markets, according to the report, and has reduced its asset retirement obligation in the Powder River Basin by $19.3 million since the end of 2020.
Coal Creek Mine is still slated for closure in 2022 with Arch completing $23 million worth of reclamation at the south Gillette mine to date, the report states.
Care and responsibility are key as the company continues the long-term wind-down of its legacy thermal assets, per the report.
All legacy thermal retirement obligations will be handled in a way that serves the needs of the company’s thermal employee base, mine communities, and thermal power customers, Arch said in the report.
Moving forward, the coal giant remains confident that the thermal mines can and will self-fund their own closure obligations while continuing to provide significant cash flow for the company.
Global and domestic thermal coal markets remain exceptionally strong at present, the report states, with countries around the world struggling to secure sufficient supplies of energy to support quickly recovering economies.
Based on current projections, Arch’s thermal segment should be on track to generate a gross margin next year that “substantially exceeds the entire asset retirement obligation for its thermal mines.”