GILLETTE, Wyo. — Mining company Arch Resources said today that it expects coking coal sales volumes for the third quarter of 2023 to generally align with those of last quarter, not increase, mostly because of ongoing challenges in a mine it operates in West Virginia.
The company estimates its third-quarter adjusted earnings before interest, taxes, depreciation, depletion, amortization, accretion on asset retirement obligations and non-operating expenses will be about 10% lower than they were for the second quarter, according to a news release.
In the second quarter report, which was released in July, Arch said it expected coking coal sales volumes to increase between 5% and 10% from the second quarter to the third quarter, despite less demand.
With the challenges in the first longwall district at its Leer South mine, Arch now anticipates coking coal sales will be 8.9 million tons instead of 8.6 million tons, and its average metallurgical cash cost will be $91 per ton instead of $88 per ton, the release said.
“While we remain enthusiastic about Leer South’s long-term outlook, the conditions in the first longwall district — which, as previously discussed, represented the most capital-efficient access point for the Lower Kittanning reserve base — continue to constrain advance rates,” CEO and President Paul Lang said in the release. “In light of these conditions, we are moderating our volume and cost expectations for the balance of the year, even as we continue to benefit from a strengthening coking coal price environment.”
Discretionary cash flow, which is the cash flow from operations minus capital expenditures, for the third quarter will likely be more than half of the $150.7 million that the company gained in the second quarter of 2023. The second quarter had a working capital reduction of $62.5 million.
Third quarter results will be released Oct. 26.