Noting that spot prices for metallurgical coal have surged recently, Corsa Coal Corp. plans to increase production and sell significantly more tons of metallurgical coal over the coming quarters. The company has commenced development work at Acosta, a deep mine in Somerset County, Pennsylvania, which is forecast to produce 375,000 tons per year of low volatile metallurgical coal once fully operational. Coal production at the mine is anticipated to begin in the second quarter of 2017 and ramp up over the course of the year.
“Extreme global shortages of metallurgical coal have caused prices to increase 250% since earlier in the year,” said George Dethlefsen, CEO of Corsa. “Corsa is taking steps to maximize coal production and sales to capitalize on the favorable market environment. In September, we commenced development work at the Acosta deep mine, which is scheduled to be in production in the second quarter of 2017. We have also increased capacity utilization at existing mines, have redirected tons sold under thermal contracts to the metallurgical market, and are exploring incremental growth opportunities within our portfolio of permitted mines. We expect Corsa’s metallurgical coal sales volumes to increase by more than 70% in 2017 and we expect the 2017 sales mix to be heavily weighted toward the higher-priced export market. We will be providing further guidance on production and sales during the fourth quarter.”
A prolonged downturn in metallurgical coal prices over the past several years has left coal operators in a weakened position to respond quickly with new supply. With low metallurgical coal inventories globally, production difficulties in China and Australia, and signs of improvement in global steel pricing, Dethlefsen believes that metallurgical coal pricing will remain at elevated levels for an extended period of time.
