Coal Age

MAR 2013

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news continued Continued from pg 6... year's 47.19 million mt, according to a company report. The company's 2012 production fell by 1% compared with 47.67 million mt a year earlier. Despite lower production, Adaro's coal sales rose by 1% to 47.41 million mt in 2012 compared to 47.17 million mt a year earlier. Adaro also said in its report that it would maintain its expansion this year, but would spend less on heavy equipment. "We began purchasing heavy equipment in 2011 to maximize productivity, improve efficiency and minimize accidents. During the fourth quarter of 2012, we spent $11.3 million on a few 200-ton class and 150-ton class Komatsu and Caterpillar trucks, which brought our total 2012 investment to $129 million," the report said. "There will be less heavy equipment spending ahead as our current fleet provides us with adequate production capacity for 2013." Other coal miners had previously announced their expectations of higher production this year. PT Berau Coal Energy is targeting 23 million mt in production this year, while PT Bumi Resources is aiming to produce up to 85 million mt. NWR Reports Loss for 2012 on Coking Coal Weakness New World Resources (NWR) swung to a full year loss as its revenue for the 12 months end December 2012 dived 20% lower in what it described as a tough year that saw coking coal prices slump 30%. The company loss for the period was €1 million, from a profit of € 130 million in 2011. Its revenues totaled €1.29 billion, from €1.63 billion a year earlier. During the year, coal production totaled 11.2 million metric tons (mt) and external sales totaled 9.7 million mt. The external sales mix was 51% coking coal and 49% thermal coal. "The ongoing macroeconomic uncertainties in Europe as well as the slowdown in Asia have affected business sentiment, and this has had a knock-on impact on steel markets and associated raw materials including coking coal," said Executive Chairman Gareth Penny. "2012 has been a tough year for NWR. In the coking coal business, continued pricing pressure during the year led to a 30% decline in the price of coking coal year-on-year. However, our sustained efforts on cost control delivered our guided mining unit costs for 2012, which remained broadly flat on the previous year, and partially mitigated the difficult pricing conditions." Penny added that the company coking coal prices continue to improve during 2013 after a slight uptick in the first quarter, as significant volumes of less competitive global coking coal supply went offline in 2012, and projects that would have brought new supply on stream in the long-term are either delayed or abandoned. Hyundai Merchant Signs Coal Delivery Contract South Korean shipping firm Hyundai Merchant Marine said it signed a 120 billion won ($109.5 million) long-term contract to deliver bituminous coals for power plants with state-run Korea Western Power. According to Maeil Business Newspaper, under the contract, the Korean shipper will ship 15 million metric tons of soft coals with 1 million metric ton every year for 15 years from 2016 from Australia, Canada and Indonesia to Korea. The shipping company will employ a Panamax bulk carrier for the delivery. Earlier, the company won coal delivery contracts worth 760 billion won in total with three power generating companies. Continued on pg 10... 8 www.coalage.com After that warning was conveyed to coal operators, Woods said the phone lines at his Springfield office "burned up." His response: "I got your attention, didn't I? This is what I was after." Woods, who was appointed to the post last year following the retirement of longtime Mines and Minerals Director Joseph Angleton, said he takes it personally when a miner is injured on the job in Illinois. "We have to send a very clear message," he said. "We've had two very young men fatally crushed to death. This is not acceptable and we will not accept it." In the early going, the message appeared to be getting through, he said. "There's some companies who catch someone in the red zone, they will terminate that employee. I'd rather have someone unemployed than have a widow." Woods said the state intends to "rigorously enforce" the red zone edict. "Every inspector went to every mine on all three shifts," he said. "The coal mines are talking to people about the red zone. I feel very comfortable about that." Trinity & Frasure Creek Creditors File Bankruptcy Petitions Claiming they are owed in excess of $100 million in unpaid bills, creditors of Trinity Coal Corp. and its Frasure Creek Mining affiliate have filed involuntary Chapter 11 bankruptcy petitions against the U.S. subsidiaries of India's Essar Group. In early March, the U.S. Bankruptcy Court for the Eastern District of Kentucky in Lexington had not yet issued a ruling on requests by one group of creditors—Credit Agricole SA, ING Groep NV and Natixis—to appoint a Chapter 11 trustee to essentially take over Trinity's business operations. They contend Trinity has defaulted on bills totaling about $104.3 million. Those creditors also joined a separate involuntary Chapter 11 suit filed in the Lexington court by three Frasure Creek creditors: Austin Powder Co., Cecil I. Walker Machinery and Whayne Supply Co. They allege Frasure Creek owes them more than $20 million for goods, services and parts they provided. Trinity, acquired by Essar for $600 million in 2010, is a Central Appalachian coal producer with holdings in Breathitt, Floyd, Knott, Magoffin and Perry counties in eastern Kentucky and Boone, Fayette, Mingo, McDowell and Wyoming counties in West Virginia. The company's operations produce both steam and metallurgical coal. In a court filing, Ronald Spitzer, managing director in the asset recovery group at Credit Agricole, said he had "lost all confidence in Trinity's current management team and in Essar's ability to effectively oversee Trinity's operations." Trinity has been in default under Credit Agricole's credit agreement since August 2011, he said, and stopped making scheduled quarterly principal and accrued interest payments in June 2012. Since then, he said, Credit Agricole has issued Trinity eight reservation of rights and notice of default letters. Spitzer traced Trinity's alleged management troubles to the mid-2011 resignation of the company's entire management team, including CEO Ken Woodring, along with its CFO, chief operations officer, senior vice president of marketing, senior vice president of business development and general counsel. "Since that time, Credit Agricole has witnessed Essar keep Trinity's management and board of directors in a constant state of chaos," he said. Since Woodring's departure, Trinity has had four CEOs—Madhu Vuppuluri, Mark Clemens, Doug Blackburn and Vijay Modi, according to Spitzer. "Of these, only two—Mark March 2013

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