Coal Age

JUN 2019

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June 2019 19 illinois basin continued dropped by nearly 10 million tons as it closed several mines in a down mar- ket. With 25.4 million tons of produc- tion in 2016, Alliance still controlled 25% of the ILB market. In 2017, Alli- ance produced 27.3 million tons and controlled 26% of the ILB market. Now that Robert E. Murray has control of Foresight Energy and Armstrong Coal, he is now the second-largest operator in the ILB controlling 27% of the market with 28.6 million tons produced during 2018. Peabody Energy controlled 18% of the market with 18.6 million tons produced. ILB Exports From 2005 through 2012, exports increased from 300,000 tons to 17.1 million tons. Due to low API2 prices, exports dropped to 10.3 million tons in 2015 and an estimated 6.5 million tons in 2016. ILB exports would have been lower except that during late 2016, the API2 index increased sub- stantially, which caused a surge in ex- ports during the fourth quarter. Continuing strength in the export market allowed ILB exports to increase to 11 million tons in 2017. As much as 20.4 million tons of ILB coal may have been exported during 2018, although that has not been confirmed yet. With a weakening of the API2 price in 2019, that figure could drop to 15.3 million tons by the end of the year with an up- side potential of that matching 2018. Historically, Foresight Energy and Murray Energy have been the lead- ers in ILB coal exports. Representing 84% of total ILB exports, the top ILB exporters during 2012 were Foresight Energy (6.3 million tons) and Murray Energy (4 million tons). In 2014 and 2015, all but Foresight Energy and Murray Energy dropped out of the ILB export market. In 2017, Foresight exported 5.8 million tons and increased that to 8.9 million tons in 2018. For 2019, Foresight could ship a minimum of 6 million tons into the export mar- ket and possibly as much as 9 million tons. Most, if not all, of Foresight En- ergy's and Murray Energy's coal is ex- ported through the SunCoke Convent Marine Terminal in Louisiana. For 2019, Foresight has publicly stated it has a minimum of 6 million tons of exports planned. Thanks to its low sulfur produc- tion from its Gibson mine complex in Indiana, Alliance jumped into the market in late 2016 and exported around 5 million tons in 2017. During 2018, Alliance reopened its 2.5-mil- lion-ton Gibson North mine, mainly to supply the Indian export market. Alliance's exports increased to around 10 million tons in 2018 as a result. Some of the coal moves via the Nor- folk Southern Railway to Lambert's Point in Norfolk, Virginia, with most of the rest moving through New Orleans, mainly through Trafigura's Burnside Terminal. Additional shipments are believed to have moved through Mo- bile. For 2019, Alliance may have con- tracted a minimum of 8 million tons into the market with some upside po- tential of matching that of 2018. Knight Hawk, which is 49% con- trolled by Arch Coal, exported a small amount of coal in 2012 and 2013. Last year was a banner year with Knight Hawk exporting slightly under 700,000 tons. For 2019, they have plans to ship up to 1.2 million tons into the export market. It is believed most of Knight Hawk's export coal moves down the Mississippi River and is transloaded into vessels by midstreamers. Determining the future of ILB ex- ports is problematic due to several take-or-pay throughput agreements that ILB producers have with Convent Marine Terminal. The terminal has di- rect rail access and the current capa- bility to transload 15 million tons per year of coal. The facility is supported by long-term contracts with volume commitments covering substantially all of its current capacity. Trafigura, with its purchase of the Burnside Terminal, turned the Burn- side facility into a state-of-the-art bulk terminal. Phase I provided for barge to vessel and Phase II added CN rail to vessel. Gulf Coast export capacity was greatly expanded through the mid- stream loading of vessels. Three companies (Associated Terminals, St. James Stevedoring and Cooper Con- solidated) have developed significant midstream loading capabilities in the Gulf. It should be noted that the Kind- er Morgan Deepwater Terminal in

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