SÃO PAULO The
difficult conditions facing the global metallurgical coal
market will probably lead some U.S. mines and companies to go
out of business, a senior industry executive said at the 6th
Coaltrans Brazil and South America conference in Rio de
"I hate to say it, but not every
coal mine is going to survive in this market," Jack Porco,
president and chief commercial officer of Latrobe, Pa.-based
XCoal Energy & Resources LLC, told delegates April 26.
U.S. coking coal producers have
significantly reduced their output and idled mines over the
past several months to adjust to market conditions. They have
also been looking to increase their metallurgical coal exports
and diversify their markets, he said.
"However, the global markets for
U.S. coal exports wont save every mine in the United
States," Porco said, adding that U.S. coal producers are likely
to announce still more production cuts. "There have been
reductions, and there are likely to be more reductions."
Coking coal prices will have to
increase following these adjustments if U.S. producers are to
remain in the market long term, he said.
American companies "wont
participate in the market just for the sake of participating,"
Most U.S. miners placed "large
bets" in the coking coal market by carrying out expansion
projects and acquisitions a few years ago, he said.
Coking coal prices would need to
be about $200 per tonne in the medium term for companies to
continue to be active in the market, Porco told delegates. "We
hope to see some improvement, for our customers and
AMM sister publication
Metal Bulletins coking coal indices were at
$161.79 per tonne c.f.r. Jingtang, China, for low-volatility
material and $147.83 per tonne c.f.r. Jingtang for
mid-volatility materials last Friday.
Despite the challenging
environment, Porco noted that U.S. coal producers are at least
no longer in the high-cost area of the curve of global coal
production as a result of the investments they have made in
productivity and output cuts at higher-cost mines. "Were
now in the middle to the low cost of the curve," he said.
A version of this article
was first published by AMM sister publication Steel