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Alpha targeting growth abroad: Crutchfield

Keywords: Tags  Kevin Crutchfield, Alpha Natural Resources, coal, metallurgical coal, coal prices, Stacy Irish

NEW YORK — Alpha Natural Resources Inc. aims to expand its presence in Asia and South America, according to chairman and chief executive officer Kevin Crutchfield.

"Part of the company’s strategy since early last year has been setting its sights on more promising growth markets abroad, while adjusting its large portfolio of mines accordingly," Crutchfield told AMM sister publication Steel First.

The Bristol, Va.-based coal producer continues to reduce production at its higher-cost metallurgical coal mines to balance supply with weak demand from U.S. and international steelmakers.

Alpha idled its Boone County mine in West Virginia earlier this month due to challenging market conditions for coal. The company also is shutting down the Justice No. 1 mine, which produces a 50-50 mix of metallurgical coal and thermal coal, and is slowing production at the Liberty preparation plant.

The company confirmed that it is sharpening its focus on metallurgical coal as its core business due to a collapse in demand for thermal coal.

"We’ve taken action to reduce our higher-cost met coal production where we can, without affecting commitments to customers," Crutchfield said. "We have a continuing process to systematically review all our assets against the current market, and we’ll certainly continue to be proactive to ensure that we’re not in a situation of continuing to supply a declining market that does not provide an adequate return on invested capital in the near term."

The company sells its coal production to a number of integrated steel mills in the United States and into international markets, serving customers in about 30 countries on five continents.

"Many people don’t know that Alpha is the world’s third-largest met coal producer," Crutchfield said.

"Our total met coal sales last year were a record 20 million tons, with more than 15 million tons of that going to international customers via several U.S. East Coast terminals, the Gulf (of Mexico) and the Great Lakes," he said. "In just the past five years, U.S. coal suppliers have quadrupled met coal exports to Asia to customers in South Korea, Japan and China, and Alpha has had success there as well. Also, Alpha has been well-placed in the growth regions of Turkey and India."

Alpha’s coal contracts for the domestic market are typically priced using long-term or annual contracts and it hasn’t been subject to the recent well-publicized pricing volatility that has affected the sector.

The company has been watching steel capacity utilization trends in North America, South America and Europe very closely for any early signs of recovery.

"We do closely watch the utilization trends and the flow-on implications utilization has for the coke batteries, and therefore the raw material input needs of our customers," Crutchfield said.

"We have seen a recent shift to lower rank, lower-cost coals as capacity utilization has decreased, reflecting the fact that coke batteries are no longer a production bottleneck and integrated steelmakers can ‘afford’ to lengthen coking cycles by several orders of magnitude," he added.

A version of this article was first published by AMM sister publication Metal Steel First.

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