Go Consol!

International Longwall News April 24, 2009

Consol flies high

Angie Bahr

Friday, 24 April 2009

CONSOL Energy has produced one of the best quarters in its history despite the economic times, with CEO Brett Harvey confident of a bounce-back in coal pricing as early as 2010.

“Despite the weakened economy, Consol was able to achieve outstanding net income and earnings per share. Both our coal and gas segments performed extremely well in these difficult times," Harvey said.

The Appalachian producer posted a net income of $US195.8 million, 260% above the 2008 March quarter, as it continued in the slipstream of higher pricing. It also posted record operating cash flows of $249.8 million.

For 2009, the company has planned coal production at an average realised price of $59.83 per ton, 23% higher than 2008.

Despite the record financial results, cracks did begin to show in the quarter with total coal sales down, as the weak economy reduced coal burn at utilities and the coal needs of steel companies.

"Because of the economy, Consol Energy is working with some of its customers to postpone shipments where needed. We have long-term relationships with our customers that we value highly, but we expect to capture the value for our shareholders in the contracts we have signed," Harvey said.

"One option we're pursuing is spreading the value over future tonnage."

Coal production was 16 million tons for the quarter, down only slightly on the 16.2Mt in the same period last year.

"Consol Energy will match its production with actual customer shipments. We are in the business of creating value for our shareholders, so we will not produce coal just to build inventory. When shipments rebound, so will our production."

Consol has already closed its Buchanan and Mine 84 complexes.

Operating costs for the quarter were $32.30/t – 14.1% higher, with supply and maintenance costs increased and installation of higher-grade seals as well as a higher number of seals built contributing.

Commenting on the costs, Harvey said idling of some of Consol's higher-cost mines in the middle of the first quarter could help mitigate unit cost pressures during the rest of 2009.

Looking ahead, Harvey was relatively positive.

"Clearly, coal stockpile levels at power generators and the domestic gas storage level is impacting near-term pricing," he said.

"However, we believe that the rapid response by coal and natural gas producers will bring the current oversupplied situation back to equilibrium more rapidly than in previous downturns.

“We believe that stockpile levels for utilities burning Northern Appalachian coals are still at significantly lower levels than those burning PRB coals. In addition, energy companies with less than stellar financial positions could find it very difficult to obtain reasonable financing terms to maintain their operations.

“We believe that this will impact supply and could set the stage for higher coal and natural gas prices as early as 2010."

Harvey said Consol was aggressively managing coal production at its mines, carefully managing relatively low inventory levels and monitoring liquidity during this period of tight credit markets and a cloudy economic outlook.

Byrd Stimulus For Coal

United States Senate
Washington DC 20510

February 19, 2009

Dear Friends:

Over the years, there have been many myths written about coal.

It was once said that coal grew from seeds in underground caves, guarded by demons and dragons. Coal was once praised for its medicinal powers to protect against plague, while others cursed it for causing baldness. In 14th Century England, King Edward I – you will remember him as Longshanks from the movie “Braveheart” – launched the medieval environmental movement when he tried to ban the burning of coal, proclaiming that anyone caught using it would suffer the loss of his head. In 19th Century America, coal was considered a “green” alternative energy, advocated by those who opposed the hunting of whales for oil, and the destruction of forests for wood.

The myths and varied perceptions about coal continue to proliferate to this day, often shaped more by environmental and safety concerns than by recent advances in the use of coal For instance, a lot of progress has been made because of the Clean Air Act, which addressed what was believed to be the major challenge in the 1970s and 1980s – acid rain. But, as we have seen, coal’s public persona continues to evolve. Now, carbon emissions are deemed to be the major challenge, and those of us who understand coal’s great potential in our quest for energy independence must continue to work diligently toward that new solution.

I recently met in my U.S. Capitol office with the new U.S. Secretary of Energy Steven Chu. I wanted the new Secretary to recognize the critical importance of coal to America’s energy future. I endeavored to enlighten him as we discussed a previous comment that he made about coal’s being our “worst nightmare.” At my request, Secretary Chu agreed to visit the National Energy Technology Laboratory in Morgantown, to see West Virginians at work making coal cleaner and more energy efficient through technology.

In addition, I have helped to secure $3.4 billion for clean coal technologies in the stimulus bill recently passed by the Congress and signed by President Obama. This is an enormous sum of money, in terms of what is usually possible in the annual appropriation process. These are dollars which will both create jobs and move us toward a cleaner environment and energy independence.

I remain bullish about the future of coal in our national energy policy, and so very proud of the miners who labor and toil in the coalfields of West Virginia. In Washington and in West Virginia, this time holds great promise of a new era, putting an abundant supply of clean coal to work for an energy independent America.

With Kind regards, I am

Sincerely yours,

Robert C. Byrd

The Sky ISN'T Falling

Here is a little more proof that the media spin is negative.

Before you read this:

• This is a Pittsburgh paper
• The vast majority of coal produced locally is used for electricity production-off less than 3% as quoted in the article
• Our local mines have been working OVER capacity to provide coal to the steam market in 2007 and 2008. Dropping production by 3% at a mine that produces 3 shifts per day, 6 days per week amounts to 0.54 shifts of reduced work per week. My guess is that most miners would be thrilled to work a few less hours after working pretty much every weekend for years.
• The 84 Mine closure announcement was first made way back in 2006. The “loss” of these jobs is old news.
• Speaking of old at 84… We have worked a lot at that mine (it is 15 minutes from here). Many of those jobs were retirement age people anyway. The UMWA retirement package is defined benefit-so it is not impacted short term by the economy.
• There is a shortage of people in coal right now. So, throwing anyone into the market for our other mines will actually help alleviate a real problem.
• The mine in Northern WV that they reference is actually in Western Virginia. Almost all of its coal is for the steel market. That mine is 4 hours from here. I know it belongs to Consol, but why is it news here?
• The picture stinks
• The price of coal on the spot market in June of “06 was about $36/Ton. We were mining like crazy at that price. Do you think we’ll be OK at today’s spot market price of $66/Ton?
• Consol’s average price per ton already sold in 2009 is $61.56. They have sold 95% of their capacity in 2009. Their average price per ton in 2008 was $48.77. Their direct cost to mine a ton in 2008 was under $32/Ton.

Don’t let the newspaper get you down. Maybe the headline could have been: “Coal still burns brightly in down economy”

Ugh.

http://www.post-gazette.com/pg/09049/949786-28.stm

GO COAL IN THE OHIO VALLEY

Still Working in the Coal Mine

By JENNIFER COMPSTON-STROUGH

MOUNDSVILLE - Many local companies - from retailers to steel giants, the chemical industry and hospitals - have announced job cuts and layoffs in recent weeks, but Consol Energy Inc. has no plans to reduce its work force in the Upper Ohio Valley.

Read More

Newsweek Weighs In On the Heavyweight Bout

On the campaign trail, President Obama embraced the coal industry's vision of "clean coal" technology. But even before he took office, a coalition of environmental groups (including Al Gore's) launched ads ridiculing the idea as a myth: "In reality, there's no such thing as clean coal."

We're sure to hear more of this debate in coming months. Burning coal creates large quantities of carbon dioxide, the most prevalent of the "greenhouse gases" that scientists say is heating up the planet and Obama has said he wants to reduce.

Is "clean coal" possible? Our answer: Probably, though it would come with a big price tag.

Link to Article

New Energy Secretary Likes Clean Coal

President-elect Barack Obama's choice to head the Energy Department told senators that developing "clean coal" technology must be a national priority, as a slew of Cabinet appointments sat for confirmation hearings Tuesday...

...Mr. Chu clarified previous remarks he had made that coal was his "worst nightmare," saying that the nation will have to rely on coal power while it develops alternative energy sources and improves energy efficiency.

"It doesn't mean that you stop everything today," said Mr. Chu, drawing an analogy between the need for coal and nuclear energy, while the nation improves technology for cleaning and disposing of both sources. "It's very much like coal," he said. "We will be building some coal plants, and one doesn't have a hard moratorium on something like that while we search for a way to capture carbon safely. It's very analogous in my mind." (More)

Not Zero, But...

Donna Caudill
Monday, 12 January 2009

United States mining industry marked its lowest number of deaths ever in 2008 at 51, but powered haulage continued to be the leading cause of death, according to data released last week by the US Mine Safety and Health Administration.

Mine Safety and Health Administration head Richard Stickler In total, coal mining accidents took 29 lives, 22 died in metal/nonmetal mines and 28 worker fatalities were marked at surface operations.

The total number was four less than the previous record set in 2004, and was a 31% drop over 2007. The fatality rate for coal mining alone was the lowest since 2005.

MSHA officials noted that powered haulage was by far the leading cause of deaths in mining across the board last year, with 15 fatalities. Coal mining made up 10 of the fatalities while five were at metal/nonmetal mines.

Taking the top spots for deaths in the US were Kentucky and West Virginia, which each had eight. Utah did not have any in the first full year following the Crandall Canyon collapse that killed nine in August 2007.

Overall, according to MSHA data extending back eight years, mining fatalities have dropped 46% and the rate of injuries in that same period has also dropped steadily by 36% from an all-injury rate of 5.07 in 2000 to 3.24 last year.

MSHA acting assistant secretary of labor for mine safety and health Richard Stickler said the year was a milestone in terms of safety and enforcements in many areas, as 2008 was the first time MSHA ever completed all of its mandated safety and health inspections.

Just between 2007 and 2008 in coal, regular inspections increased 12% while there was a 46% rise in inspection hours, a 33% increase in orders and citations and a notable 209% rise in assessed penalties.

Part of that progress is due to the large-scale hiring of federal mine inspectors across the entire nation. Since 2006, 260 new inspectors have come online with a net gain of 169 full-time workers. At current, there are 754 inspectors in the US in coal alone.

Also, the agency marked its first-ever issuance of a pattern of violation notice, implemented a total of eight final rulings for safety and health issues, and collected a significant amount of monetary penalties from delinquent operators.

MSHA recorded a significant jump in civil penalties as well in 2008, with 198,700 for violations versus 130,100 in 2007. During that timeframe, assessed penalties increased more than twofold from $US74.5 million in 2007 to a single-year record of $194 million last year.

In fact, according to federal data, enforcement actions over all types of mining were marked in the eight-year period logged.

There was an 80% increase between 2000 and 2008 from 3122 in the first year to 5628 last year. Accordingly, the total dollar amount assessed inflated 622% from an average $23 million per fiscal year to an average $166 million during the same period.

After defining a “flagrant violation” as part of the MINER Act of 2006, the agency placed a significant focus on them in the two years to follow.

In 2008, 74 flagrant violations were issued to mines, a staggering increase over the 15 assessed in 2007, and the violations totalled $11,474,400 and $2,588,200, respectively.

“Although these numbers demonstrate continuing improvements at our nation's mines, they also represent significant loss to the families and friends of 51 miners," said Stickler.

“We must continue to be vigilant in our efforts to bring all miners home safe and healthy at the end of every shift."