St. Louis-based Peabody Energy Corp. reported Thursday that the mining company saw its highest level of coal production in Wyoming’s Powder River Basin during the fourth quarter of 2023 since 2019, despite a tornado hitting its flagship mine last summer.
On a call with Wall Street analysts, Peabody Executive Vice President and CFO Mark Spurbeck said the Powder River Basin mines shipped 23.6 million tons of coal in the quarter, the highest quarterly volume since 2019 despite its flagship North Antelope Rochelle mine being hit by a tornado last summer.
He described the volume of shipments as a “testament to our team’s full recovery from the mid-year tornado disruption” with workers “putting themselves in a position to seize an opportunity to load additional trains.”
In late June, a tornado ripped through the North Antelope Rochelle coal mine in northeast Wyoming, causing minimal injuries. The mine — the largest in the nation — was not as fortunate, suffering serious damage that temporarily halted operations.
The tornado damaged a train loading dock and power line to the mine.
Peabody also operates the Caballo and Rawhide mines in the Powder River Basin.
The Outlook
The higher volume of shipments out of the PRB were better than anticipated, Spurbeck said.
In the quarter, Peabody increased the production share of all shipments out of the Powder River Basin from 39% in the 2023 third quarter to 43% in the fourth, he said.
In the 2022 fourth quarter, Peabody shipped 21.2 million tons of coal from the coal-rich basin, down from 22.5 million during the same 2021 quarter.
In this year’s first three months, Peabody estimates coal shipments from the basin to slip to 21 million tons, with an overall target that could hit 85 million for all of 2024.
Peabody President and CEO Jim Grech delivered a cautious outlook on the call with analysts.
“In the United States, electricity generation from thermal coal declined year over year due to low gas prices and the impacts of renewable generation,” Grech said.
“The near-term demand outlook is anticipated to be challenged by comparatively high ... inventories [at the power plants] as we transition into the post-winter shoulder season,” he said.
Holding On
Even so, Grech sees Peabody’s coal business holding up well over the next year despite renewable forms of power — such as solar and wind turbines — having cut into its coal business.
“Renewables continue to grow as part of the energy mix,” Grech said.
However, he said several of Peabody’s utility customers have delayed the retirement of their coal-fired plants to ensure grid reliability.
Utilities are looking to sign longer term coal delivery contracts as they seem to be deferring the closure of power plants.
“One thing we noticed is a desire to have longer term contracts put in place because of concerns about reliability of supply and the potential for plants having longer lives than originally thought to be the case,” said Grech on the call.
“The conversations we are having with our customers, and what we are seeing, is plants that maybe thought they would close in the next few years, are now going out to 2029 and 2030,” he said. “Nobody is making commitments or predictions beyond that. But that is a very good trend to see.”
Profit Fell In 2023
In the 2023 fourth quarter, Peabody reported profit of $192 million on revenue of $1.2 billion versus profit of $632 million on revenue of $1.6 billion in the same quarter of 2022.
Overall for 2023, Peabody reported profit of $759.6 million on revenue of $4.94 billion versus profit of $1.3 billion on revenue of $4.98 billion in 2022.
Last year, Peabody executives cited rail transportation issues and increased costs as lowering performance of Peabody’s Powder River Basin coal mines in the fourth quarter of 2022.
The rail issues were related to labor shortages and cold weather in December 2022. The company ran only one train per day when it planned for 18.
Pat Maio can be reached at pat@cowboystatedaily.com.
