Peabody Energy Corp., the largest coal producer in Wyoming and the United States, saw coal sales out of its Powder River Basin open-pit mines drop 16.4% in the second quarter of 2024 from year-ago levels as profits continued to fall, company reported Thursday.
Peabody President and CEO Jim Grech cited depressed natural gas prices as a main reason for the challenges with selling coal as utilities selected the ore’s rival commodity to fuel their power plants.
Still, said Grech, the segment had “strong cash performance” in a presentation to Wall Street analysts.
Meanwhile, St. Louis-based Peabody Energy lowered its forecast for coal sales out of the energy-rich Powder River Basin in northeastern Wyoming by 5 million tons, a sign of further constriction in a market that is struggling to keep its relevance amid a world enamored with alternative energy plays in the wind and solar sectors.
Mines in the Powder River Basin are struggling to regain their footing. Wyoming recently reported a 25% drop in all coal production in the region during the first six months of the year as compared to 2023 levels.
Historic Lows
Peabody is no different.
For all of 2024, Peabody now forecasts 75 million to 82 million tons of coal production out of its mines in the basin, 5 million less than what it projected three months ago.
The North Antelope Rochelle Mine, the world’s largest coal mine, reported 12.4 million tons of coal produced in the second quarter, down 4.7% from 13 million tons in the same 2023 period.
The highest volume ever produced during a second quarter at the North Antelope Rochelle mine came in 2014 when it pulled 28.5 million tons out of the ground. That’s 56.5% more than Thursday’s report of 12.4 million tons.
Peabody’s biggest haul a decade ago came at time when America was grinding out a return to economic normalcy following the Great Recession back in 2008 and 2009 after a mortgage and financial crisis crippled the nation.
In all of 2014, Peabody’s coal production in Wyoming’s coal stronghold was in line with the most coal that was ever pulled out of the mine on an annualized basis. In that year, nearly 118 million tons was dug up from the North Antelope Rochelle mine.
In the first half of 2024, Peabody dug up 25.8 million tons, 56% less than the 58.4 million tons produced in its 2014 record year.
Peabody’s other mines in the Powder River Basin displayed similar performance in the 2024 second quarter, according to Peabody and Wyoming State Geological Survey data.
Peabody’s Caballo mine produced 1.7 million tons in the second quarter, down 54% from 3.7 million produced a year ago. It’s nearly the lowest in production out of Caballo since the second quarter of 2014 when it saw 1.67 million tons produced.
Peabody’s Rawhide mine saw production slip 54% to 1.7 million tons in the quarter versus 3.7 million tons in the same year-ago period.
Cost Containment
In the second quarter, Peabody said that it sold 15.8 million tons of coal in total from the the Powder River Basin, an amount at the low end of guidance due to continued “cost containment measures.”
That’s 16.4% less than what Peabody delivered in the second quarter of 2023.
Peabody said that shipments increased as the second quarter progressed, confirming expectations by the company for higher volumes in the second half of 2024.
In the quarter, the segment saw profit before taxes and other expenses of $17.8 million for its Powder River Basin coal, down 32% from the same year-ago period.
Companywide, Peabody’s profit before taxes in the quarter grew 11.3%, partially boosted by a one-time insurance settlement of $109.5 million on “property loss and business disruption” at its Shoal Creek underground mine in 2023.
Peabody Coal, which was struck by an underground fire at its Shoal Creek Mine in March 2023, reported over a year ago that the affected areas in the Alabama mine have been sealed.
Peabody mines metallurgical coal at the site about 35 miles west of Birmingham at depths of 1,000 to 1,300 feet. The mine produced 800,000 tons of coal in 2022.
For the second quarter ended June 30, Peabody reported profit of $199.4 million on revenue of $1.042 billion versus profit of $179.2 million on revenue of $1.26 billion a year ago.
Pat Maio can be reached at pat@cowboystatedaily.com.
