US miner Arch Coal said Tuesday it had cut its 2017 met coal sales guidance to 6.6 million-6.8 million st, from earlier expectation at 6.9 million-7.1 million mt, due to lower third-quarter mine production on geological issues.
Arch in Q3 suffered production losses at the Leer, high-vol A, and Mountain Laurel high-vol B producing coking coal mines, the company said in a report.
At the 6.7 million st midpoint of volume guidance, Arch exceeds 98% commitment on full-year sales, with 10% of that committed volume exposed to index-based pricing.
Arch said Q3 coking coal sales totaled 1.8 million st at an average $99.21/st FOB Mine, compared with 1.5 million st and $103.44/st FOB Mine in Q2 2017.
"Average coking coal realizations continued to be supported by index-linked tons that priced during the period, but were partially offset by annual fixed-priced tons contracted prior to the start of 2017 and sequential decreases in the Platts East Coast assessments," the company said.
In Q3 2016, prior to the finalization of the company's restructuring at the end of 2016, Arch sold 1.6 million st of coking coal at $57.80/st Mine.
The St Louis-based company produces met coal also at the Beckley, Sentinel and last quarter at the Lone Mountain PCI and thermal mine, which has been sold effective September 14. The mines contributed to offsetting Leer and Mountain Laurel's poorer output.
"We experienced tough geologic conditions at both the Mountain Laurel and Leer mining complexes, which contributed to lower-than-expected volumes and higher-than-expected costs," Arch Coal's President, Paul Lang, said in a statement.
"While challenges such as these are expected from time-to-time in our industry, it is unusual to confront issues at two mines simultaneously."
Arch encountered difficult start-up conditions in the transition to the Cedar Grove seam at Mountain Laurel and found an "acute roll" in the coal seam at the Leer mine, it said.
