Alliance Resource Partners, a leading coal producer in the eastern U.S., foresees a delay in the closures of coal-fired power plants. This prediction is based on projections of higher energy demand in the region.
A Strong Outlook for Coal Sales
Chairman, President, and Chief Executive Joseph W. Craft III expressed optimism for the future, stating, “As we look to 2024, our coal sales book is expected to be equally as strong as last year and be the anchor to deliver another record year of revenues.” This indicates a positive market for Alliance Resource Partners, with over 90% of their coal sales volumes already committed for 2024, at similar price levels to 2023.
Predicting more consistent production in 2024, Craft added, “We are expecting our production to be more consistent in 2024, believing we have moved beyond the several negative geological areas that we faced in 2023.”
Infrastructure Projects in the Pipeline
Looking ahead to 2024, Alliance Resource Partners plans to complete major infrastructure projects at Tunnel Ridge, Hamilton, Warrior, and the River View complex. These projects are aimed at enhancing operational efficiency and further strengthening the company’s position in the industry.
Positive Impact from Rise in Natural Gas Prices
With new LNG terminal capacity expected to come online in 2025, domestic natural gas prices are forecasted to rise. This increase in prices will drive an upsurge in natural gas exports, benefiting both Alliance Resource Partners’ Coal and Royalties segments.
Growing Demand in Industrial and Manufacturing Sectors
Grid planners have significantly increased their five-year load growth forecasts to support ongoing investments in U.S. industrial and manufacturing sectors. This, coupled with rising energy needs from data centers and artificial intelligence, indicates sustained demand for coal. While the progress of electrifying the transportation sector may have slowed down, the enthusiasm for AI has accelerated.
“We remain confident in our projections for sustained coal demand for ARLP and the likelihood that the premature closures of coal-fired power plants in the eastern U.S. will be delayed,” stated Craft, underlining the company’s positive outlook.
Steady Performance in Coal Operations
In 2023, Alliance Resource Partners experienced a decline in per-ton coal sales prices compared to the previous year. However, the company remains optimistic about future growth and expects a more favorable market environment moving forward.
Overall, Alliance Resource Partners anticipates a delay in the closure of coal-fired power plants and projects a strong future for their coal sales, supported by increased energy demand and ongoing infrastructure advancements.
Lowered Coal Sales Prices in the Illinois Basin
Lower export pricing in the Illinois Basin had a significant impact on coal sales prices. Sales prices decreased by 4.2% compared to the 2022 Quarter. Additionally, when comparing to the Sequential Quarter, coal sales prices in the Illinois Basin were lower by 2.8%. These declines can be attributed to reduced domestic price realizations.
Decrease in Coal Sales Price per Ton in Appalachia
In Appalachia, there was a significant decrease in coal sales price per ton. Comparing the prices to the 2022 and Sequential Quarters, there was a decrease of 14.1% and 10.4% respectively. This decline was primarily due to lower domestic pricing, although there was some offset from higher export price realizations.
Increase in Coal Sales Volumes in the Illinois Basin
Despite the decrease in sales prices, coal sales volumes in the Illinois Basin experienced growth. Comparing to the 2022 Quarter, there was an increase of 2.1%. When compared to the Sequential Quarter, sales volumes grew by 6.1%. This increase can be attributed to higher volumes from the Hamilton and Warrior mines, as well as the Gibson South operation.
Decline in Tons Sold in Appalachia
On the other hand, tons sold in Appalachia experienced a decline compared to both the 2022 and Sequential Quarters. This decline was primarily driven by reduced volumes across the region due to various factors. These factors include lower recoveries, fewer operating units at MC Mining, challenging geologic conditions that delayed development at the Mettiki longwall operation, customer plant maintenance, and a longwall move at the Tunnel Ridge mine during the 2023 Quarter.
Total Coal Inventory
ARLP ended the 2023 Quarter with a total coal inventory of 1.3 million tons. This represents an increase of 0.8 million tons compared to the end of the 2022 Quarter. However, it is a decrease of 0.5 million tons compared to the end of the Sequential Quarter.
Impact of Unexpected Temporary Outage at Gulf Coast Export Terminal
The 2023 Quarter coal inventory and tons sold were negatively impacted by approximately 0.6 million tons. This was the result of an unexpected temporary outage at a Gulf Coast export terminal, which is used for export market sales.
