International Coal Group Q3 2009 Earnings Call Transcript

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2009-10-29 18:15:22.0

Tags: Call Transcript, Ton, Earnings, UBS AG, International Coal Group, Construction, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions). Our question come from a line of Shneur Gershuni from UBS. Please proceed.

Shneur Gershuni - UBS

Hi.

Bennett Hatfield

Good morning.

Shneur Gershuni - UBS

Just a couple of quick question here. Just kind of looking at your 2010 guidance and so forth. You mentioned 1.2 million tons are uncommitted, are metallurgical coal tons. I was wondering if you can kind of give us your total that you plan to produce next year and what's your maximum capability is with respect to the met coal and also with respect to 2010 guidance and if you can also about how fast you can bring workers back on and bring tonnage back on if the market turns faster than you think.

Bennett Hatfield

First speaking, first as the production question. As we noted our current forecast cost for producing between 16 and 17 million ton, but your point is on target and that certainly reflects substantial cutbacks of existing production capacity because of the weak thermal market. Over the course of the last three quarters, we have shredded over 30 million tons of annual production capacity.

So, if we have a much more favorable thermal market there is certainly a substantial portion of that production that could be brought back on line. But I would offer to caution and certainly we would not be doing so unless we see attractive margins.

Permitted mine reserves that is reserves that are ready to produce are already faced up, already developed and have approved from it from becoming an increasingly scarce resource, particularly in the current regulatory environment. So, we want to make sure that the margin is there to just completing that resource before we reactivate production.

So, we will be very cautious on proceeding with any restarts that we would have the capacity available to those productions with reasonable notice by any growth from about 2 to 3 million tons certainly for 2010.

Shneur Gershuni - UBS

And with respect to your metallurgical capabilities on both the high and low wall?

Bennett Hatfield

Well, at 2.2 million tons which is our current forecast. That's why we consider that the comfortable achievable level for 2010. And as that reflects a step up our new Beckley low-volatile operation as well as improved output at our Central (ph) highwall metallurgical mine. So, we are comfortable with that forecast for 2010. There is certainly another incremental production available with we have a very strong market because we have a variety of coals that are kind of on the bubble so to speak as to whether they go into the thermal market or the metallurgical market, and several of those did well in export blend, particularly thanks to the favorable reality of our household and our low wall coal.

 

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