Walter Energy Inc the world leading, publicly traded pure play producer of metallurgical coal for the global steel industry provided guidance that 2012 met coal production will be between 11.5 million and 13 million tonnes. Also, Walter Energy Inc commented on fourth quarter results and announced that it has made three executive appointments.
Mr Walt Scheller CEO of Walter Energy said "Our production outlook for 2012 represents very robust growth compared with 2011, which was a year of solid gains for met coal production. This change reflects my evaluation during the first three months as CEO of our global operations, strategy and timing of major projects. The executive appointments announced today will help us accomplish our strategic and operational growth objectives. We will provide additional insights into operational results during our earnings call in late February 2012."
2012 Production Guidance
Walter is resetting the range of expected met coal production in 2012 for a number of reasons, including the inherent risks of the mining business and slightly lower expectations from some of the startup developmental projects like the Aberpergwm mine in Wales. The new projected growth of 11.5 to 13 million metric tons compares with prior expectations for 2012 of 13 to 14 million metric tons of met coal.
For 2011, Walter produced 8.7 million tonnes of met coal, including nine months of production from the operations of Western Coal Corp. that Walter acquired on April 1 2011. This excludes the 1 million tons of met coal production Western Coal Corp. had during pre-acquisition first quarter 2011. Compared with the combined base, Walter expected 2012 production represents an increase in the range of 19% to 34%.
1. Fourth Quarter 2011 Results
Met coal sales volume and production in the fourth quarter of 2011 were both approximately 2.4 million tonnes. Similarly for the full year 2011 met coal sales volume matched the above-mentioned actual annual production rate of approximately 8.7 million tonnes.
On a consolidated basis for the fourth quarter of 2011, production was approximately 400,000 metric tons lower than previous guidance and sales volume was approximately 130,000 tonnes lower than previous guidance. The fourth quarter production shortfall was principally due to equipment issues on the second longwall at Mine No 7 in Alabama and unanticipated ventilation issues associated with the startup of the nearby third longwall. The fourth quarter sales volume had a much smaller shortfall due to sales from inventory and sales of purchased coal.
Sales volume from the mines in Canada exceeded 1 million tonnes of met coal which was at the high end of our guidance. These Canadian sales helped to partially offset the Alabama sales shortfall of approximately 280,000 tons but have lower margins than Walter Alabama mines. Additionally, the average selling price for Walter met coal was near the low end of previous guidance and, due principally to lower production volumes in the US the average cash cost per ton was near the high end of previous guidance.
Given this combination of factors, Walter estimates that fourth quarter 2011 financial results were below the low end of its prior guidance. As noted above, actual financial results will be disclosed at end of February 2012.
