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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (36620)	5/6/2009 10:05:49 AM
From: LoneClone	Read Replies (1) \| Respond to of 195744

Foundation Coal trims forecast on potential for customer deferrals miningweekly.com By: Liezel Hill 5th May 2009 Updated 1 hour 30 minutes ago TORONTO (miningweekly.com) – US coal producer Foundation Coal has lowered its guidance for coal shipments this year and in 2010, to reflect expected deferrals by customers. Foundation now only expects to ship between 70-million and 73-million tons of coal in 2009, down from an earlier estimate of 73-million to 76-million tons. Last year, Foundation sold 70,9-million tons. In the first quarter, earnings were affected by reduced shipments on a few customer contracts, which cut Foundation's earnings before interest, tax, depreciation and amortisation by some $22-million, CEO James Roberts said on a conference call on Tuesday. Of this, $15-million could be attributed to one specific metallurgical customer, which has refused to accept contracted shipments. Foundation has launched legal action against steelmaker ArcelorMittal, claiming breach of contract. The company has adjusted its 2009 shipment guidance, to include the assumption that unsold tons are unlikely to be shipped in 2009, and reflect an estimate of customer deferrals that it believes are likely this year, Roberts said. “We have put a number in there that we are assuming might occur.” The company is talking to several domestic steam coal customers that have indicated they may need to defer shipments, and will try to negotiate for delivery of the coal tonnages over a longer period of time. “We expect those tons will be, in most cases, deferred into 2010 and possibly 2011,” Roberts said. The customer pushback reported for the first quarter is "not surprising”, Dahlman Rose analyst Daniel Scott said in a research note. But he added that the downward revision to full-year 2009 sales was “a bit more than we expected”. In 2010, Foundation expects to ship between 70-million and 74-million tons, of which 80% is committed and about 72% is committed and priced. Shares in the company slid 0,68% on Tuesday, to $20,53 apiece by 14:13 in New York. CUTS STILL TAKING EFFECT In the US, power utilities are struggling to consume the coal they have contracted for, there is little new contracting and some utilities are even being forced to sell coal into the market, which puts added pressure on prices and demand, Roberts said. Stockpiles are rising at many mines, and most US coal producers have announced a series of production cutbacks, in an attempt to shore up prices. However, production cutbacks are being rolled into gradually and have yet to be fully realised, Roberts said. He estimates that, for US supply and demand to come into balance this year will likely require as much as 80-million to 100-million tons of production capacity being taken off line. So far, announced US production cutbacks total approximately 60-million tons. The need to further reduce supply can be “clearly seen in stockpile levels”, which are rapidly approaching record high levels, he said. SWING TO LOSS Foundation posted a first-quarter net loss of $4,5-million in the first quarter, compared with $6,2-million profit in the same period of 2008. Earnings were affected by two scheduled longwall moves at the company's Cumberland and Emerald mines and the deferred customer shipments, particularly in the case of ArcelorMittal. Foundation announced in January that it would idle its high-cost iLaurel Creek mining complex, in West Virginia. The firm also said on Tuesday that capital expenditure for 2009 will be trimmed to between $190-million and $210-million, compared with an earlier forecast of $190-million to $240-million.