Contura Energy Will Accelerate Exit From Thermal Coal Business, Citing Global Transition Away From Fossil Fuels

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BRISTOL, Tenn. (OVR) — A major Ohio Valley coal producer announced last week it will speed up its exit from producing coal used to generate electricity. In a call with shareholders last week, Contura Energy, Inc., said the move is tied to the ongoing global transition away from fossil fuels.

Piles of coal
[File Photo]
“We recognize that the world is transitioning toward an economy that relies less on fossil fuels for power generation, and we therefore have accelerated our strategic exit from thermal coal mining,” said CEO David Stetson.

The largest market for coal has traditionally been “thermal” coal, or that used in power stations. A smaller but lucrative market exists for “metallurgical” coal, which is used in making steel.  Executives said Contura plans to focus its operations solely on producing metallurgical and expects to be out of the thermal coal business by the end of 2022.

The Tennessee-based company operates both thermal and metallurgical mines in West Virginia, Virginia and Pennsylvania. Contura in 2018 purchased Alpha Natural Resources. The companies previously split during bankruptcy in 2015.

The 2018 merger turned Contura into the largest metallurgical coal producer in the U.S. Its portfolio also includes mines owned by Massey Energy, which in 2011 was acquired by Alpha Natural Resources following the April 2010 explosion of the Upper Big Branch Mine that killed 29 miners.

Contura last year exited its thermal coal operations in Wyoming’s Powder River Basin. Earlier this year the company announced it is actively seeking a buyer for its Cumberland mine, which produces thermal coal, in Greene County, Pennsylvania. Operations will cease by the end of 2022 if a buyer isn’t found.

The company also said the COVID-19 pandemic continues to hurt coal prices. In April, Contura idled its operations for several weeks to cut costs.

Contura reported a $238 million net loss in its second quarter. Executives said the company will idle its Kielty mine, which produces both thermal and met coal, and the Delbarton prep plant in southern West Virginia in the next six weeks.

Three new metallurgical coal operations are in the works, at the Road Fork No. 52 Mine, Lynn Branch and Black Eagle Mine.

“Even in spite of the disruptions caused by the COVID-19 pandemic, development at our new metallurgical mines remains on schedule,” said COO Jason Whitehead.

In 2018, federal data show Contura was the 10th largest coal producer nationwide.