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This article originally provided by
The Charleston Gazette
Firm wants to open a new coal mine every 17 days
this year
By The Associated Press
Massey Energy Co. expects to open a new coal mine at a rate of
one every 17 days this year as it continues an ambitious plan to
increase production 25 percent by 2010, a company official said
Friday.
Massey is positioning itself to take advantage of soaring demand and
prices for Appalachian coal. The expansion is centered on
underground coal mines, giving Massey alternatives if a court
decision that would make it more difficult and time consuming to get
federal permits for surface mines is upheld.
"We have all the permits," Chief Executive Don Blankenship told Wall
Street analysts during a conference call Friday. "We have a line of
equipment that's set up that takes us beyond these currently
announced expansion plans."
Labor is another matter.
Massey needs 300 to 400 additional miners and Blankenship said that
will be a challenge. The market for coal miners is already tight in
Appalachia, and expansion plans by Massey and others are making it
tighter. Massey, for instance, recently started giving miners
multiyear contracts to reduce poaching by rivals. That has helped
cut voluntary turnover to 14.8 percent in the first quarter from
21.4 percent last year, Blankenship said.
Massey produced 39.5 million tons of coal last year. Company
officials hope to increase that total to 41.5 million to 43 million
tons this year, 46 million to 48 million tons in 2009 and 50 million
tons in 2010. By the second quarter, Massey should have enough mines
open, although not necessarily at full production, to hit 46 million
tons, Blankenship said.
The latest word on Massey's expansion comes a day after it reported
a 28.5 percent earnings increase in the first quarter, when it
opened nine mines. Massey earned $41.9 million, or 52 cents per
share, on revenue of $644.6 million in the quarter, compared with
$32.6 million, or 40 cents per share, on revenue of $607.3 million
in first-quarter 2007.
The quarter numbers benefited from skyrocketing prices for
Appalachian coal. Central Appalachian steam coal futures, for
instance, recently hit $95.75 a ton - up 127 percent from last
April. Massey has gotten much more - up to $230 a ton for
metallurgical-grade coal used to make coke for steel manufacturing,
Blankenship said.
Massey plans to plow a good portion of the extra revenue back into
operations, rather than return it to shareholders, Blankenship said.
The company expects to spend $310 million on expansion this year, in
addition to $240 million for regular maintenance. Massey also is
purchasing rail cars to ease transportation bottlenecks caused by
high demand for shipping coal from mines to the East Coast for
export. Shipments out of the United States are expected to hit about
90 million tons nationally this year.
"If we can continue to get 50 percent returns," Blankenship said, "I
think that's what the shareholders would prefer."
Massey, the nation's fourth-largest coal producer by revenue,
operates 19 mining complexes in West Virginia, Virginia and
Kentucky. Its stock rose $3.78, or 7.4 percent, to $55.04 Friday
afternoon.
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