Diversified fuel producer
CONSOL Energy Inc.
) announced that its Bailey Preparation Plant in Southwestern
Pennsylvania has resumed coal production. The temporary
disruption in production was due to partial structural failure in
a newly installed belt system. The conveyor belt system plays an
important role in the entire process as it helps to transport the
coal produced from the mines.
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The failure resulted in the suspension of longwall production
from the company's Bailey and Enlow Fork mines. However, this
temporary outage did not impact the sales guidance for the third
quarter. CONSOL Energy reiterated its third-quarter sales
guidance at 13.4 to 13.9 million tons.
Bailey and Enlow Fork Mines produce thermal coal. The combined
production from these two mines was 16.6 million tons out of its
total production of 56 million tons in 2012.
CONSOL Energy has nearly 4.5 billion tons of proven and probable
coal reserves and 96% of its coal production comes from its
underground operations. CONSOL resorts to longwall mining
techniques where the geology is favorable. Longwall mining
techniques increase the production output in comparison to other
conventional mining techniques. A major portion of CONSOL
Energy's coal is produced using longwall techniques.
The recovery in natural gas prices could revive the demand for
thermal coal. However, the present supply glut has put a downward
pressure on coal prices. Having said that, the receding
stockpiles are likely to create fresh demand for thermal coal.
Moreover, the demand for the premium variety of coal is expected
to improve, as a report from World Steel Association suggests a
3% yearly increase in steel demand in 2013 and 2014.
CONSOL presently carries a Zacks Rank #4 (Sell). Other operators
in the sector having a favorable rank and worth considering are
Alliance Resource Partners L.P.
Alliance Holdings GP, L.P.
Oxford Resource Partners, L.P.
). All of them presently carry a Zacks Rank #1 (Strong Buy).