Rail service disruptions in the PRB affect Arch Coal's fourth-quarter earnings

Lower-than-expected shipment levels in the Powder River Basin (PRB) and lower production levels at the Mountain Laurel complex in Appalachia will impact Arch Coal Inc.'s fourth-quarter 2013 financial results, the company announced yesterday.

PRB shipment levels decreased more than 15 percent compared with the third quarter due to "rail service issues on the joint line," according to an Arch Coal press release.

"Arch's fourth quarter shipments were impacted as its current mix of sales contracts skews more heavily toward customers utilizing the rail operator with the majority of the shortfall," the press release stated. "Arch noted that this shipmen shortfall had a predictable increase in fourth quarter unit costs in the region."

The lower-than-expected shipments caused thermal volumes to fall below Arch Coal's projections for 2013, as well.

"Although rail disruptions impacted our PRB operations in the fourth quarter, we would expect to make up a majority of those shipments during 2014, as rail service improves throughout the year," said Arch Coal President and Chief Executive Officer John Eaves in a prepared statement.

At the Mountain Laurel complex, "challenging geological conditions" in the current longwall panel led to a 40 percent production decline compared with third-quarter 2013, causing Arch Coal's full-year 2013 metallurgical coal sales volumes to dip slightly below projections, the company said.

Arch Coal plans to issue its fourth quarter earnings on Feb. 4. The U.S.-based company is one of the world's top coal producers for the global steel and power generation industries.