November 16, 2019 - Arch Coal said Friday it has discontinued longwall mining operations at its Mountain Laurel high-vol mine in West Virginia three months earlier than planned, which will reduce fourth-quarter coking coal volumes by 150,000-200,000 st.

Arch sold 5.8 million st of coking coal in January-September, and in October, reaffirmed full-year guidance of 6.7 million-7.1 million st with costs ranging $61-$65/st FOB mine on average in 2019.

Investment bank Seaport Global estimated Arch to have targeted close to 1.8 million st of production from the mine this year, in a note Friday commenting on the development.

Seaport expects 1.3 million st in 2020 from the mine.

The transition to complete room-and-pillar mining at Mountain Laurel underground mine will allow Arch to cut overall unit costs going forward, and deploy the longwall to tap anticipated higher margin coals in the new and larger Leer South mine.

Arch Coal confirmed market talk earlier this month that the company was stopping the longwall earlier than expected, as weaker spot coking coal prices at a three-year low, and lower spot demand for high-vol B coal, forced changes in the US mining industry.

"As previously discussed, Mountain Laurel had encountered challenging geologic conditions in its final longwall panel," Arch said in the statement.

The company last month said the longwall was expected to complete its final panel by year end.

"Once removed from the mine, the longwall system will be refurbished and relocated to the Leer South mine, which is expected to commence longwall production in the third quarter of 2021."

Mountain Laurel will see operations transition fully to room-and-pillar mining, which would leave essentially a new smaller mine able to improve coal quality and allow the group to be better able to meet continuing demand for the brand as well as expand in high-vol A.

"Mountain Laurel currently has three of five continuous miners operating efficiently in the new configuration, and now expects to complete its transition to a room-and-pillar mine early in the first quarter of 2020," Arch said.

"We believe Mountain Laurel has a bright and profitable future as a continuous miner operation," Arch Coal president and COO Paul Lang said in the statement.

Seaport saw cost benefits for Arch as the company reduces its investment capex by reusing the old longwall.

"We think the combination of new lower cost Leer South tons and the move to room and pillar mining at Mountain Laurel can drive Arch's overall met coal costs lower by at least several dollars per ton," senior analyst Mark Levin said in a note.