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Coal Mining Consol Marine Terminal CMT

How Consol is handling the closure of Baltimore’s port and the flow of coal overseas

One of Consol Energy Inc.’s biggest weapons in the topsy turvy coal industry has been its wholly owned marine terminal in Baltimore, where it ships an ever increasing amount of Pennsylvania coal overseas. But the closing of the Port of Baltimore after Tuesday’s bridge collapse has made its immediate future uncertain.

Consol (NYSE: CEIX) in the mid-afternoon had confirmed what the stock market and the coal industry had suspected: The Consol Marine Terminal was out of action until the collapsed bridge could be cleared.

That’s bad news for Consol, which has shipped tens of millions of tons of coal from its Pennsylvania mining complex in Washington and Greene counties to customers overseas. It also ships coal from other western Pennsylvania mining operations, including Rosebud Mining Co. and Xcoal, from the Consol Marine Terminal. Consol has also used a loading facility in Baltimore owned by CSX, one of its two railroad companies.

“At this moment, we do not have a definitive timeline of when vehicle access or normal operations will resume,” Consol said. “We are looking at all available options to us to minimize or address direct and indirect impacts to the company and its operations.”

Consol is one of the biggest coal companies in the United States, with an $80 a share stock price despite a shakeout in the industry and a greatly shrinking market for coal domestically. Consol has weathered the loss of coal-fired power plants in the United States better than many competitors, shifting its sales overseas to coal-hungry India and elsewhere. 

The Baltimore terminal is a critical part of that success. CEO James Brock told the Business Times in an interview earlier this year that the export market is big and getting bigger for Consol. Not only is Consol’s Pennsylvania mining complex one of the most cost-efficient coal producers, but having the terminal means that it can save money on some of the shipping costs.

How big? The Consol Marine Terminal had its best year ever in 2023, shipping 19 million tons of coal and a record $106.2 million in revenue. But even more substantial, Consol shipped 60% of its total coal production from Greene and Washington counties — 15.7 million tons — to the overseas market. Export sales represented 66% of its total revenue of $2 billion in 2023.

Weeks or months of being unable to process the coal could translate into lost revenue, especially in a global market that is softer on coal than it has been in recent years. But it’s hard to tell at this moment how much that would be, and there were signs that investors’ reaction on the New York Stock Exchange — the stock was down about 7% and lost about $200 million in market cap — might have been too pessimistic.

At least one company that exports products through the Port of Baltimore struck a hopeful tone. Jim Barker, president of Rosebud Mining Co. in Kittanning, said Tuesday morning that he had been told that the port could start receiving and sending out ships within two or three weeks. Rosebud, like other coal producers in Pennsylvania, use the Consol Marine Terminal in Baltimore to load coal that will be exported overseas for power generation, industrial and steelmaking uses.

Barker said he’s not concerned at the moment about a potential backup of coal either at Rosebud’s mines or at the terminal due to the fact there’s storage on site in Baltimore.

“We don’t see any (long-term) impact,” Barker said.

CSX told the Business Times it was working with its customers on shipments.

“CSX currently has capacity to dispatch additional trains to CSX-served coal terminals, in Baltimore, before reaching pile space limits,” the company said. “Contingency plans are being implemented and CSX is in contact with existing coal customers through these terminals.”

CSX said it would for the moment keep its Curtis Bay Coal Pier facility operational.

Consol didn’t estimate how long it would take to return to normal. It also has storage capability at Baltimore and has also had experience in the past shipping coal through Newport News, Virginia, during disruptions to the port and marine terminal. It wasn’t clear whether the port shutdown would lead to a slowdown of production at Consol’s Bailey, Harvey and Enlow Fork mines.

But Lucas Pipes, an analyst who has long covered Consol for B.Riley Financial, thinks the port will be open sooner rather than later.

“Given the economic importance of the harbor for the region (and nation), we believe that after search and rescue, reopening the shipping channel will be of utmost importance for all stakeholders,” Pipes wrote in an analyst note Tuesday afternoon. “As such, we believe that a closure of the shipping channel for several weeks is unlikely.”

Pipes estimated about $35 million in impact or about 1 million ton of coal exports.

Other Pennsylvania coal companies, including Xcoal in Latrobe and Corsa Coal in Somerset County, didn’t respond to a request for comment. Nor did Norfolk Southern, which also ships Consol coal by rail from the mines to Baltimore.

By Paul J. Gough

Source: Pittsburgh Business Times