I'm wondering if Consol's emphasis on debt reduction makes sense. If they have fixed debt at low rates, it would be much better to hang on to it. If variable rate debt, then yes, it would be good to pay it off when the interest rates become greater than their return on equity.
Most coal companies struggle to sell bonds or get loans. That's why most of them are going debt-free. That also makes it less likely they'll run into financial distress if coal prices were to stay low for an extended period of time.
Also most of CONSOL's debt either carry a high interest rate or mature soon. From their 10Q:
- 5.75% MEDCO Bonds due September 2025
- 9.00% PEDFA Bonds due April 2028
- 11.00% Senior Secured Second Lien Notes due November 2025
Thank you for the detailed history of CONSOL! I had no idea where the name came from or that the PAMC has been operational since the 1970's. You get a lot right about the company. I appreciate that you covered CONSOL's customer mix (mostly export and industrial).
I would also add a few relevant pieces of information to help understand the company's strengths: their coal has a high calorific value and relatively low sulfur (by Northern Appalachian coal standards), and they are low on the cost curve.
A nitpick -- the Itmann mines does not have "an expected annual production rate of about 166 thousand tons." It's probably 900,000 tons per year. The mine is currently ramping up; you might have gotten that figure by annualizing either Q4 or Q1 production.
Tian, thanks for chiming in with all this color! Yes, another advantage of CONSOL's is its high average BTU/lb and low sulfur content compared to its peers.
Correct, 166,000 tons was the annual production from '22 for the Itmann mine. Projections going forward are for the 900,000 tons you highlighted. Thanks for catching that!
I'm wondering if Consol's emphasis on debt reduction makes sense. If they have fixed debt at low rates, it would be much better to hang on to it. If variable rate debt, then yes, it would be good to pay it off when the interest rates become greater than their return on equity.
Most coal companies struggle to sell bonds or get loans. That's why most of them are going debt-free. That also makes it less likely they'll run into financial distress if coal prices were to stay low for an extended period of time.
Also most of CONSOL's debt either carry a high interest rate or mature soon. From their 10Q:
- 5.75% MEDCO Bonds due September 2025
- 9.00% PEDFA Bonds due April 2028
- 11.00% Senior Secured Second Lien Notes due November 2025
- 11.50% Term Loan B due in September 2024
Yes, no wonder they're paying down debt. I see that now. Thanks. Are the woke bankers restricting loans to coal companies?
Yes they are. ARLP is one of the few coal companies still able to get loans.
Thank you for the detailed history of CONSOL! I had no idea where the name came from or that the PAMC has been operational since the 1970's. You get a lot right about the company. I appreciate that you covered CONSOL's customer mix (mostly export and industrial).
I would also add a few relevant pieces of information to help understand the company's strengths: their coal has a high calorific value and relatively low sulfur (by Northern Appalachian coal standards), and they are low on the cost curve.
I second your suggestion to read The Coal Trader! He covered CONSOL in this article: https://thecoaltrader.substack.com/p/consol-energy-inc-ceix.
A nitpick -- the Itmann mines does not have "an expected annual production rate of about 166 thousand tons." It's probably 900,000 tons per year. The mine is currently ramping up; you might have gotten that figure by annualizing either Q4 or Q1 production.
Tian, thanks for chiming in with all this color! Yes, another advantage of CONSOL's is its high average BTU/lb and low sulfur content compared to its peers.
Correct, 166,000 tons was the annual production from '22 for the Itmann mine. Projections going forward are for the 900,000 tons you highlighted. Thanks for catching that!
Thank you,very interesting.it would be nice to read in a recessin scenario what would happen to consol