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UPDATE 2-James River bets big on met coal; sells out thermal
March 1, 2012 / 2:51 PM / 6 years ago

UPDATE 2-James River bets big on met coal; sells out thermal

* Co sells out thermal coal for 2012

* Sees higher met coal demand from India, China

* Q4 adj. EPS $0.02 vs est. $0.03

* Rev more than doubles to $357.2 mln

* Shares rise 16 pct in morning trade (Adds details, outlook; updates shares)

March 1 (Reuters) - James River Coal Co said it substantially sold out its thermal coal for this year, despite weak demand for the commodity, and expects steel-making coal market to rebound in the second half.

Shares of the U.S. coal miner, which have lost 77 percent of their value since touching a year high in April last year, rose 16 percent to $6.66 in early trade on Thursday on the Nasdaq.

James River, which has about 63 percent of its 2012 met coal sales were under contract, said growth in the steel market and a strengthening Indian economy would support the met-coal business later this year.

The Richmond, Virginia-based company said it expects to ship 2.8 million tons of metallurgical coal in 2012, higher than the 2.1 million tons it shipped last year.

Strong growth is expected from emerging markets, especially from India and China, where a boom in building is driving steel demand.

Earlier this month, bigger peer Cliffs Natural Resources said China may increase its steel production this year, boosting demand for raw materials like coking coal.

WEAK THERMAL COAL

James River, which expects a weak thermal coal market through 2012, said it will ship 6.7 million tons this year, lower than the 7.1 million tons it shipped last year.

It sees a weak thermal coal market this year on the face of cheap competitive natural gas, a mild winter, and regulatory uncertainties.

Demand for thermal coal is slipping as power producers switch to cheaper natural gas. Companies like FirstEnergy Corp , American Electric Power and Duke Energy are shutting down many of their coal-fired plants in response to stricter environmental rules.

However, James River has nearly 91 percent of its thermal coal sales under contract.

James River also said it agreed to sell 2.8 million tons of Central Appalachia coal at $115.82 per ton.

It reported a fourth-quarter loss of $28.5 million, or 82 cents a share, compared with a net profit of $25.9 million, or 93 cents a share, a year ago.

Excluding one-off items, the company earned 2 cents a share, compared with estimates of 3 cents a share, according to Thomson Reuters I/B/E/S.

Total revenue more than doubled to $357.2 million, beating expectations of $324.8 million, as coal shipments rose 60 percent. (Reporting by Vaishnavi Bala in Bangalore; Editing by Gopakumar Warrier)

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