Anyone fortunate enough to be familiar with the beautiful reddish cliffs prevalent in Nevada and Arizona knows that sandstone can be thing of beauty. But one company reminds us that you can't convert it to electricity.
Foundation Coal Holdings
Some of the challenges Foundation encountered were company-specific. Of the 800,000-ton production shortfall reported from its eastern mines, more than 80% of that figure corresponded to unfavorable geology at the Emerald Mine in West Virginia. Where the company expected to find coal, it ran into sandstone. (By late September, though, the company reinstated the longwall and is back into the coal.) Another major source of the quarter's woes were several diesel and coal hedges that had the opposite of their intended impact -- they forced the company to take on $11.2 million in unrealized losses.
Helping to clue Fools in to some regional issues to remain watchful for, Foundation noted increased regulatory activity, wage increases, and a shortage of skilled labor as broad challenges facing the entire eastern coal-producing region. The company estimates that site inspections eroded quarterly production by 100,000 tons. Although the release mentions the added uncertainty surrounding permits and regulations regarding surface mining in the east, Foundation is similar to CONSOL Energy
Although the company reduced 2008 guidance, Foundation echoed the same bullish long-term outlook that we heard recently from top producer Peabody Energy
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Fool contributor Christopher Barker thinks coal is lousy for the environment. He can also be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Peabody Energy and Massey Energy. The Motley Fool has a surface-mining disclosure policy.