UMWA members reject tentative deal
Warrior remains focused on coal supply contingency plan
Platts assessed spot Blue Creek No. 7 at $162/mt FOB on April 9
US coking coal miner Warrior Met Coal said April 12 a strike by workers is continuing as weak reference Australian coking coal prices at $110/mt threaten margins at higher cost producers.
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Register NowUnited Miner Workers of America members rejected a tentative collective bargaining agreement reached last week with Warrior, and are on an unfair labor practice strike, according to the union.
Warrior, while confirming on April 12 the strike was ongoing, referred to its March 31 statement that it has continuity plans in place to continue meeting the demands of its key customers.
Major Warrior coking coal buyers include Exiros, Voestalpine, Erdemir Group, and trader Xcoal Energy & Resources, according to company documents. Warrior has worked off coal inventory from around 1 million st at the start of the year due to strong export contract demand and spot shipments to China, according to market sources. Contracts typically price off Australian FOB indices, while spot prices won premiums since the fourth quarter on demand in China for North American met coal imports.
"Our belief is that the company will likely ship from those stockpiles to satisfy contracts while production is idled. The question is how long it will take before those tons run out," investment bank The Benchmark Company's analyst Nathan Martin said in an April 12 report.
"Even if a more prolonged outage at HCC caused force majeure to become necessary, the company's customers could likely secure replacement cargoes from Australia if necessary. While this might put some upward pressure on Australian prices, there probably wouldn't be an oversized near-term reaction in the market," the bank said.
The UMWA will continue negotiations with the company, and the UMWA District 20 and the International union support the workers on strike, the union said in an April 9 statement.
"Our members made it clear that the tentative agreement was not sufficient enough to make up for the sacrifices made in 2016," said UMWA International President Cecil Roberts. "So, the UMWA will continue to strike at Warrior Met until an agreement can be reached that provides these miners what they deserve."
Miners at Brookwood, Alabama-based Warrior have been on strike since 10 pm on April 1, according to the UMWA.
"We have not been able to see the agreement brought before the group, but we hear that wages continue to be a sticking point," Benchmark's Martin said. "Notably, miners reportedly took an hourly wage cut to get the last contract done as HCC emerged from bankruptcy back in April 2016. It would seem members are now trying to recoup some of that concession in the new five-year agreement."
The strike included over 1,100 workers, of around 1,400 in total, and affected the two active coal mines and coal processing plants, according to local reports.
Warrior produced 7.9 million st of coking coal in 2020, 7.2% lower on 2019, due to weaker demand stemming from the onset of the COVID-19 pandemic in the second quarter of last year.
Warrior said it employs 1,400 workers through operations including two underground mines and export facilities at the port of Mobile.
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