Warrior Met Coal, Inc. Announces Significant Progress in Blue Creek Project Development
Warrior Met Coal, Inc. (referred to as “Warrior” or the “Company”) has provided a series of substantial operational and financial updates regarding its ongoing development of the Blue Creek project. As the premier U.S.-based producer and exporter of high-quality steelmaking coal, Warrior is reinforcing its market leadership by enhancing its production capabilities and ensuring sustained profitability in the global steel industry. The company’s latest updates highlight an increased production capacity, accelerated project timelines, and robust financial forecasts, all of which solidify Blue Creek as a world-class mining operation.
Key Highlights of the Blue Creek Project The Blue Creek project is a transformational investment for Warrior Met Coal, and the company has revised several of its key operational and financial projections to reflect improved efficiencies and market conditions. The most significant updates include:
- Expansion of nameplate capacity: The original production plan aimed for 4.8 million short tons per year. However, following strategic evaluations and improvements, Warrior has increased this by 25% to 6.0 million short tons per year.
- Incremental financial benefits: At this revised capacity, Blue Creek is projected to generate approximately $1.3 billion in additional revenues annually, alongside $735 million in incremental adjusted EBITDA and $637 million in incremental free cash flow each year.
- Strong project valuation: The Net Present Value (NPV) of Blue Creek stands at approximately $5.4 billion, with an internal rate of return (IRR) of 35% and a projected payback period of just 2.3 years.
- Accelerated production timeline: The project is progressing efficiently, with the first longwall mining operation expected to commence no later than the second quarter of 2026.
- Financial discipline and cost efficiency: Warrior expects the entire project to be completed on time and within budget, fully financed by operational cash flows.
CEO’s Statement on the Transformative Impact of Blue Creek Walt Scheller, Chief Executive Officer of Warrior Met Coal, emphasized the company’s long-term commitment to innovation and efficiency in coal production:
“Our decision to invest in Blue Creek marks a defining moment for Warrior, positioning us for sustained growth and value creation. By significantly expanding our nameplate capacity, we are poised to capitalize on the strong market dynamics anticipated in the near and medium-term. Blue Creek is an opportunity to solidify our reputation for high-quality, cost-efficient steelmaking coal production. This project will have a profound and lasting impact, benefiting our employees, shareholders, and stakeholders. I extend my gratitude to our dedicated workforce and project team for their commitment to ensuring the successful execution of this initiative, on schedule and within budget.”
Production Projections and Timeline Since re-launching the Blue Creek project in May 2022, Warrior has undertaken numerous operational and technological enhancements aimed at optimizing efficiency and maximizing returns. These improvements have resulted in a significant increase in production capacity and overall output projections.
- Production Capacity Increase: Warrior’s total nameplate production capacity has surged from 8.0 million short tons per year to 14.0 million short tons per year, reflecting a 75% increase in overall output capabilities.
- Further Expansion Potential: Warrior has indicated that with the addition of an extra continuous miner unit, Blue Creek’s nameplate capacity could be increased by an additional 0.6 million short tons, reaching 6.6 million short tons per year.
- Phased Production Strategy: Given prevailing market conditions, Warrior plans to commence operations at 4.8 million short tons per year, with additional expansions subject to supply and demand factors.
- Operational Milestones:
- Q3 2024: Continuous miner production launch
- Mid-2025: Preparation plant operational
- Q2 2026: Longwall mining begins
These developments underscore Warrior’s commitment to an efficient, systematic, and well-planned execution strategy that minimizes risk while maximizing long-term value.
Budgetary Control and Financial Outlook Warrior has reinforced its reputation for maintaining strict cost discipline and fiscal responsibility. Despite incorporating innovative technologies and global inflationary pressures, the company remains on track to keep Blue Creek within its original budget estimates.
- Total Capital Expenditure: The total investment required for Blue Creek, excluding mine development costs, remains within the $995 million to $1.075 billion range.
- Funding Strategy: To date, Warrior has already invested $716.5 million in the project, financed entirely through internally generated cash flows.
- Efficiency Focus: The company continues to uphold its hallmark low-cost operational structure. Projections indicate that Blue Creek will be among the lowest-cost mining operations worldwide.
Revenue and Profitability Projections Based on conservative market assumptions, including a long-term benchmark price of $250 per metric ton, Warrior Met Coal forecasts significant financial benefits from Blue Creek:
- Annual revenue potential: Approximately $1.3 billion
- Incremental adjusted EBITDA: $735 million
- Incremental free cash flow: $637 million per year
- NPV (at revised capacity): $5.4 billion
- IRR: 35%
- Payback period: 2.3 years, net of already-invested funds
These figures highlight the financial viability and strategic importance of Blue Creek in driving Warrior’s sustained profitability and long-term market positioning.
Strategic Implications and Industry Impact The successful execution of the Blue Creek project will not only elevate Warrior Met Coal’s production capabilities but will also have far-reaching implications for the broader steel and coal industries.
- Securing Steelmaking Coal Supply: High-quality metallurgical coal is an essential raw material in steel production. By significantly increasing its output, Warrior is strengthening global supply chains and ensuring a stable source of premium steelmaking coal.
- Enhancing U.S. Export Competitiveness: As a leading U.S. exporter, Warrior is strategically positioned to meet growing international demand, particularly from Asia and Europe.
- Sustainability and Innovation: While coal remains a crucial component of industrial production, Warrior continues to explore advanced mining technologies that enhance operational efficiency, reduce environmental impact, and improve worker safety.
- Long-Term Market Growth: With ongoing global infrastructure expansion, the demand for steelmaking coal remains robust. Warrior’s expanded capacity ensures it remains at the forefront of this dynamic market.
