Hamilton Beach 2013 Annual Report Download - page 13

11
over the following five years from 2012 levels due
to benefits from anticipated continued operational
improvements at MLMC’s customer’s power plant
and from the company’s execution of its long-term
plan at the Reed Minerals operations. The company
views its acquisition of Reed as a metallurgical
coal strategic initiative which includes significantly
increased volume and profitability for the company
over the long term.
NACoal expects to continue its record of
operational excellence in safety, environmental
stewardship and production at each of its mining
operations and, over time, to deliver profitability
that exceeds its financial objectives.
NACoal expects to continue to be a low-cost
miner of coal at its existing mines and its mines in
development, in support of customer power plants
which are among the lower-cost producers of electricity
on their respective grids. The company hopes that
any new EPA regulations will not significantly disturb
the current low-cost and reliable power generation
structure in favor of high-cost/low CO2producers.
Because the current regulatory environment is very
difficult for developing new traditional coal-fired power
plants, NACoal is taking a very disciplined view of
where likely domestic growth opportunities exist.
Given current political and regulatory barriers
to coal-fired power generation in the United States,
NACoal has put in place four additional strategic
initiatives which have the potential to provide future
growth of the company.
First, leveraging its skills as expert miners,
NACoal entered a narrow segment of the metallurgical
coal and power market in Alabama with the Reed
Minerals acquisition in 2012. The company considers
its acquisition of Reed as the first step in a metallurgical
coal strategic initiative which includes significantly
increased volume and profitability for the company
in the Alabama market and, in the future, coal exports.
NACoal’s full integration of Reed, as well as the
improvements made to the mining operation in 2013
and currently under way in 2014, are expected to
increase capacity and lower costs, providing enhanced
opportunities to increase both domestic and export
sales, especially as the steel industry improves.
Second, strategic growth may come from projects
developed out of new technologies that utilize coal,
such as integrated gasification combined cycle power
generation, and production of alternative fuels made
from coal, as well as other clean coal technologies and
non-traditional products derived from coal. NACoal is
working with a range of technical experts and potential
partners who could help develop projects based on
these advanced technologies. However, any significant
growth in domestic opportunities is largely dependent
on the United States adopting a balanced energy policy
in which coal continues to play a key role, including
through new coal technologies.
Third, the company is also pursuing opportunities
to expand by serving international mining operations,
including new opportunities to provide value-added
mining services outside the United States, similar to
its current activities in India.
Fourth, the company is investigating a number
of non-coal mining opportunities, both domestically
and internationally, which include providing selected
value-added mining services for companies in the
aggregates business.
NACoal believes that a large majority of con-
sumers in the United States want a domestic energy
policy which balances affordability, energy needs and
environmental responsibility. The company believes
that coal must remain an integral part of the nation’s
total energy mix for the United States to continue
to be competitive in a global economy. NACoal
will continue to monitor pending regulations and
legislation and will take a leadership role to help
ensure that reasonable actions are undertaken by
the government. Importantly, NACoal expects to
effectively address currently anticipated changes to
domestic environmental regulatory requirements
by working collaboratively with its customers.
Overall, NACoal anticipates good prospects
for growth over the next few years as the company’s
new mines currently in development reach full
production and its five-year targets for its consolidated
and unconsolidated mines are attained. This financial
performance over the next few years should provide
a solid base for NACoal to attain further growth in
later years through its strategic initiatives.