Hamilton Beach 2007 Annual Report Download - page 41

Employee safety. Employee safety is the number-one
priority at NACoal. Nine of the company’s 12 locations
worked the entire 2007 calendar year without incurring a
lost-time accident. NACoal’s incident rate has consistently
been well below the national average for surface coal mines.
NACoal firmly believes its commitment to safety and strong
employee relations improves productivity and employee
retention, thereby reducing costs and enhancing profitability.
Contract structure. Most of NACoal’s mining contracts
minimize exposure to the market price of coal. These
carefully structured coal supply
agreements establish the specific
services NACoal will perform for its
customers and the mechanisms by
which NACoal will be compensated.
These agreements are structured such
that NACoal and its customers share
a common goal of minimizing costs.
By eliminating speculation on the
future price of coal, these contracts
are designed to provide customers
with consistent supplies of low-cost
fuel and allow the company to consistently earn sound
margins for its services.
These contracts also include various cost escalation
mechanisms and may include performance incentives for
NACoal. As inevitable changes occur in mining costs, such
as the costs of diesel fuel, equipment spare parts or tires,
contracts are designed to adjust to those changes so NACoal
neither profits excessively from, nor is unfairly burdened
by, changes in these operational expenses. In the event a
situation arises in which a contract is not properly capturing
cost changes, NACoal works closely with the customer to
resolve the issue.
Lignite mining operations. Production and performance
at most NACoal mines in 2007 was comparable to 2006, with
the exception of two mines where special circumstances led
to lower volumes or higher costs.
NACoal had an outstanding
year at Mississippi Lignite Mining
Company (“MLMC”) as mining
efficiency and productivity rates
improved. However, the company
delivered fewer tons of lignite coal
in 2007 compared with 2006 due
to extended, unplanned outages at
the customer’s power plant. Only
moderate increases in lignite
deliveries are anticipated in 2008
due to another planned power plant
outage. In addition, higher costs are expected as a result
of lower production levels. Increased deliveries are expected
in 2009 and beyond. MLMC has not yet achieved positive
EVI, but with the expected increase in deliveries going
forward, MLMC should attain that goal in the 2009 to
2010 timeframe.
[37]
Left to right: Wheat fields, located on reclaimed land, are harvested at The Falkirk Mining Company in North Dakota. North American Coal returns mined land to its
original or an improved condition. This golf course in North Dakota sits on land previously mined by The Falkirk Mining Company.
Safety Record
(Lost-Time Accident ”LTA” Rate*)
■ LTA North American Coal Average
■ LTA National Average for Surface Coal Mines
00 02 0301 04 05 06 07
0
1.0
0.5
2.0
2.5
1.5
2.33 2.11
2.29 1.99
1.75
1.52 1.47 1.49
0.39 0.67 0.79
0.33
0.16
0.39
0.00
0.28
J
JJ
J
J
JJJ
Incident Rate
*Lower LTA statistics indicate a better safety record as measured
by lost-time accidents in relation to total hours worked.