Hamilton Beach 2014 Annual Report Download - page 10

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They care deeply about the land, water and
wildlife where they live and are excellent stewards.
As representative evidence of this corporate
and individual commitment to the environment,
MLMC received one of only three 2014 Excellence
in Surface Coal Mining Reclamation Awards from
the U.S. Department of the Interior’s Office of
Surface Mining and Reclamation.
Strategic Initiatives and Long-Term View
NACoal’s unconsolidated operations, which
constitute a large majority of its earnings and
cash flow capabilities, provide a strong core to
NACoal’s business model. NACoal has been very
fortunate to enter into six new agreements over
the last several years to develop new mines
or provide services to customers. Generally,
the power plants served by NACoal are among
the lower-cost producers of electricity on their
respective grids. NACoal expects to continue to
be a low-cost miner of coal at existing mines and
its mines in development, in support of customer
needs. Over the longer term, NACoal’s goal is to
increase earnings of its unconsolidated operations
by approximately 50 percent by 2017 over 2012
results through the development and maturation
of its new mines in development and normal
escalation of contractual compensation at its
existing unconsolidated mines. NACoal continues
to anticipate it will achieve this goal.
NACoal also has had a goal of at least doubling
the earnings contribution of its consolidated
mining operations by 2017 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 Centennial operations. While NACoal
continues to expect meaningful improvements
of financial results at the MLMC mine compared
to 2012, the outlook at Centennial is poor at this
time due to low coal prices, low demand and
the aforementioned regulatory challenges. We
currently are not prepared to forecast significant
GAAP earnings at Centennial, and will not until
these price and demand conditions improve.
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, with the
exception of the Centennial operations.
Given the current unsupportive regulatory
environment for developing new traditional
coal-fired power plants, and based on lessons
learned at Centennial, NACoal is taking a very
disciplined approach with respect to growth.
Opportunities may exist, although limited, to
provide coal to customers for use other than as
a power-generation fuel, or to serve as a cost-plus
contract miner for non-coal operations, such as
aggregates or other minerals. Also, strategic
growth could possibly come from projects based
on 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
more balanced energy policy in which coal
continues to play a key role, including through
new coal technologies.
NACoal believes that a large majority of
consumers in the United States will benefit