It’s spring on Wall Street, the time when publicly traded companies announce their first quarter results. Just a few years back, coal companies loved the ritual: a bubble in international coal prices had industry execs crowing, their spirits bouyed by the bright prospects for coal exports.

But the coal industry reports today are much bleaker. International coal prices are in the dumps, profits are thin, companies are scaling back…and all those bold projections for a thriving US coal export business are looking more and more like foolish optimism.

For an example one need look no farther than Arch Coal, which runs the Black Thunder mine in Wyoming’s Powder River Basin—the second largest coal mine in North America. Arch’s earnings conference call last week mostly reconfirmed what its stock price already shows so clearly: as international coal prices tumbled, so did the company’s prospects.

But the earnings call did contain one genuinely new revelation: Arch execs admitted that the company will lose tens of millions of dollars this year on its coal export strategy.

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During the call, Arch’s CFO admitted that the company had cancelled many overseas shipments, instead choosing to pay $12.5 million in contractual penalties to rail companies and port operators in the first quarter alone:

[W]e incurred a charge of $12.5 million in the first quarter related to minimum obligations on various port and rail commitments…Given the prevailing weak prices in the seaborne market for both thermal and metallurgical coal we believe it is appropriate to incur these costs rather than move coal into over supplied markets. [Emphasis added.]

In short, Arch execs believe that the company will pay about $50 million in penalties to rail and port operators this year, just to avoid losing even more money shipping coal into a depressed international market.

It may seem strange that a coal company would have to pay such a stiff penalty for not shipping coal. But it’s not that unusual. Back when prices were high, many coal companies locked in “take-or-pay” contracts with rail and port companies—contracts that gave coal companies access to export facilities, but that imposed penalties on coal companies if they didn’t actually use the contracted port or rail capacity.

So Arch is now just paying a penalty for overconfidence about exports back when prices were high. And back in the day, Arch’s overconfidence in coal exports was rampant. Here’s just a sampling of quotes from old earnings calls, all from the Seeking Alpha website.

Third Quarter 2011: “ the opportunities to export US coal overseas will accelerate …there is no reason why the US can’t displace Russia as the third largest player in the international coal market place…and thank goodness that we’ve seen the step-up in the international market.”

…there is no reason why the US can’t displace Russia as the third largest player in the international coal market place…and thank goodness that we’ve seen the step-up in the international market.” Fourth Quarter 2011: “Seaborne coal demand will increase…We are…bullish on the Pacific seaborne market…trends continue to support increased demand for PRB coals overseas… [W]e are encouraged by what we see in the global markets . “

. “ First Quarter 2012: “There are five drivers that should combine to restore coal markets to help over the next two years. The first is coal exports …”

…” Second Quarter 2012: “ Another positive market data point is the pace of the U.S. coal exports …the U.S. is kind of in that transition zone of going from more of a swing supplier to a long term strategic supplier in seaborne markets.”

…the U.S. is kind of in that transition zone of going from more of a swing supplier to a long term strategic supplier in seaborne markets.” Third Quarter 2012: “ [W]e continue to move forward with building-out a significant export franchise that we believe will allow us to unlock incremental value for our coals over time.”

that we believe will allow us to unlock incremental value for our coals over time.” Fourth Quarter 2012: “[W]e continue to field enquires about shipping our coal overseas and are building new business in this rapidly growing arena .”

.” First Quarter 2013: “We expect exports to continue their upward trend in the future years…we think the U.S can start playing a more prominent role in the seaborne coal trade… Clearly as we look at world markets, we’re bullish… “

“ Second Quarter 2013: “ We continue to build up our international customer base …And that’s why we’ve been more proactive than others in terms of going out and getting the infrastructure to allow us to access that demand growth we see around the world.”

…And that’s why we’ve been more proactive than others in terms of going out and getting the infrastructure to allow us to access that demand growth we see around the world.” Third Quarter 2013: “I do think the international markets are going to be very important to Arch Coal over the coming years…”

After that, though, things start getting uglier:

Fourth Quarter 2013: “We are taking a hard look at our minimum obligations with various port and rail operators. It simply may not be in Arch’s best interest to ship the tons at this time , while the direction of global demand and pricing trends will dictate whether we meet our minimum obligations in subsequent quarters.”

, while the direction of global demand and pricing trends will dictate whether we meet our minimum obligations in subsequent quarters.” First Quarter 2014: [W]e incurred a charge of $12.5 million in the first quarter related to minimum obligations on various port and rail commitments…Given the prevailing weak prices in the seaborne market for both thermal and metallurgical coal we believe it is appropriate to incur these costs rather than move coal into over supplied markets. Absent improvement in those markets, we would expect to incur comparable charges for the remainder of 2014.”

Even so, Arch’s management still insists that there’s a bright future in coal exports. But the numbers show, quite clearly, that Arch will consider itself lucky to only lose $50 million this year to back itself away from its ill-advised commitments to exporting coal.

Many thanks to Sightline Research Fellow Jerrell Whitehead for his assistance with this post.