(Bloomberg) -- Higher coal prices are prompting Warrior Met Coal Inc. to restart development of a mine and pay out a special dividend to investors.
Warrior Met expects to spend $650 million to $700 million during the next five years to develop its Blue Creek mine in Alabama, including about $45 million to start the steelmaking coal project this year, the company said Tuesday in a statement. The metallurgical coal producer also said it’s accelerating returns to shareholders with a special cash dividend of 50 cents a share.
Shares of Warrior Met rose 3.9% to $34.79 at 10:38 a.m. in New York.
Warrior Met had put Blue Creek on hold in 2020 as the pandemic slowed demand for steel, but now the producer sees more certainty in the global economy. While few companies are developing new mines for thermal coal with utilities moving away from the dirtiest fossil fuel, the market for steel is expected to remain steady. Prices for metallurgical coal have surged, driving up earnings for suppliers and prompting Warrior to review its spending.
“The recent shift to a higher price environment, and the outlook for a continuation of that environment for the near future, presents us the opportunity to deploy our capital on two important fronts -- special dividends” and Blue Creek, Chief Financial Officer Dale Boyles said in a separate statement.
The Blue Creek mine will eventually be able to supply about 4.8 million tons a year, boosting the company’s annual production capacity by 60%. Initial development tons may start in the third quarter of 2024, with full production in 2026.
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