Alpha Natural Resources said Thursday afternoon that it has warned 1,100 workers at nearly a dozen West Virginia surface coal mines that they could lose their jobs in two months.
The Bristol, Va.-based company said it had provided layoff notices — required by the Worker Adjustment and Retraining Notification, or WARN, Act — to the employees at 11 mines and associated preparation facilities and support operations in six counties.
Alpha cited “sustained weak market conditions and government regulations that have challenged the entire Central Appalachian mining industry” and a “business environment that’s undergone an enormous and fundamental transformation.”
In a news release, Alpha said its actions “are being triggered by persistent weakness in U.S. and overseas coal demand and depressed price levels, along with government regulations that are causing electric utilities to close coal-fired power plants and forgo new construction.”
“Excess supply of coal worldwide also has contributed to falling coal prices,” the company said. “The international prices of coal shipped to power plants in Europe has been hovering at a four-year low, while prices for metallurgical coal used to make steel have declined more than 20 percent in less than a year, reflective of oversupplied markets.”
The Alpha announcement comes as the U.S. Environmental Protection Agency is holding a weeklong series of public hearings on its proposal to curb greenhouse emissions from coal-fired power plants, an effort that coal industry officials and coalfield political leaders strongly oppose.
It’s the last in a series of such moves by Southern West Virginia coal producers hard hit by the mining-out of the best-quality reserves, competition from Wyoming and Illinois, low natural gas prices and new limits on toxic pollution from coal-fired power plants.
“The potential for layoffs and mine closures are heartbreaking and frustrating for our miners, their families and the communities in which they live,” said Gov. Earl Ray Tomblin. “We recognize market trends can play a part in these potential closures; however these actions also show the real-world impact of the regulatory environment in which industry must operate.”
While no reductions in force are occurring immediately, Alpha said current plans call for the layoffs to take place by mid-October.
Alpha President Paul Vining said the company will continue to run forecasts for coal sales and pricing over the next two months, and then decide “whether the overall economics make sense, given the cost structures at these operations and the business we expect to secure.”
“Many mines in the region have done a great job finding ways to reduce costs and remain economically viable in this unprecedented business climate, but Central Appalachia mines haven’t been able to keep up with the fast pace at which coal demand has eroded and prices have fallen,” Vining said in a prepared statement. “So, our operations managers have to take a hard and serious examination whether they can sustain a number of mines and related operations by finding additional cost reductions and whether the business will be there to support them in the year ahead.”
The largest operations covered in the layoff notices were the Twilight Surface Mine and the Black Castle Surface Mine, both in Boone County, which list about 200 workers each in records filed with the U.S. Mine Safety and Health Administration. Another affected operation, the Republic Surface Mine in Raleigh County, employs about 180 workers, according to disclosures filed with MSHA.
Other mines covered by the layoff notice include: Alpha subsidiary Highland Mining’s Superior, Reylas, Freeze Fork and Trace Fork surface mines in Logan County and its North Surface Mine in Mingo and Logan counties; subsidiary Alex Energy’s Edwight Surface Mine in Raleigh County; subsidiary Republic Energy’s Workman Creek Surface Mine in Raleigh County; subsidiary Pioneer Fuel’s Ewing Fork No. 1 Surface Mine in Kanawha and Fayette counties. All but the Ewing Fork mine are properties Alpha acquired in its June 2011 purchase of Massey Energy, a spokesman said.
In its news release, Alpha said industry forecasts for 2015 indicate that coal production in Central Appalachia will be less than half the region’s output in 2009. The U.S. Energy Information Administration’s most recent forecast projected Central Appalachian production to be about 113 million tons in 2015, compared to 196 million tons in 2009, according to government records.
“A major contributor to the demand erosion has been competition from natural gas as an alternate fuel for electricity generation in the U.S., along with competition from other coal producing basins,” Alpha said.
The company also blamed EPA rules for closing electrical-generation plants that are fired by coal, and said, “Nearly one of every five existing coal-fired power plants is closing or converting to other fuel sources.” Central Appalachian coal “has been the biggest loser” from the EPA’s actions, Alpha said.
Alpha said the mines affected by Thursday’s notice produced 4.2 million tons of coal, for power plants and steelmaking, through the first half of this year. Vining said domestic shipments and shipments to Europe from Central Appalachia are expected to be cut back significantly, although it is too early to project exactly how much annualized production might be taken offline.
“These actions are consistent with steps that we’ve taken in the past to build a smaller but more sustainable portfolio of mining assets across our three coal-producing basins,” Vining said. “Altogether we’ve idled about 35 million tons of coal production in just three years, primarily operations with the highest cash costs. The result has been an improved cost structure, which bolsters our competitiveness in the face of challenging market conditions.
In June, Patriot Coal announced it had laid off 75 workers at two West Virginia operations after initially warning in April that 850 employees might lose their jobs.
Reach Ken Ward Jr. at email@example.com, 304-348-1702 or follow @kenwardjr on Twitter.