BRISTOL, Va., July 31, 2014 /PRNewswire/ -- Eight
operating affiliates of Alpha Natural Resources, Inc. (NYSE: ANR)
have notified their employees late this afternoon that the coal
mines and other facilities where they work are subject to being
idled due to sustained weak market conditions and government
regulations that have challenged the entire Central Appalachian
mining industry.
In accordance with requirements of the Worker Adjustment and
Retraining Notification (WARN) Act, notice has been given
today to approximately 1,100 employees at 11 Alpha affiliated
surface mines in West Virginia, as
well as preparation plants and other support operations, advising
them of the expected idling of those facilities based on Alpha's
current assessment of market conditions. The operations
affected are:
- Highland Mining's Superior, Reylas, Freeze Fork and
Trace Fork surface mines in
Logan County and the North surface
mine in Mingo and Logan Counties
- Black Castle Mining's surface mine in Boone County
- Independence Coal's Twilight
surface mine in Boone County
- Alex Energy's Edwight surface mine in Raleigh County
- Republic Energy's Republic and Workman Creek surface mines in
Raleigh County
- Pioneer Fuel's Ewing Fork #1 surface mine in Kanawha and Fayette Counties
- Additional technical and other support services for these mine
operations.
While no reductions in force are occurring immediately at these
sites, they are currently planned to take place by
mid-October.
These 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 forego new construction. Excess supply
of coal worldwide also has contributed to falling coal prices. The
international price 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.
Industry forecasts for 2015 indicate that coal production from
Central Appalachia will be less
than half the region's output in 2009. 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. Additionally, EPA
regulations are at least partly responsible for more than 360
coal-fired electric generating units in the U.S. closing or
switching to natural gas. Nearly one of every five existing
coal-fired power plants is closing or converting to other fuel
sources, and Central Appalachian coal has been the biggest loser
from EPA's actions. EPA's new MATS air emissions rule alone
is expected to take more coal-fired power generation offline next
year than in the previous three years combined. Much of that
is in markets historically supplied by Central Appalachian
mines.
Alpha's President Paul Vining
said: "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 some Central Appalachia mines haven't been able to
keep up with the fast pace at which coal demand has eroded and
prices have fallen. 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.
"Over the next two months they will continue to run forecasts
for expected customer commitments for next year, along with
anticipated pricing, and a determination will be made whether the
overall economics make sense given the cost structures at these
operations and the business we expect to secure," Vining added.
The mines receiving today's WARN notifications produced 4.2
million tons of thermal and metallurgical coal through the first
half of this year. Vining said that both domestic shipments and
shipments to Europe from
Central Appalachia are expected to
be cut back significantly, though it was too early to project
exactly how much annualized production might be taken offline due
to today's announcement.
"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.
"Our company has faced challenges in the last several years, but
this is the most difficult part of the job. Coal miners are
some of the hardest working, most dedicated people in
America. This country would not be where it is today without
them. As difficult as these decisions have been, they're essential
for our organization in a business environment that's undergone an
enormous and fundamental transformation."
About Alpha Natural Resources
Alpha Natural Resources is one of the largest and most
regionally diversified coal suppliers in the United States. With affiliate mining
operations in Virginia,
West Virginia, Kentucky, Pennsylvania and Wyoming, Alpha supplies metallurgical coal to
the steel industry and thermal coal to generate power to customers
on five continents. Alpha is committed to being a leader in
mine safety with our Running Right safety process, and an
environmental steward in the communities where its affiliates
operate. For more information, visit Alpha's website
(www.alphanr.com).
SOURCE Alpha Natural Resources