In September 2012, Alpha Natural Resources Inc. took a bold step in the historic Central Appalachia coal region, announcing plans to lay off more than 1,100 workers and cut 16 million tons of mostly thermal coal production from Appalachian mines along with Powder River Basin operations.
Less than two years later, Alpha unveiled a potentially even more drastic measure that could exacerbate the challenges facing southern West Virgini, according to a report by SNL Energy.
On July 31, Alpha said it issued layoff notices to approximately 1,100 employees at 11 Alpha-affiliated surface mines in West Virginia, preparation plants and other support operations. The company could idle mines that produced a combined 9.74 million tons of coal in 2013, according to U.S. Mine Safety and Health Administration data.
Alpha is undergoing a fundamental transformation in an effort to maintain a competitive cost structure.
Not long after acquiring Appalachian coal producer Massey Energy Co., Alpha said in a Form 10-K for the year ended Dec. 31, 2011, that it owned 145 active mines. Today, that number is 81, according to spokesman Steve Hawkins, and that counts the 11 mines that could be idled by mid-October.
The coal producer counts mines operated by third parties under contracts with Alpha. According to MSHA data analyzed by SNL Energy, Alpha had 131 active mines in 2011.
“Central Appalachia has been the hardest hit of any of the coal-producing regions from competition from natural gas,” Hawkins said in a phone interview. “A surplus of coal has driven down prices here and around the world. EPA regulations are forcing utilities to shut down coal-fired power plants. New longwall mines in the Illinois Basin can produce at half of the cost of Central App. Since 2008, Illinois Basin production is up around 40% and Central App is down around 40%. There are issues both here and abroad.”
Keep reading the full report and analysis here: http://www.snl.com/InteractiveX/Article.aspx?cdid=A-28808059-10287
(Fred Pace is the Editor for the Coal Valley News. He can be contacted at email@example.com or at 304-369-1165, or on Twitter @fcpace62)