November 3, 2011
Alpha says Massey site safety slow to improve
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CHARLESTON, W.Va. --Alpha Natural Resources officials said Thursday it's going to take more time for them to clean up poor safety practices at Massey Energy operations it purchased five months ago.

Alpha CEO Kevin Crutchfield said his company has conducted 55,000 hours of employee training classes on its "Running Right" safety philosophy, giving up several hundred thousand tons of coal production in the process.

"We think it's a worthwhile investment," Crutchfield said. "It's kind of a table-setting exercise that we've focused very heavily on here in the first few months."

But Crutchfield said Alpha so far couldn't point to major improvements in safety compliance, though it believes violations, accidents and injuries are on the way down at the former Massey mines it now manages.

"That's going to take some time," Crutchfield said. "You can't turn this thing on a dime."

Crutchfield made his comments during a conference call with industry stock analysts following Alpha's release of its first financial report to include a full quarter of results since the Massey acquisition.

Alpha reported that its net income over the last three months roughly doubled, to $66.4 million, over the third quarter of 2010.

Much of the change is attributable to the Massey deal. Alpha reported $2 billion in coal revenues, compared to $900 million in coal revenues during the same period last year. This year, the third quarter results included more than $800 in coal revenues from former Massey mines, Alpha said.

During the quarter, Alpha shipped 12.6 million tons of coal from the Powder River Basin of Wyoming and 12.7 million tons of electricity-producing coal from the east, including 7 million tons from former Massey operations. Alpha also shipped 5.9 million tons of steel-making coal, including 2.1 million tons from former Massey mines.

Crutchfield said Alpha is optimistic about the future, despite a boom in natural gas drilling that is cutting into coal's market share and Obama administration pollution rules Alpha agrees are making it tough on the industry.

"Clearly, the current administration through their regulatory approach is focused on picking winners and losers, and they certainly don't want coal to win," Crutchfield said.

But Crutchfield also said Alpha has no immediate concerns about new surface mining permits it needs being held up, even though one new Alpha mine is facing litigation in federal court from environmental groups.

"We feel pretty good about what we have permitted so far," Crutchfield said. "There's nothing in 2012 that is contingent upon any sort of regulatory relaxation or need."

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