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Alpha, Patriot announce coal production cuts

CHARLESTON, W.Va. -- Alpha Natural Resources announced late Friday that it plans to idle several Appalachian coal mines and reduce work schedules at others, citing reduced coal demand as more electricity utilities move toward using natural gas.

The company said many of the affected workers would be able to transfer to other Alpha operations but that about 320 workers would be displaced "within the next few weeks."

The announcement is the second such move by a major coal producer this week, coming just one day after Patriot Coal said it was closing its Big Mountain complex in Boone County.

"Several mines are encountering weak demand for their products," said Alpha CEO Kevin Crutchfield. "We examined all options, but in the end these operations had to do what was necessary to preserve a sustainable business plan in a challenging environment."

Appalachian coal producers are facing a tough market, with falling natural gas prices, declining high-quality reserves, and increased limits on toxic air pollution from coal-fired power plants.

Competition from other basins, including Wyoming and Illinois, is also affecting mines in Southern West Virginia and Eastern Kentucky. Just last month, the U.S. Department of Energy projected steeper production declines to come, with Central Appalachian coal output estimated to drop by 54 percent between 2011 and 2035.

Local business and political leaders have focused their attention on criticizing the Obama administration's environmental agenda related to coal, but have said little about planning for an economic transition if other factors continue to drive regional production and jobs down.

In its Friday announcement, Alpha said it would idle four mines in West Virginia and Kentucky immediately and two others between now and 2013. Several other mines will alter work schedules or reduce the number of production crews. The news release did not identify the specific mines.

Alpha spokesman Ted Pile said the West Virginia mines being idled include the No. 2 Gas Mine in Kanawha County and the Randolph Mine in Boone County, both underground operations. Work hours will be reduced at the Black Castle surface mine in Boone County, the Camp Branch surface mine in Logan County, and the Progress/Twilight surface mine in Boone County. The Alloy Powellton Mine in Fayette County is eliminating one underground section.

"These moves altogether will displace about 320 people over the next few weeks," Pile said. "The number would have been higher, but we were fortunate, being a larger company, to have other positions available for miners to fill, so all told, 234 people have been given a job opportunity elsewhere in our mine network."

When completed, what Alpha called "adjustments" will reduce annual coal production by about 4 million tons, including 2.5 million tons of thermal coal for power plants and 1.5 million tons of steel-making coal.

When it released its quarterly earnings statement on Thursday, Patriot Coal said it would idle the Big Mountain operation near Prenter, which had produced 1.8 million tons of thermal coal in 2011.

Patriot CEO Richard Whiting said in a statement that the action was taken "given our view that the domestic thermal coal market is likely to remain depressed for an extended period."

Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.


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