Eight operating affiliates of Alpha Natural Resources, Inc., including two in Boone County, have notified their employees 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.
“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,” said Alpha’s President Paul Vining. “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 the 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 the 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,” he said. “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.”
West Virginia Gov. Earl Ray Tomblin issued the following statement following an announcement from Alpha Natural Resources that the company has notified 1,100 Alpha employees of scaled back operations at 11 West Virginia mines.
“The potential for layoffs and mine closures are heartbreaking and frustrating for our miners, their families and the communities in which they live,” Tomblin said. “They depend on these jobs to keep food on the table and a roof overhead. My administration will closely monitor the situation and we stand ready to provide whatever assistance our miners and their families may need during this difficult time.”
“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. Today’s announcement, in part related to power plant closures as a result of past EPA regulations, is why we remain concerned about the EPA’s current proposals regarding CO2,” Tomblin added.
For years, we have tried to warn the EPA of the consequences of its irresponsible mandates and today, our fears have unfortunately become our reality. I again urge the EPA to reconsider its proposed plan and realize the real impact these new rules have on West Virginia miners, their families and our communities.
U.S. Congressman Nick Rahall (D-W.Va.) said, “Alpha’s notification to its employees about potential layoffs later this year is painful news. The announcement is further evidence of the toll that market forces, including the low cost and abundance of natural gas, have taken on coal jobs. But it is also incredibly frustrating to have an agency like the EPA being so purposefully blind to the effects of its policies on the economy and the lives of hard-working families. I stand firm with our coal miners and will continue, at every opportunity, to help advance legislation in the House to block job-killing regulations. I hope the Senate will follow suit. Ultimately, I am hopeful that these WARN notices are precautionary and that Alpha can find the means to avert these layoffs.”
While U.S. Congresswoman Shelley Moore Capito said she was saddened by the announcement.
“The regulations imposed by this administration are designed to depress the demand for coal at the expense of West Virginians,” Capito said. “The unlevel playing field of anti-coal regulations, market conditions, and the rise in natural gas production is turning the lights out on hardworking West Virginia families. And as the president continues to ramp up his anti-coal efforts, we will see more days like today, where employees go to work in the morning and come home with pink slips in the evening.”
“On Tuesday, I went to the U.S. Environmental Protection Agency to tell them how their regulatory actions are costing West Virginia families their livelihoods. Since the EPA refuses to come to West Virginia to hear from us, I went to them to share what I’m seeing at home: Families worried about making ends meet; seniors worried about rising energy prices,” Capito added. “The House has passed numerous bills that would fight back against the president and the EPA’s anti-coal policies, but these pieces of legislation are stalled out in the Senate. I will never stop fighting for our miners and their families, but today is a truly dark day for the people of our state.”
(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)