U.S. Rep. Ed Whitfield, R-Ky., whose home state was particularly hard hit by Arch Coal’s (NYSE: ACI) plan to cut mining jobs in the face of slack utility coal markets, said June 21 that the Arch decision is yet another sign of the Obama Administration’s “war on coal.”
Whitfield, Chairman of the House Subcommittee on Energy and Power, noted that Arch Coal’s June 21 announcement came just two weeks after Alpha Natural Resources (NYSE: ANR) said it plans to cut back coal mining in its northern and southern Kentucky operations, and three weeks after American Electric Power (NYSE: AEP) announced it may abandon operations at the coal-fired Big Sandy power plant due to the U.S. Environmental Protection Agency’s new permitting regulations. AEP said it has shelved plans to add a scrubber on the 800-MW Big Sandy Unit 2, with both coal units at the plant now targeted for likely eventual closure.
“This is another sad example of the results of the Obama Administration’s continued war on coal,” said Whitfield. “It is troubling to me that President Obama continues to put our economy at risk at a time when it is most vulnerable by issuing regulations that cause companies to close plants, which will mean lost jobs and which will ultimately raise electricity prices on consumers. At a time of high unemployment rates, especially in some counties in Kentucky where unemployment remains at more than 10 percent, the Obama Administration and his EPA should be working with coal states to create and retain jobs, rather than thwarting economic growth and causing miners to lose their jobs.”
Whitfield said the EPA’s “outright assault on coal” is having a destructive effect on Kentucky’s economy, and more coal-fired power plants are likely to be closed and more mining operations shut down due to new EPA regulations, and lawsuits filed by environmental groups with the support of the Obama Administration.
“But it’s not just the Kentucky economy that is taking a hit from EPA’s new regulations,” Whitfield added. “Of the approximately 500 coal-burning power plants, more than 100 (over 20%) are expected to close in the coming years. That is real jobs being lost, and real dollars being taken out of our economy. As Vice President [Joe] Biden said on the campaign trail in 2008, under an Obama/Biden Administration there will be ‘No coal plants here in America.’ Well they are certainly well on their way to reaching that goal, at the expense of jobs and our economy.”
Arch cuts even more production to match slumping steam coal market
Arch on June 21 announced plans to idle several operations and to reduce production at other mining complexes in Appalachia. These actions, along with other recent changes in Appalachia, will result in a total workforce reduction of about 750 full-time employee positions.
“We deeply value our people, and the decision to reduce personnel was made only after exhaustively reviewing other options and exploring opportunities to avoid this measure,” said John Eaves, Arch’s president and CEO. “We sincerely regret the impact this announcement will have on our employees and their families as well as on the local communities where we operate.”
Arch’s subsidiaries will close three higher-cost thermal mining complexes and associated preparation plants, temporarily idle Hazard’s Flint Ridge complex in eastern Kentucky and curtail production at other operations in Kentucky, Virginia and West Virginia. The mine locations affected by the announced closings are the East Kentucky, Eastern and Knott County complexes.
These actions will reduce Arch’s thermal coal production by more than 3 million tons annually. Arch, though, continues to expect thermal coal sales volume in the range of 128 million to 134 million tons for 2012. The company also plans to realize savings on future capital spending due to the idling of several operations and the redeployment of equipment into other active operations.
“Current market pressures and a challenging regulatory environment have pushed coal consumption in the United States to a 20-year low,” said Eaves. “In response, we had previously streamlined capital spending, idled equipment and reduced shift work. We now are taking further steps to enhance our competitive cost position in Appalachia, while increasingly shifting our portfolio in the region toward higher-margin metallurgical coal operations.”