Alliance to shut its Pontiki coal mining operation in December

Alliance Resource Partners LP (NASDAQ: ARLP) said Sept. 27 that its subsidiary, Excel Mining LLC, has issued Worker Adjustment and Retraining Notification (WARN) Act layoff notices to all employees at the Pontiki mining complex in Martin County, Ky.

ARLP said it currently plans to continue operations at the Pontiki complex until early December to fulfill commitments under existing sales contracts at which time the mine is expected to cease production.

“For over 36 years, the Pontiki mining complex has operated safely and profitably – providing quality jobs for our hardworking people and meeting the needs of customers,” said Joseph Craft III, President and CEO. “When Pontiki resumed production last year, we knew the market outlook was uncertain but were hopeful that conditions would improve. Unfortunately, market conditions remain weak, and we have been unable to secure new coal sales commitments for Pontiki coal beyond the existing 2013 contracts. While we are deeply saddened by the impact of this decision on our employees, their families and their communities, we have no choice but to take this unfortunate but necessary step to begin the process of winding down production operations at Pontiki.”

ARLP said it continues to execute on its growth projects in the Illinois Basin and Northern Appalachia, and that management is currently evaluating options to provide employment opportunities to Pontiki personnel at other ARLP operations in those regions. Martin County is in Central Appalachia, where ARLP has a minimal presence.

Following a closure order by the U.S. Mine Safety and Health Administration with respect to the Pontiki prep plant and associated surface facilities, the Pontiki mining complex was temporarily idled from August 2012 to November 2012. Due to that temporary idling, ARLP recorded in 2012 approximately $26.6m of related losses and charges, including a $19m non-cash asset impairment charge. ARLP does not currently expect the closure of the Pontiki mine to have a material impact on its 2013 financial results.

The Pontiki complex is owned by Pontiki Coal LLC and operated by Excel, both subsidiaries of ARLP. The Pontiki mining complex currently employs about 142 workers and has generated 2013 year-to-date coal sales and production volumes of around 613,000 tons and 634,000 tons, respectively.

U.S. Energy Information Administration data shows Pontiki shipping coal earlier this year out of its Van Lear deep mine to the Yates, Kraft and Hammond power plants of Georgia Power.

ARLP is a diversified producer and marketer of coal to major electric utilities and industrial users. ARLP is currently the third largest coal producer in the eastern U.S. with mining operations in the Illinois Basin, Northern Appalachian and Central Appalachian coal producing regions. ARLP operates eleven mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia.

ARLP is also constructing a new deep mine (Gibson South) in southern Indiana and is purchasing and funding development of reserves, constructing surface facilities and making equity investments in a new deep mining complex in southern Illinois (White Oak). ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Ind.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.