Several Alpha coal mines survive the end of their layoff warning periods

Alpha Natural Resources (NYSE: ANR) said Dec. 8 that operating affiliates have announced that WARN layoff notices for eight coal mines in West Virginia have expired and the mines and their approximately 750 workers will continue to operate.

The longer-term plans for these mines will continue to depend upon market prices and demand. In accordance with requirements of the Worker Adjustment and Retraining Notification (WARN) Act, notices were issued on July 31 at 11 different West Virginia surface mine sites, plus certain support operations, advising workers that their facilities were expected to idle. Eight of those mines received WARN extension notices on Sept. 26, two were idled due to sustained weak market conditions and government regulations challenging the Central Appalachian mining industry, and one other (Alex Energy‘s Edwight mine) continued to operate without extending its WARN notice.

As of the Dec. 8 announcement, the mines that will continue to operate include Highland Mining‘s Superior, Reylas, Freeze Fork and Trace Fork surface mines in Logan County; the North surface mine in Mingo and Logan counties; Black Castle Mining‘s surface mine in Boone County; and Republic Energy‘s Republic and Workman Creek surface mines in Raleigh County. Additional technical and other support services for these mine operations also saw the WARN extension notices expire without a reduction in force.

Alpha Chairman and CEO Kevin Crutchfield credited the efforts that the mine operators and their workers undertook in reducing costs to compensate for weak coal prices. “Many of these sites have made significant progress in improving efficiencies and finding cost savings,” he noted. “They were proactive in presenting ideas that helped move the mines toward enhanced contributions to earnings before interest, taxes, depreciation and amortization (EBITDA) while continuing to operate safely and in an environmentally sound way.” 

Alpha President Paul Vining said that in addition to reducing the cost of extracting the coal, sales opportunities have improved in some locations. Vining said, “Though demand for Central Appalachian thermal coal has declined, there is residual demand for the coal these mines produce and we’ve booked enough sales to allow the mines to continue operating.”

Vining did express concern that the coal sales market is changing, increasing the likelihood of a more volatile market. “The market is moving toward a spot market, away from longer-term agreements that coal suppliers and customers have worked with in the past. We’re certainly mindful of the low stockpiles some utilities have on hand and are trying to ensure we are ready to respond should demand increase.” 

Vining said that buying coal as it is needed may not be an effective strategy if the U.S. has another cold winter, demand spikes and the rail system continues to struggle with performance. Already this year, PJM Interconnection set a new record for November demand, breaking the previous record set just last year.  Another cold winter could put pressure on utilities’ ability to procure fuel, whether coal or gas, on a prompt basis.

Alpha Natural Resources is one of the largest and most regionally diversified coal suppliers in the United States. With affiliate mining operations in Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming, Alpha supplies metallurgical coal to the steel industry and thermal coal to generate power to customers on five continents.

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.