Alliance cuts back at coal mines in western Kentucky, southern Indiana

Alliance Resource Partners LP (NASDAQ: ARLP) announced Nov. 6 that in response to continued uncertainty in the coal markets, it has taken several actions to reduce production at its higher-cost mines in order to focus on maximizing production at its lower-cost mines.

Beginning Oct. 30, subsidiary Hopkins County Coal LLC in western Kentucky reduced production from three units to two units at its Elk Creek mine, which remains slated to cease production in the first quarter of 2016. This action did not result in any job loss as a result of employment opportunities at other ARLP operations.

On Nov. 6, subsidiary Gibson County Coal LLC in Indiana issued Worker Adjustment and Retraining Notification (WARN) Act notices to approximately 120 of its employees in anticipation of eliminating a total of one and a half production units at its Gibson North and Gibson South mines. By Dec. 31, 2015, ARLP currently expects production at the Gibson South mine to be increased to four production units with the Gibson North mine idled.

On Nov. 6, subsidiary Sebree Mining LLC in western Kentucky issued WARN Act notices to all employees at the Onton mine, and stopped coal production at the mine. As a result of employment opportunities at other ARLP operations, this reduction in force is expected to affect approximately 140 employees.

“Unfortunately, prolonged weak market conditions made this production response necessary,” said Joseph W. Craft III, President and Chief Executive Officer of ARLP. “We deeply regret the impact of these decisions on our employees, their families and their communities. While we were hopeful that conditions would improve, an oversupplied market combined with weak pricing forced us to take these actions and shift production to our lowest-cost mines. These steps are consistent with our current projected production and sales volumes for 2015 and beyond.”

  • The Onton #9 Mine has generated 2015 year-to-date coal sales and production volumes of approximately 1,861,000 tons and 1,869,000 tons, respectively.
  • Gibson North has generated 2015 year-to-date coal sales and production volumes of approximately 1,939,000 tons and 1,983,000 tons, respectively.
  • The Elk Creek Mine has generated 2015 year-to-date coal sales and production volumes of approximately 2,537,000 tons and 2,648,000 tons, respectively.

Some of the coal production from the reductions at Onton, Gibson North, and Elk Creek will be replaced by increased production at ARLP’s lower-cost mines.

ARLP confirmed its previously announced earnings guidance provided on Oct. 27, including 2015 full-year ranges for coal production of 41.1 million to 41.7 million tons and coal sales volumes of 40.9 million to 41.5 million tons and 2016 full-year ranges for coal production and sales volumes of 40.0 million to 45.0 million tons.

ARLP is a diversified producer and marketer of coal to major United States utilities and industrial users. It is currently the third largest coal producer in the eastern United States with mining operations in the Illinois Basin and Appalachian coal producing regions. ARLP currently operates eleven mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana.

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.