MORGANTOWN, W.Va. (AP) — Coal producer Alpha Natural Resources said Tuesday it was cutting production by 16 million tons and eliminating 1,200 jobs companywide, laying off 400 workers immediately by closing mines in Virginia, West Virginia and Pennsylvania.
The mine shutdowns start Tuesday, while the rest of the layoffs will be completed by the end of the first quarter after Alpha fulfills current sales obligations, Chief Executive Officer Kevin Crutchfield said. In all, the layoffs amount to nearly a tenth of Alpha's 13,000-person workforce.
Alpha said it was closing four mines in West Virginia, three in Virginia and one in Pennsylvania. They are a mix of deep and surface mines, and all are non-union operations.
Company spokesman Ted Pile said most of the displaced workers may eventually be rehired, either assigned to new jobs in other locations or replacing outside contractors. Only 150 workers in West Virginia and three in Pennsylvania will not have any other employment opportunities with the company, he said.
Though some miners will stay on to seal the operations, most will either be reassigned or laid off immediately.
Support positions will also be cut proportionally as Alpha reduces its operating regions from four to two, Crutchfield said, and two executives will retire Nov. 1.
It wasn't immediately what other states would be affected by the still looming layoffs.
Crutchfield said the shutdowns and layoffs are a necessary part of ensuring Alpha survives in what has become a difficult U.S. market, where coal companies face a dual challenge: Power plants are shifting to cheap, abundant natural gas, while companies like his face "a regulatory environment that's aggressively aimed at constraining the use of coal."
The affected West Virginia operations are the Alloy deep mine near Powellton, the Alloy surface mine near Boomer, the Premium highwall mine near Gilbert and the White Flame Surface Mine near Wharncliffe. The Virginia mines are Guest Mountain deep mines No. 8 and No. 9 near Norton, and the Twin Star Surface Mine near Hurley. In Pennsylvania, Alpha will close its Dora deep mine in Jefferson County.
Bristol, Va.-based Alpha will cut production 16 million tons by early 2013 and reduce overhead by $150 million as it shifts away from thermal coal used in domestic power generation to concentrate on metallurgical coal used in steelmaking overseas.
Globally, "there remains a structural undersupply" of metallurgical coal, Crutchfield said, and Alpha expects to see demand grow by more than 100 million tons by the end of the decade.
Alpha's $7.1 billion acquisition of Massey Energy helped create "one of the most valuable met coal franchises in the world," Crutchfield said, effectively doubling its production potential. It has 25 million to 30 million tons of export capacity through the East Coast and the Gulf of Mexico, giving it the ability to scale up exports quickly, he said.
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