The unprecedented downturn in demand for coal-based electricity brought on by a milder winter and low natural gas prices has sent shock waves through the coal mining industry, leading to many cut backs, including Arch Coal’s decision to reduce its work force by 750 people while cutting production by more than 2.7 Mt/a (3 million stpy).
Arch Coal aimed to defer several operations and reduce production at other mining complexes in Appalachia in efforts to position the company for long-term success.
“Current market pressures and a challenging regulatory environment have pushed coal consumption in the United States to a 20-year low. In response, we had previously streamlined capital spending, idled equipment and reduced shift work,” explained Arch CEO and president John Eaves.
While the coal producers’ subsidiaries closed three higher-cost thermal mining complexes and their associated preparation plants, Arch would temporarily idle Hazard’s Flint Ridge complex and curtail production at other operations in Kentucky, Virginia and West Virginia, miningweekely.com reported.
Arch Coal announced earlier this month that it would temporarily halt output at its Dugout Canyon Mine, after having already retrenched workers at its eastern Kentucky mines.
“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 Eaves.
The equipment and potential capital spending on the idle operations would be redeployed into other active operations. Eaves also commented that a portfolio review continued, which could result in the future divestiture of some of Arch's noncore assets or reserves.
The global coal producer, which sold 142 Mt (157-million st) of coal during 2011, expected thermal coal sales to reach between 116 and 122 Mt (128-million and 134-million st) for 2012.
Virginia-based coal miner Alpha Natural Resources earlier this month halted mining at four operations, idled two coal preparation plants, scaled back production at several other mines and closed four contract mines, citing continued market pressure.
The production cuts reduced its shipments by another two-million tons in 2012, cost 150 jobs and shifted 286 employees to other operations in Kentucky, southern West Virginia and Virginia.