Cut backs could affect Wyoming coal mines

November 5, 2013

Slumping coal prices and the need to cut costs could affect workers at Alpha Natural Resources’ Wyoming mines. The company announced that it plans to cut 230 jobs company-wide and some of those could be in Wyoming where production costs are lower than at the company’s eastern operations.

Mike Lepchitz of Alpha's Gillette office said the company will make a decision on staff reductions by mid-November. It was unclear where those cuts would come or if they would affect the company's two Wyoming mines, the Casper Star Tribune reported.

The Bristol, VA-based coal producer announced plans to trim costs by $200 million starting in 2014. The planned 230-job reduction would be companywide. Alpha operates mines in Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming. The Associated Press reported that about 100 of the jobs to be eliminated were open positions that will not be filled.

Alpha operates the Belle Ayr and Eagle Butte mines in Wyoming's Powder River Basin (PBR). The company's job reductions are more likely to be felt at its eastern mines, which continue to struggle with weak coal prices and high production costs.

Alpha estimated its PRB mines will produce between 37 million and 40 million st of coal in 2014, slightly less than the 41 million st analysts projected.

Powder River Basin coal is positioned slightly better than its eastern counterparts. The basin's low production costs and an uptick in natural gas prices mean that it is generating a slight profit. It nonetheless remains hampered by weak international and domestic demand.

The announcement to cut jobs followed a dismal third-quarter earnings report, in which the company said it posted a $458 million loss between July and September.

It came on the heels of a poor earnings report from Arch Coal Inc. and Cloud Peak Energy at the end of October. Both companies reported losses for the quarter, and Cloud Peak said it intended to reduce production at its Cordero Rojo Mine by 10 million st, or approximately 25 percent, in 2015.

Each of those companies' losses were not as big as analysts' expected, due to cost containment measures. Cloud Peak reduced costs from $10.81/st in the second quarter to $9.78/st in the third quarter, while Arch said its Powder River Basin mines recorded their lowest cost per ton ratio in 10 quarters.


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