Alpha Natural Resources, a coal supplier with Wyoming holdings, will cut production nationwide by about 16 million tons and eliminate 1,200 jobs by early 2013.
Roughly half the output reduction will be achieved through production curtailments in company-owned mines in the Powder River Basin, the company said in a statement Tuesday.
Alpha owns the Belle Ayr and Eagle Butte mines, both near Gillette. The two combined to produce between 45 million and 50 million tons of coal in 2011, according to Mike Lepchitz, a Wyoming spokesman for the company. A reduction of eight million tons would lower the mines’ output by about 16 percent.
The company also announced plans Tuesday to lay off 1,200 workers companywide, about a tenth of its workforce. About 400 jobs were eliminated Tuesday with the idling of eight Alpha mines in Virginia, West Virginia and Pennsylvania. Some workers will stay on to close the mines. The company declined to name the mines until employees were informed.
The Belle Ayr and Eagle Butte mines employ about 650. Lepchitz said Tuesday it’s unclear just how the company’s long-term plans will affect employment in the Cowboy State, but the company will continue to evaluate operations and make a decision, although he didn’t know when.
“How that translates in terms of what we look like in 2013 is undetermined,” he said.
A call to Alpha company headquarters in Virginia went unreturned Tuesday.
Employees at the two Wyoming mines have been briefed about the company’s outlook.
“We’ve been very candid and transparent with workers about market conditions and the fact that our world is changing,” Lepchitz said.
The company is hardly alone in facing hard times. The coal market has been softening for some time, according to Wyoming Mining Association Executive Director Marion Loomis.
“It’s not a surprise that some of the impact’s going to be felt in Wyoming,” he said. “We already know that we’re down for the here-to-date.”
Loomis said until the price of natural gas increases, coal companies will continue to slow production. And possible solutions, such as coal gasification plants, are still on the distant horizon.
“We’re still going to produce a lot of coal out of Wyoming coal mines,” he said. “But we are going to see a reduction of quite a lot, probably this year.”
Bristol, Va.-based Alpha will cut production by 16 million tons total by early 2013 and reduce overhead by $150 million as it shifts away from the thermal coal used in domestic power generation to concentrate on metallurgical coal used in steel-making overseas.
About 40 percent of Alpha’s production cuts will come from high-cost eastern mines “that are unlikely to be competitive for the foreseeable future,” said Kevin Crutchfield, the company’s chief executive officer.
“The elimination of jobs on this scale is something I take very seriously,” he said, “Unfortunately, we think we have to do it to set the company on the right foot going forward.”
In the long run, the new strategy will create a leaner, more agile company that can readily adapt to changing market circumstances, he said.
Alpha will try to find openings for some of the laid-off workers in other locations or in contractor positions, but that will take time.
Some politicians were quick to pounce on the announcement as further evidence that President Barack Obama’s administration is waging a “war on coal” through new air-pollution standards, but many U.S. power companies have long planned to close or convert some of their aging, inefficient coal-fired plants.
Crutchfield acknowledged that natural gas is currently a less expensive option for those utilities but predicted that will change. Eventually, the price of gas will rise, he said, and in the long term, so will Americans’ power bills.
Loomis said he’s discovered similar attitudes in discussion with other industry representatives.
“The word that is coming out of the industry is, ‘We’re going to hunker down; we’ve been through this before,’” he said. “’The industry knows how to survive and we’ll take the necessary steps to survive and become stronger when the demand does come back.’”