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Powder River Basin Coal

The Black Thunder coal mine is seen on Friday, Jan. 9, 2015, in Campbell County. 

Here’s what you need to know.

What are the layoff numbers?

Peabody Energy cut 235 people, or 15 percent of the workforce, at its flagship North Antelope Rochelle mine, south of Gillette. It’s the nation’s largest coal mine.

Arch Coal said it was cutting about 230 people, also about 15 percent, at its Black Thunder Mine near Wright. Workers were learning of the news Thursday morning.

The two mines generally produce about 100 million tons of coal per year.

Why have these major miners generally avoided layoffs until now?

Until Thursday, layoffs in the Powder River Basin have been limited even during these tough times in coal markets. Smaller mines producing lower-quality coal have announced layoffs, but Peabody and Arch had avoided major cuts.

That’s because surface mines in the Powder River Basin are relatively efficient. In 2013, federal numbers estimated that the average Wyoming miner was responsible for 29 tons of coal per hour. For a West Virginia miner, it was 2.4 tons per hour.

What are the companies saying?

"While our asset position and contracting strategies give us relative strength, we are taking these actions to match production with customer demand.” -- Kemal Williamson, Peabody president for the Americas

“We regret the need for this difficult step and the impacts it will have on our employees, their families and the local community. We have made every effort to preserve as many positions as possible, and this decision was made only after a number of other cost-cutting measures were exhausted.” -- Keith Williams, Arch’s president of western operations

What’s the big picture for the industry?

Coal and some other energy markets are in the midst of an extended downturn. A series of major mining firms, including Alpha Natural Resources and Arch, have filed for bankruptcy protection in recent months. Peabody is working to stay out of bankruptcy. It also said it would miss two interest payments.

Coal shipments are plummeting, too. Weekly shipments from western U.S. mines fell below 7,000 tons for the second consecutive week, the federal government reported Thursday.

Coal also has an inventory problem: The nation’s coal-fired power plants currently have about 95 “days of burn” stockpiled. That’s the highest level since 2010 and up from 65 “days of burn” last June. Power plants are saving the newly arriving coal, reducing demand and dragging down prices.

What's the impact of federal regulation?

President Barack Obama's signature climate change initiative, the Clean Power Plan, is on hold after the Supreme Court issued a stay of his carbon-cutting strategy. The plan calls for reducing carbon emissions by a third in 14 years, largely by clamping down on coal plant pollution. 

“If you’re swimming in the ocean being attacked by sharks, you’re not going to worry about the jellyfish stinging you,” Doyle Trading Consultants analyst Hans Daniels told the Star-Tribune in February. “Natural gas is the shark. Regulations are the jellyfish.”

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