Buckskin Coal Mine laid off 60 employees last Wednesday in an effort to adjust to deteriorating market conditions for coal.
The mine employed 206 workers and produced 4.3 million tons of coal in the final quarter of 2019, according to the U.S. Mining Safety and Health Administration. Nationwide demand for coal has plummeted in the past year, as utilities transition away from coal toward less expensive natural gas and renewable energy sources.
“The Buckskin Mining Company has communicated a workforce reduction to 60 of our employees,” Tom Janssen, director of external affairs for Omaha, Nebraska-based Kiewit Corp., said in a statement to the Star-Tribune. “This is not driven by their performance, but rather the realities of the market. Buckskin continues to operate and we remain focused on safely managing the mine to meet our commitments to our clients and to ensure the mine’s long-term viability.”
Though workers received official notice of the layoffs Wednesday, they will receive pay through April 2, according to Janssen. The company had announced one week ago it was finalizing a plan to reduce its workforce over the course of the next month. But the news on Wednesday still surprised some employees.
“I was shocked ... they had to cut that many positions,” said JD Dietsche, 47, a coal miner at Buckskin who also worked at the neighboring Eagle Butte mine until it shut down and changed ownership last year.
He wasn’t subject to Buckskin’s recent wave of layoffs but said the loss of so many workers at the mine would be a big adjustment.
“It doesn’t sound like a lot of people, but those crews are like 25 or 26 people, so (this) was a big hit,” he said.
Despite the slump in coal production basin-wide, Buckskin’s performance has been an outlier. Coal production at the mine increased by over 30 percent between 2018 and 2019. Over the same period, the number of workers employed climbed by 24 percent.
For most of the basin, employment reductions have not kept pace with the deteriorating desire for coal. Amid waning demand, productivity at most Powder River Basin mines has been falling too, analysis by University of Wyoming economist Rob Godby found. In other words, the average output of coal per employee has been declining overall.
The announcement from Buckskin comes on the heels of another layoff in the Powder River Basin. Peabody Energy laid off 50 temporary workers at its North Antelope Rochelle Mine on March 5.
“The coal market is not doing very well,” Dietsche said. “Everyone is feeling it.”
This year’s wave of layoffs has led some residents to recall workforce reductions in the hundreds in 2016. That year, Buckskin laid off 36 workers in March and 45 workers in June.
Rick Mansheim, manager of the Workforce Center in Gillette, said several Buckskin workers had come through the center in preparation for their final day of work in early April. But no workers have filed a claim for unemployment yet.
However, Mansheim has seen an uptick in oil and gas workers filing for unemployment in recent weeks. Oil prices have plunged in response to the spread of COVID-19 and a global price war.
“Oil fields have been laying off consistently,” he said. “The oil fields is what is getting hit. Coal, though, that’s a fairly gradual reduction. I don’t think it’s going to go back up for sure, but I can always hope.”
The state's 16 mines produced 72.3 million tons of coal in the final months of 2019, 14 percent less than the year prior. Since 2015, six coal companies have applied for bankruptcy in Wyoming.
The mounting financial distress faced by many coal companies nationwide has left some residents and conservation groups in the area worried about the steep reclamation, or cleanup, liabilities associated with coal mining.
The majority of bonding, a form of financial assurance, in place to cover future reclamation costs at the Buckskin Mine comes in the form of a self-bond (a type of bond not backed by money or assets).
Kiewit Corp. has a self-bond for the Buckskin Mine in the amount of $94.9 million. In addition, the operator, Buckskin Mining Company, has a $23.9 million surety bond to cover the mine too, according to data provided by Wyoming Department of Environmental Quality.
To protect taxpayers, Wyoming regulators revised bonding rules last year. Signed into law by Gov. Mark Gordon in May, the new bonding rules bar companies from solely relying on self-bonding. The new rules also set new credit standards for companies electing to partially self-bond, among other amendments.
The new financial assurance rule included an 18-month transition period, ending in November, a spokesman for Wyoming Department of Environmental Quality explained. That means the owner of the Buckskin mine will need to demonstrate it has sufficient credit to maintain its proportion of self-bonds.
Follow the latest on Wyoming’s energy industry at @camillereports
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