Wyoming coal mine job cuts possible

2013-11-04T08:00:00Z 2013-11-04T14:29:04Z Wyoming coal mine job cuts possibleBy BENJAMIN STORROW Casper Star-Tribune The Billings Gazette
November 04, 2013 8:00 am  • 

Alpha Natural Resources' plan to eliminate 230 jobs across the coal-mining company may affect its Wyoming mines, a company representative said Friday.

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.

"All that stuff is being evaluated and worked on now," Lepchitz said.

The Bristol, Va.-based coal producer announced plans Thursday 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.

The announcement 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 earlier in the week. Both companies reported losses for the quarter, and Cloud Peak said it intended to reduce production at its Cordero Rojo mine by 10 million tons, 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 per ton in the second quarter to $9.78 per ton in the third quarter, while Arch said its Powder River Basin mines recorded their lowest cost per ton ratio in 10 quarters.

Alpha operates the Belle Ayr and Eagle Butte mines in Wyoming's Powder River Basin. 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, but there are no guarantees that Alpha's Wyoming operations will be spared, said David Beard, an analyst at Iberia Capital Partners.

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

"You don’t cut tons without cutting costs, which usually means cutting people or overtime," Beard said.

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.

PRB mines face a prisoner's dilemma, Beard said. They need to cut production to limit costs, but doing so will boost coal prices and benefit their competitors.

"The industry is under attack nine ways to Sunday," he said.

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