When questioned by Raymond James analyst James Rollyson about Alpha’s process to sort out a sustainable steam coal portfolio and whether it would anticipate selling mines, closing operations or some combination of the two, Alpha chief executive officer Kevin Crutchfield offered an affirmative response.
“I think there are multiple paths there. I'm not sure we want to get into a whole lot … this morning,” he said.
“There are assets that would certainly have some value to someone. But the question is under what sort of scenario, what sort of structure might you be looking at.”
Using the analyst’s example of divesting thermal assets, Crutchfield said it was likely a “pretty tough time” to be following such an avenue.
“We just want to be diligent and thoughtful as we go to the process and end up in a good place and do something that makes good strategic sense for us long-term for assets that don't really fit the strategic profile of those first two categories,” he said.
“I think there's a host of options that you can pursue and that we're thinking about now.”
He went on to say that its plan was “not really ready for prime time” and did not elaborate further.
Crutchfield confirmed that the integration of its mines with the Massey Energy portfolio continued to progress well and that it was able to get two legacy Massey mines, Randolph and Revolution, removed from the US Mine Safety and Health Administrations potential pattern of violation list.
Alpha closed its takeover of Massey last June.
Crutchfield said the company saw a market decrease of MSHA enforcement actions in the fourth quarter, with orders down 45% from the previous period.
“Employee engagement, through Running Right, is very strong across all of Alpha's operations,” he said.
“Turnover has improved steadily for several months and is now solidly in the middle single digits for both legacy Massey and the entire organization.
“Reduced turnover, heightened employee engagement and vastly improved safety performance is expected to drive improvements in efficiency and productivity as well as improved cost performance going forward.”
Alpha is confident it will see operating synergies in its first full year of combination in 2012 and is on target for its previously announced synergy target of $US220 million to $260 million annually by the middle of next year.
