Arch subsidiaries will close three higher-cost thermal mining complexes and associated preparation plants, temporarily idle the Flint Ridge complex (Kentucky) and curtail production at other operations in Kentucky, Virginia and West Virginia.
Eastern and Knott County complexes in Kentucky will bear the brunt of the widespread shutdown, with almost 600 workers layoffs expected for the state.
Arch president and chief executive John Eaves said the decision to reduce personnel was made only after exhaustively reviewing other options.
“We sincerely regret the impact this announcement will have on our employees and their families as well as on the local communities where we operate,” he said.
“This decision was difficult but necessary in order to weather the current downturn and to position the company for long-term success.”
The closings will reduce Arch’s thermal coal production by more than three million tons per annum though the company’s thermal sales volume is expected to maintain between 128-134Mt for 2012.
Redeployment of equipment at idled operations is also expected to contribute to cuts in capital spending which the miner estimates to reduce by $US30-40 million.
“Current market pressures and a challenging regulatory environment have pushed coal consumption in the United States to a 20-year low,” Eaves said.
“In response, we had previously streamlined capital spending, idled equipment and reduced shift work. We now are taking further steps to enhance our competitive cost position in Appalachia, while increasingly shifting our portfolio in the region toward higher-margin metallurgical coal operations.”
Blame for the shutdowns has been squarely placed on tougher environmental rules, a mild winter, competitively priced natural gas and a political witch hunt against the industry.
“Today’s reported announcement is yet another example of the overreaching policies on the federal level by the Environmental Protection Agency, and the Democrats’ continuing ‘war on Coal’ led by their leader, President Obama,” Kentucky State Representative Jeff Hoover told the Lexington Herald-Leader.
In a report by the Associated Press, Kentucky environmental lawyer Robert Ukeiley said this industry’s struggles had little to do with the EPA.
“The fact is that cheap coal in central Appalachia has been mined out – that's just a fiscal fact. There is no politician who can change that or scapegoat anybody,” he was quoted as saying.
“Central Appalachia would be experiencing almost as much decline in coal mining even if we had the most anti-environmental president of our history in place.”
Arch claims status as a top-five global coal producer and marketer with 157 million tons of coal sold in 2011 and more than 20 active mining complexes across every major US coal supply basin.
Last month, Arch secured a $US1.4 billion to enhance liquidity, simplify capital structure and extend debt maturities.
