Eight operating affiliates of Alpha Natural Resources yesterday notified their employees that the coal mines and other facilities where they work are to be “idled” because of the weak market and government regulations.

The1100 employees are at Alpha-affiliated mines, including Highland Mining’s Superior; Reylas; Freeze Fork; Trace Fork; North surface mine; Black Castle Mining’s surface mine; Independence Coal’s Twilight surface mine; Alex Energy’s Edwight surface mine; Republic Energy’s Republic and Workman Creek surface mines; and Pioneer Fuel’s Ewing Fork number one surface mine.

The reductions are expected to take effect by mid-October.

Alpha president Paul Vining said: “Many mines in the region have done a great job finding ways to reduce costs and remain economically viable in this unprecedented business climate, but some Central Appalachia mines haven’t been able to keep up with the fast pace at which coal demand has eroded and prices have fallen.

“So, our operations managers have to take a hard and serious examination whether they can sustain a number of mines and related operations by finding additional cost reductions and whether the business will be there to support them in the year ahead.

“Over the next two months they will continue to run forecasts for expected customer commitments for next year, along with anticipated pricing, and a determination will be made whether the overall economics make sense given the cost structures at these operations and the business we expect to secure.”

The affected mines produced 4.2 million tons of thermal and metallurgical coal through the first half of this year. Vining said that both domestic shipments and shipments to Europe from Central Appalachia are expected to be cut back, though it was too early to project exactly how much annualised production might be taken offline.

“These actions are consistent with steps that we’ve taken in the past to build a smaller but more sustainable portfolio of mining assets across our three coal-producing basins,” Vining said.

“Altogether, we’ve idled about 35 million tons of coal production in just three years, primarily operations with the highest cash costs. The result has been an improved cost structure, which bolsters our competitiveness in the face of challenging market conditions.

“Our company has faced challenges in the last several years, but this is the most difficult part of the job. Coal miners are some of the hardest working, most dedicated people in America.

“This country would not be where it is today without them. As difficult as these decisions have been, they’re essential for our organisation in a business environment that’s undergone an enormous and fundamental transformation.”

Alpha said the actions are being triggered by persistent weakness in US and overseas coal demand and depressed price levels, along with government regulations that are causing electric utilities to close coal-fired power plants and forego new construction.

Industry forecasts for 2015 indicate that coal production from Central Appalachia will be less than half the region’s output in 2009.

A major contributor to the demand erosion has been competition from natural gas as an alternate fuel for electricity generation in the US, along with competition from other coal producing basins.

Reaction

West Virginia Governor Earl Ray Tomblin issued a statement following the Alpha announcement.

"The potential for layoffs and mine closures are heartbreaking and frustrating for our miners, their families and the communities in which they live," he said.

"They depend on these jobs to keep food on the table and a roof overhead. My administration will closely monitor the situation and we stand ready to provide whatever assistance our miners and their families may need during this difficult time.

"We recognize market trends can play a part in these potential closures; however these actions also show the real-world impact of the regulatory environment in which industry must operate. Today's announcement, in part related to power plant closures as a result of past EPA regulations, is why we remain concerned about the EPA's current proposals regarding CO2.

"For years, we have tried to warn the EPA of the consequences of its irresponsible mandates and today, our fears have unfortunately become our reality. I again urge the EPA to reconsider its proposed plan and realize the real impact these new rules have on West Virginia miners, their families and our communities."