The producer said Worker Adjustment and Retraining Notification (WARN) Act notices had been issued and that it would continue operations until early December only to fulfill its existing sales contracts.
Sales and production year-to-date at Pontiki has been 613,000 tons and 634,000t, respectively. Alliance did not indicate projections on final numbers once the mine closes its doors.
It did, however, confirm that weak demand was at the centre of its decision to idle the 36-year-old complex.
“When Pontiki resumed production last year [following a federal closure order], we knew the market outlook was uncertain but were hopeful that conditions would improve,” president and CEO Joseph Craft said.
“Unfortunately, market conditions remain weak, and we have been unable to secure new coal sales commitments for Pontiki coal beyond the existing 2013 contracts.
“While we are deeply saddened by the impact of this decision on our employees, their families and their communities, we have no choice but to take this unfortunate but necessary step to begin the process of winding down production operations at Pontiki.”
The producer is seeking opportunities for its personnel to transfer, particularly in its high growth areas in the Illinois Basin and northern Appalachia. It will soon hold informational sessions on the topic.
Pontiki’s path over the past 12 months has been rough. US Mine Safety and Health Administration investigators issued a closure order to the complex last year for issues related to its coal preparation plant and associated surface facilities and it remained closed from August 29 through November 25.
The stoppage resulted in a significant hit to its financial bottom line.
“Due to that temporary idling of the mine, Alliance recorded in 2012 approximately $US26.6 million of related losses and charges, including a $19 million non-cash asset impairment charge,” officials said.
However, Craft said, ARLP did not expect Pontiki’s closure to have a material impact on its 2013 financial results.
An Alliance spokesman was not available for further comment by press time.
Alliance, the nation's first publicly traded coal master limited partnership, operates 11 complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia.
It is also developing a mine in southern Indiana and purchasing and funding development of reserves, constructing surface facilities and making equity investments in a mining complex in southern Illinois.
