Coal Tattoo

And so it begins: Coal layoffs sign of things to come?

Share This Article

If you don’t read the Saturday newspaper, you might have missed this story, outlining two troublesome announcements last week by major coal producers here in West Virginia:

Alpha Natural Resources announced late Friday that it plans to idle several Appalachian coal mines and reduce work schedules at others, citing reduced coal demand as more electricity utilities move toward using natural gas.

The company said many of the affected workers would be able to transfer to other Alpha operations but that about 320 workers would be displaced “within the next few weeks.”

The announcement is the second such move by a major coal producer this week, coming just one day after Patriot Coal said it was closing its Big Mountain complex in Boone County.

You can read for yourselves the announcement from Alpha here and the one earlier in the week from Patriot here.  Alpha made a separate announcement of its moves, in anticipation of the release of its quarterly earnings data on Feb. 24. Patriot wrapped word of its closure of the Big Mountain Complex in Boone County inside its quarterly earnings statement.

For those who missed the details of the Alpha closures and schedule cutbacks — Alpha didn’t bother to include that in its press release — here’s the way company spokesman Ted Pile explained it in an email to me:

West Virginia:

— #2 Gas mine in Kanawha County is being idled immediately as is the Randolph Mine in Boone County. Both are underground.

–The Black Castle surface mine in Boone County is reducing its work hours

–Camp Branch surface mine in Logan County is reducing work schedules

–Progress/Twilight surface mine is cutting back work schedules (Boone Cty.)

–Alloy Powellton mine in Fayette County s eliminating one underground section

Kentucky:

— the Cave Spur and Perkins Branch underground mines are idled immediately. Both are in Harlan County.

— the Coalgood surface mine in Harlan County will be phased out by the middle of this year and the Big Branch West surface mine in Knott County will close in early 2013.

Ted continued:

These moves altogether will displace about 320 people over the next few weeks. The number would have been higher but we were fortunate being a larger company to have other positions available for miners to fill, so all told, 234 people have been given a job opportunity elsewhere in our mine network.

While this was a decision driven by the reality of the tough market for coal, it’s still a hard decision because it affects working families. We’re trying to help by giving all displaced workers 60 days of continued pay and benefits even though it’s not required. Hopefully that’ll help them transition.

In its official press release, which is also a document that gets filed with the Securities and Exchange Commission, Alpha referred to the layoffs as production adjustments, which it blamed on “market conditions that have decreased coal demand.” Alpha’s release continued:

Alpha’s Central Appalachian businesses are seeing more electric utilities switch from thermal coal to natural gas to take advantage of gas prices at 10-year lows. A series of federal regulatory actions also have prompted utilities to implement plans for shutting down a number of generating stations that have traditionally run on coals sourced from Central Appalachia.

Patriot CEO Richard Whiting explained his company’s actions this way:

Metallurgical coal demand has trended downward in recent weeks, particularly in export markets.  As previously announced, we have taken actions to match our met production with expected sales volume. We are reducing production at both our Rocklick and Wells complexes, with particular emphasis on higher-cost operations, and delaying certain of our met expansion plans.

Likewise, given our view that the domestic thermal coal market is likely to remain depressed for an extended period, we have conducted a rigorous review of our Central Appalachia thermal mine portfolio.  As a result, we made the decision to idle the Big Mountain complex in Boone County, West Virginia, effective today.  Big Mountain produced 1.8 million tons of thermal coal in 2011.  This decision effectively positions Patriot with no remaining uncommitted Appalachia thermal coal in 2012.

We’ve gone over many times on this blog the problems facing the Appalachian coal industry … reduced amounts of quality reserves, increased competition from natural gas and from other coal basins, etc. (See here, here, and here, just for example). It’s true that increased air pollution limits on coal-fired power plants are part of this picture, but it’s worth remembering that many of the power plants that are closing were slated for demise anyway, as most are old and inefficient. And not for nothing, but these mines all had their environmental permits, so there’s no real way to blame the Obama administration’s crackdown on mountaintop removal this time — it’s a chance to see the future of coal a little more clearly, perhaps.

None of that really matters to the miners who are losing their jobs, and certainly not to their families. When you get a pink slip, it’s still a pink slip, no matter what the reason. Public relations battles between the Sierra Club and the United Mine Workers, or all the energy put into lobbying efforts by all sides don’t really change the immediate challenges those families now face. Though I wonder if Mayor Bloomberg or Aubrey McClendon would shell out a few million each for a job training or educational program for coalfield residents who are likely to be hard hit in the coming years …Or maybe a place for the Sierra Club and the UMWA to find some common ground would be to spend some of that “Beyond Coal” money for programs to help families who are experiencing the impact of that program first hand.

More broadly, it seems likely these announcements won’t be the last, at least if the Central Appalachian coal production forecast — a more than 50 percent drop over the next 25 years — comes to pass. So perhaps this is an opportunity for policymakers in the region to finally start thinking about what they’re going to do about this problem. EPA regulations aren’t the only cause here, and all the public relations and lobbying campaigns in the world aren’t going to change some of the factors that are behind the layoffs announced last week, or the additional layoffs likely to come.

So why is it acceptable to for our leaders to just write off the idea of coming up with some additional money for a trust that could fund future economic development, education and infrastructure that would help smooth this transition? Why should our kids have to wait for solutions so that politicians can be more comfortable running for re-election? Is that leadership?