Coal Tattoo

There’s an important story out from Darren Epps at SNL Financial that reports this:

The cost of coal sales per ton accelerated an average of 38.9% between 2009 and 2012 among eight major U.S. coal companies analyzed by SNL Energy, highlighting the geological, regulatory and market challenges facing an industry struggling to maintain market share against competing energy sources.

The confluence of low natural gas prices, mild weather and U.S. EPA regulations on coal-fired power plants generated much of the blame when coal markets experienced a swift downturn in 2012. But analysts and coal officials indicated in interviews that challenges closer to the mine are also significantly impacting revenues.

In Central Appalachia, coal seams are thinner and more difficult to reach following decades of underground mining, hindering profitability among coal companies. Less capital-intensive mining methods, like mountaintop removal and surface mining, are under increasing regulatory scrutiny by the U.S. EPA.

Now, there’s been a fair amount of interest today in this new information posted by the U.S. Department of Energy’s Energy Information Administration:

Natural gas used to generate electricity so far this year is below the high level during the comparable 2012 period, when low natural gas prices led to significant displacement of coal by natural gas for power generation. In early 2013, coal recovered some market share as natural gas prices rose. By late March, wholesale natural gas prices at the Henry Hub trading center were back to $4 per million British thermal units (MMBtu). In response, electricity generators used 16% less natural gas this March compared with March 2012.

But the SNL story seems much more interesting, especially if you’re interested in the present and future economy of the Appalachian coalfields:

The cost of coal sales per ton will continue trending upward, Nelson said.

“Production costs are going to continue to rise due to continued regulatory scrutiny and geology, and Central Appalachia will be the most challenged region,” he said.

Coal companies took drastic measures to combat costs in 2012, reducing thermal coal production by at least 75 million tons, idling dozens of mines and reducing work shifts. Producers began abandoning Central Appalachia mines in favor of lower cost operations in Northern Appalachia and the Illinois Basin.

But combating cost challenges on the met coal side of the business is more difficult because most of the country’s most valuable met coal reserves are located in Central Appalachia.

“Our lower cost Northern Appalachia longwall production now constitutes a bigger piece of the overall production pie,” Pile said, “but at the same time, production from all our met mines is in Central App, which tends to be higher cost.”

Here’s the latest, just in from Patriot Coal regarding its bankruptcy and the contract/benefits dispute with the United Mine Workers of America. The company has filed proposals (see here and here) to again modify its proposed changes to its agreements with the UMWA. Patriot summarized the proposals this way in an e-mail message to the media:

— The UMWA would be granted a direct 35% equity stake in the reorganized enterprise. This equity stake could be monetized, in whole or in part, generating a substantial cash contribution to the VEBA Trust, which is expected to be worth hundreds of millions of dollars.

— The date on which retiree healthcare will be transitioned to the VEBA Trust will be extended by six months to January 1, 2014, provided the UMWA consents to a short-term bridge-funding arrangement. If the UMWA consents, UMWA retirees and their beneficiaries will continue to receive their current level of benefits until January 1, 2014. The purpose of this extension is to afford the UMWA ample time to monetize the equity stake and determine the optimum level of healthcare coverage the VEBA Trust can provide. The extension will also allow UMWA retirees and beneficiaries to continue to receive their current level of benefits until the healthcare options associated with the Patient Protection and Affordable Care Act (“PPACA”) become available on January 1, 2014.

— In addition to the Profit-Sharing Contribution that was a component of prior 1114 proposals, Patriot would also pay a royalty contribution for every ton produced at all existing mining complexes. This royalty will raise additional tens of millions for the Trust based on current production estimates.

— Patriot has accepted the UMWA’s litigation trust proposal verbatim, except that the funding obligation has been reduced to a level Patriot can afford, and the appointment of members will be evenly apportioned between the UMWA and the Committee.

— As set forth in Patriot’s revised Section 1113 Proposal, Patriot has pledged to pursue good faith negotiations with the UMWA 1974 Pension Plan toward a mutually agreeable payment arrangement that avoids creation of a large unsecured claim that would be detrimental to other Patriot creditors (including the UMWA).

Patriot said:

Unfortunately, Patriot simply does not have the financial resources to support its current benefit levels and will not survive without substantial changes across its cost structure. While we very much regret that these changes are necessary, we hope and trust that the UMWA will work with us on a collaborative basis to achieve a successful reorganization. Failure to reorganize will almost surely lead to a devastating loss of jobs and healthcare coverage for more than 21,000 active workers, retirees and their dependents.

UMWA officials are still reviewing the Patriot filings and declined comment this afternoon.

More on the UMWA’s latest Patriot rally

There’s more in today’s Gazette about the big United Mine Workers of America rally against Patriot Coal here in Charleston, including the above video by Doug Imbrogno, a story by Rusty Marks about the arrests of 16 UMWA members and supporters, and this piece by Dr. Paul Nyden, headlined, “Mine families at rally ask ‘who will be next?‘:

Linda Robinette doesn’t rely on Patriot Coal for her health benefits. But she’s worried what might happen if the company is allowed to cut union-negotiated benefits for retirees.

“We are here for a good cause. If Patriot and Peabody get by with this, who will be next?” asked Robinette, whose husband Clarence retired after working at U.S. Steel’s No. 50 Mine in Wyoming County for 36 years. Their health benefits were negotiated under the United Mine Workers of America’s contract with the company.

On Monday, thousands of miners, retirees and supporters arrived at the Charleston Civic Center to protest Patriot Coal’s efforts to use bankruptcy filings to strip miners and retirees of health and pension benefits guaranteed under union contracts.

The miners traveled from coalfields in West Virginia, Illinois, Ohio, Pennsylvania, Virginia, Indiana and Kentucky. After the rally, the crowd marched to nearby Laidley Tower, where Patriot maintains its West Virginia headquarters. Sixteen marchers, including UMW President Cecil Roberts, were arrested after they sat down on the building’s front steps.

Patriot Coal was founded Oct. 31, 2007, when Peabody Coal sold all its union operations east of the Mississippi to the newly created company. In 2008, Patriot bought Magnum Coal, a company that took over union mines once operated by Arch Coal.

Union leaders have said that Patriot was a “company created to fail,” a way to let Peabody and Arch shed their obligations to union employees and retirees, while reaping the benefits of their largely non-union mines in the western United States.

“I worked 36 years as a miner with Arch. I have COPD (chronic obstructive pulmonary disease) and breathing problems,” said Charles Huth of Ava, Ill. “I think Arch should honor their commitment and give us our health care.

“The coal companies are only paying 20 percent of our health care because Medicare is paying the rest of it,” Huth said. “I get $1,300 a month in my pension. I still have that. I am afraid that if we lose our benefits, everyone else down the road will also lose them.”

Huth said he boarded a bus in Illinois at 10 p.m. Sunday to come to Charleston, and would get back on the bus to go home Monday evening.

I’m just back from listening to a few of the speeches and watching a little bit of the action at the huge United Mine Workers of America rally today in downtown Charleston. Thousands of miners, family members and various supporters attended the event, held as part of the UMWA’s ongoing campaign to protect its union contract and retiree benefits at bankrupt Patriot Coal.

The event began over at the Charleston Civic Center, where they started with prayers, music and speeches for the thousands who drove or rode union-chartered buses into town early this morning. Then, the crowd marched a few blocks over to Laidley Tower, where Patriot maintains a local office.  There, 16 individuals — including UMWA President Cecil Roberts and West Virginia AFL-CIO President Kenny Purdue — were arrested after they sat down on the office tower’s steps and refused to move, in another of the union’s series of peaceful civil disobedience protests.

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Patriot Coal: Will industry have to pay its debts?

Whenever there’s any sort of action by the government or by environmental or citizen groups that might somehow — no matter how remotely — curb any practice of the coal industry, I can almost always count on watching my inbox fill up with statements from coalfield politicians criticizing that action and promising to stand up for the coal industry.

Well, yesterday evening, Patriot Coal finally made official what the United Mine Workers union has been warning for months was going to happen. As we reported in today’s Gazette:

Patriot Coal Corp. on Thursday asked a U.S. bankruptcy judge to throw out the terms of the company’s contract with the United Mine Workers union and modify the health-care plan covering thousands of retired miners.

Now, the public can’t really find out exactly what Patriot is proposing. Company lawyers filed this motion asking a federal bankruptcy judge to throw out its union contract, but that document contains few details — and Patriot’s attorneys also filed this motion asking Judge Kathy A. Surratt-States to allow them to file the more detailed proposal under seal. In a press release, Patriot explained its proposal this way:

Patriot’s UMWA labor costs are not competitive with other coal producers that operate under more flexible work rules and a significantly lower labor cost structure. The Company’s proposal seeks to adjust wages, benefits and work rules for its unionized employees to a level consistent with the regional labor market. The Company can no longer afford to pay above-market wages and benefits to its 1,600 union employees as compared to its 1,300 nonunion miners doing exactly the same jobs. As part of the proposal, Patriot intends to offer its union employees the same healthcare benefits it provides to nonunion employees.

Here’s what UMWA President Cecil Roberts had to say about it:

They’re demanding massive changes to the collective bargaining agreement, and they want to scrap the health care benefits our retirees earned through decades of blood and toil. These demands by the company are totally unacceptable to the UMWA, and unnecessary for the company’s survival.

The truth is that the depth of relief Patriot seeks isn’t needed. There is a path forward for the company that does not include drastic cuts at the level the company has proposed and we will demonstrate that in court.

Patriot Coal CEO Ben Hatfield had this to say for his company:

The actions we have taken today are necessary for the survival of Patriot and the preservation of more than 4,000 jobs. Without the cost relief we are seeking, all of these jobs will be lost and it will no longer be possible to provide healthcare for more than 23,000 employees, retirees and their dependents. Our labor and retiree benefit costs have risen to levels that simply cannot be sustained given the challenges facing the Company and our industry. All of our employees and retirees are being asked to make sacrifices to help Patriot emerge from bankruptcy. These sacrifices include reductions in compensation and benefits for salaried, union and nonunion employees.

What Ben didn’t mention was that this proposal comes just a few days before a hearing that’s scheduled on Monday, described by Cecil Roberts and the mine workers this way:

Patriot’s filings come just days before it goes into the bankruptcy court and argues it should be allowed to pay nearly $7 million in bonuses to executives and managers. “That $7 million would pay for a lot of oxygen bottles for the black lung sufferers. If Patriot is successful, these retirees will soon face a cruel decision between getting the oxygen they need to survive or eating,” Roberts said.

Keep in mind the stakes in this particular dispute, as outlined on the website of the UMWA’s Fairness at Patriot campaign:

About 2,000 UMWA members currently work at Patriot operations in West Virginia and western Kentucky. Additionally, more than 10,000 retirees, their dependents and surviving spouses receive health care benefits from Patriot. All told, the UMWA estimates the health care benefits for more than 22,000 people are potentially at risk.

But so far, I’ve only seen one coalfield politician have anything to say about Patriot’s move yesterday. Sen. Jay Rockefeller, D-W.Va., issued this statement:

Patriot’s decision is deeply disappointing, and incredibly unjust. These retirees worked day and night, risking their lives and their health, under a pledge that is now broken. Passing my bill to protect these union miners’ health benefits and pensions is now more than just the right thing to do – it’s imperative.

It’s not entirely clear yet if Sen. Rockefeller’s bill will fix all of the problem for UMWA members and pensioners, or if it will make Patriot be the one to pay these debts. And that’s really what this is all about — a major player in an industry that’s historically tried to externalize its costs of doing business onto its workers, the environment, the communities where it operates, and the global climate. As Temple University business professor Bruce Rader has explained, Patriot’s move here will:

… Ultimately will shift the burden to the general public or in a word socialize the health care benefits since the miner’s ability to pay will not cover this obligation and then the health care burden will be shifted to the government. In essence we will all pay the costs. This is a perfect example of the use of the legal system to socialize the costs and therefore lead to a transfer of costs to the general public from the shareholders of a company.

The question becomes, as a society, do we want to condone this? Should the profitability of these companies be enhanced at the general public’s expense, and what effect will this have on our system of allocating capital? Free-market capitalism is ultimately a system for the allocation of capital in a society and the efficient allocation of capital is the driving force behind the economic growth that this country has experienced. For this system to work, the participants must suffer the consequences and reap the benefits of their actions.

If you look more broadly at Patriot, you can see this … Take the selenium pollution from Patriot’s mountaintop removal mines (many of which — like its retiree health-care liabilities — Patriot inherited from other mine operators). With a series of carefully planned lawsuits, citizen group lawyers from Appalachian Mountain Advocates managed to force Patriot to internalize the costs of that pollution. The company went kicking and screaming at first, but eventually agreed not only to proper pollution treatment plans, but also to a longer-term plan that will get Patriot out of the mountaintop removal business altogether. Back when that announcement was made, Ben Hatfield had this to say:

Patriot Coal recognizes that our mining operations impact the communities in which we operate in significant ways, and we are committed to maximizing the benefits of this agreement for our stakeholders, including our employees and neighbors. We believe the proposed settlement will result in a reduction of our environmental footprint.

But remember that while Ben Hatfield became a household name because of the Sago Mine Disaster, he’s also  a veteran coal operator who worked for many years for Massey Energy’s predecessor, A.T. Massey Coal, a company whose efforts to break union contracts to reduce production costs and increase profits was in many ways the beginning of the sorts of maneuvers that Patriot is making now as part of its bankruptcy reorganization.

In West Virginia, the response to the Patriot selenium deal has been for state lawmakers to pass legislation aimed at ensuring that no other coal companies will have to take responsibility for their selenium pollution. Our House of Delegates couldn’t muster even one vote against that selenium bill — and not for nothing, but the United Mine Workers sent its lobbyist, Ted Hapney to a public hearing to support the industry’s bill.  And, as Taylor Kuykendall at The State Journal made clear in this story, the West Virginia Coal Association was certainly proud of its success with this legislation. Among those patting themselves on the back was Delegate Troy Andes, who used to handle public relations for Massey and Don Blankenship:

Andes said the Coal Caucus has allowed pro-coal legislators to educate the rest of the body on coal issues. As an example, Andes cited the selenium bill that the House passed unanimously March 8. He said the Coal Caucus was able to meet with about half of the legislative body on the bill before opponents were able to “flood the halls of the Capitol with misinformation.”

Andes also touted the major gains of the Republican Party and said that would bode well for the West Virginia coal industry.

“Today we have 46 Friends of Coal in the Republican Caucus,” Andes said. “Thanks to the 2012 election we grew from 35 members to 46 members. That translates to more seats on important committees.”

Rupert Phillips, D-Logan, works at White Armature Works, an electric motor repair company in Southern West Virginia that serves the coalfields. Hamilton said Phillips championed the passage of the selenium bill that recently passed the House.

“(The West Virginia Coal Association) gave me the car to drive,” Phillips said regarding the selenium bill. “I put it in four wheel drive and we took it to the top.”

So far, I haven’t heard any of these “Friends of Coal” talking about what they’re going to do to make sure Patriot lives up to the promises made to UMWA members and retirees. They seem perfectly content to allow the industry they champion to keep “externalizing” its costs onto workers and pensioners and, ultimately, the rest of us. Which brings me back to something that UMWA President Cecil Roberts said about how the union is continuing to fight Patriot in court and to call attention to the situation with protests in the streets:

Lawyers will do what lawyers do, courts will do what courts do,” Roberts said. “What working families do when they fight for justice is get out, get loud, and demand to be heard. We will continue to do that.

And as we do, more and more of our members are wondering which side national, state and local politicians, community leaders and religious leaders are on. For those who haven’t already answered that question, the time is now. Get off the fence and choose.

Here’s the announcement just from from Sen. Jay Rockefeller’s office:

On the heels of hearing gripping accounts last week in Beckley from retired coal miners who were promised lifetime pension and health care benefits for themselves and their families, Senator Jay Rockefeller today introduced legislation that would protect those benefits for thousands of retired miners whose livelihoods are in jeopardy. Senator Joe Manchin cosponsored the bill.

The Coalfield Accountability and Retired Employee Act seeks to provide certainty and peace of mind to retirees and their families while holding employers accountable for the commitments they make to their workers. The bill builds on and strengthens similar legislation Rockefeller and U.S. Rep Nick Rahall introduced last Congress. The new measure comes soon after a roundtable discussion Rockefeller held in Beckley with retired coal miners in which he re-affirmed his commitment to preserving their promised benefits. Rahall and United Mine Workers of America (UMWA) President Cecil Roberts also joined the discussion. Rahall today introduced companion legislation in the House, just as he did last Congress.

Sen. Rockefeller said:

Last month, I heard stories that absolutely broke my heart. One woman—Shirley Inman, who lives in Boone County—left a good-paying job in Chicago to come home to West Virginia to work in the mines. She did it because of the pension and health care benefits she was promised. And now, after years of on-the-job injuries and a bout with cancer, that promise was broken. That’s more than unfair. It’s shameful. And I won’t stand for it.

Sen. Manchin said:

A strong mining industry begins with a strong commitment to our miners. Our coal miners are some of the hardest working people in America, and they are proud to do the heavy lifting that keeps this country strong. They are the backbone behinds decades of lighting our cities and heating our homes, and deserve nothing less than the best possible benefits and care. This bill makes sure our brave coal miners receive the benefits they’ve been promised.

At the same time, here’s the announcement from Rep. Rahall’s office:

As part of his longtime effort to strengthen and improve the quality of life for coal miners in retirement, U.S. Rep. Nick J. Rahall (D-W.Va.) today introduced the Coalfield Accountability and Retired Employee Act (CARE Act), legislation that strengthens the legal protections and funding for the health care and pension benefits promised to retired coal workers and their families.

“Every effort must be made to preserve health care benefits for our retired coal miners who worked so hard to produce the coal that powered this Nation,” said Rahall. “This legislation that Senator Rockefeller and I are introducing today keeps faith with the federal commitment that has been made to our coal miners. It ensures that those who participated in the noble but dangerous job of working underground to provide our energy security are secure in the retirement.”

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Telling the truth about coal-mining job losses

In response to a previous Coal Tattoo post, there’s been a little bit of discussion about the relative merits of making sure we use accurate data — as accurate and timely as possible — when we talk about what’s going on with our coal industry here in West Virginia and the rest of Appalachia.

Phil Smith, communications director for the United Mine Workers of America, makes a perfectly valid point when he writes:

Whatever the number is, I think everyone can agree that there are today thousands of miners in West Virginia who can no longer provide for their families the way they once were able to, who are no longer contributing to the economies of their local communities like they were, and who are no longer contributing to the tax bases of their communities and the state like they were. Whether its 2,000, 3,000 or 5,000 of them really isn’t the issue. It’s what comes after the jobs are lost that is.

Now, on the one hand, it absolutely does matter if the number is 2,000, 3,000 or 5,000 … especially if we have an actual count that was reported to the government by the coal companies themselves. But even the more accurate and timely figure for coal-mining jobs losses — 3,327 last year in West Virginia — is a lot of families. And on a personal level, it doesn’t matter whether it’s 2,000 or 5,000 if your family is one of the ones hit by a layoff.

But in their zealous pursuit of being “Friends of Coal,” some West Virginia political leaders are quick to jump on even the slightest hint of a coal-job loss, blame it on the Obama administration, and fire away with their anti-EPA rhetoric. We saw such an incident easily debunked today in the Gazette’s letters to the editor column by Rob Goodwin of Coal River Mountain Watch. He wrote:

Some West Virginia leaders appear to have slightly backed off on the divisive “War on Coal” or anti-EPA rhetoric, but the new attorney general, Patrick Morrisey, has continued with the dishonest claims perpetuating divisiveness. He falsely claims in a recent stern letter to President Obama that workers were laid off because of Environmental Protection Agency permit delays.

The Feb. 11 letterr signed by Morrisey asks for the nomination of a new EPA administrator more sympathetic to the coal industry.

His only example that actually alleges any real harm on West Virginians has a serious factual flaw. Morrisey sources a news release from Rockefeller, Manchin, Rahall and Tomblin, issued a week before the election, bashing the EPA, stating, “After the EPA delayed issuing a needed 402 permit, Consol issued a WARN Notice tonight notifying [145] workers that they would be laid off.”

Morrisey falsely claimed in his appeal to Obama that 150 coal miners were laid off because of this EPA permit delay; however, Consol Energy stated in its annual report filed with the SEC on Feb. 7 “Consol Energy was able, in this instance, to redeploy these [145] employees to work at another adjacent coal mine property for which a permit was already issued.”

Now, keep in mind that AG Morrisey’s letter is dated Feb. 11, and the SEC filing that Rob Goodwin refers to was filed four days earlier, on Feb. 7.

The Gazette and the State Journal both posted stories about the letter on Feb. 11, and I did mentioned that coverage in a Coal Tattoo news roundup, but none of that coverage mentioned the clear divergence between what Morrisey said and what the facts of the incident showed. So everyone can be clear, here’s the entire passage from CONSOL’s annual report:

Thus far, CONSOL Energy subsidiaries have been able to continue operating their existing mines. However, CONSOL Energy was affected by a delay in permitting in 2012 for a new coal mine in Mingo County, WV, which resulted in a Worker Adjustment and Retraining Notification Act (WARN) notice being issued for employees scheduled to begin work on the new mine. Since 2007, CONSOL Energy has undertaken permitting activities to permit a new surface mine with a post mine land use plan for a five mile stretch of connecting highway that is part of the King Coal Highway corridor. CONSOL of Kentucky entered into a Memorandum of Understanding in conjunction with the Federal Department of Highways Administration and the U.S. Army Corps of Engineers, to coordinate the design of the valley fills to serve as highway infrastructure. However, the EPA objected to CONSOL Energy’s water discharge permit on the grounds of their April 2010 Appalachian guidance, which resulted in CONSOL Energy’s issuance of a WARN notice on October 30, 2012 for 145 employees who were planned to work at the new coal mine. CONSOL Energy was able, in this instance, to redeploy these employees to work at another adjacent coal mine property for which a permit was already issued. However, there is no assurance that the permit for a new coal mine will be issued, or that CONSOL Energy would be able to re-deploy its employees under future similar circumstances.

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W.Va. coal jobs: What the data shows now – and later

This Sept. 18, 2008 file photo shows a Massey Energy coal mining site near Slyvester, W.Va.  (AP Photo/Jeff Gentner, file)

I’ve had a few questions from readers about the recent statements by the Tomblin administration saying that West Virginia has lost 5,000 coal jobs in 2012 alone.  We’ve delved before into this murky world of coal-job figures — an issue greatly clouded by the career campaign consultants during last year’s presidential election. You can read my blog post on the matter here or, even better, go back and check out the great piece Pam Kasey wrote for the State Journal on the same topic here.

The Associated Press has reported on deputy revenue secretary Mark Muchow’s figures a couple of times, first in its coverage of Gov. Earl Ray Tomblin’s State of the State address and again this week in reporting on the Tomblin administration’s press release about coal exports. The second of those stories, for example, reported:

Despite the increase in exports, West Virginia coal production was still down more than 8 percent in 2012, and the mining industry in the state lost more than 5,000 jobs, according to the West Virginia Department of Revenue.

To try to explain this to Coal Tattoo readers, I put in a call to Mark Muchow, the deputy state revenue secretary quoted in the second of the AP stories. When I asked where this 5,000-jobs-lost figure comes from, Mark pointed me to this section of the Workforce West Virginia website. This is where I suspected the figure came from, and in fact it shows that as of December 2011, the state had 34,500 jobs in the “mining and logging” sector. By December 2012 (based on preliminary figures), that number of “mining and logging” jobs had dropped to 29,500 — the drop of 5,000 that’s been quoted in recent media accounts.

But read the name of the category again: Mining and logging. It’s not just coal mining. It’s all mining and logging. And it’s even more than that. As Muchow explained this morning, that category includes all jobs that are part of the North American Industry Classification System (or NAICS) category 21. As defined here, this category includes: Mining, Quarrying, and Oil and Gas Extraction. And there’s more. West Virginia’s “Mining and logging” category also includes all jobs in NAICS category 1133 for logging, which is defined here as: (1) cutting timber; (2) cutting and transporting timber; and (3) producing wood chips in the field.

Mark Muchow was clear — when I talked to him anyway — that the category under discussion goes well beyond coal mining:

It’s all those put together. It’s all sectors there, not just coal mining.

So, I asked him, if that’s true, how can he tell the media that the reduction in jobs of 5,000 during 2012 for the overall category means West Virginia lost 5,000 coal-mining jobs during that period? Mark told me that he believes  that “coal probably represents the bulk of those losses.” Why does he say that? He told me he’s drawn that conclusion based on looking at production figures, and monitoring other trends in the industry through tax collections, wage data, etc.

But Mark isn’t — and can’t — cite any numbers that specifically prove his statement. And from what I’ve heard, his comments to the media and to lawmakers don’t reflect that uncertainty — and the media coverage of his statements certainly doesn’t reflect that uncertainty either. We’re talking about a state official’s theory — albeit a state official who is trusted by administration officials, lawmakers and the statehouse media — but we’re not talking about facts.

Is Mark Muchow’s theory correct? Maybe it is.

It’s certainly true that coal mining accounts for the bulk of the jobs in the “mining and logging” sector in West Virginia. We know that by looking at the more detailed industry-by-industry figures here, which show coal-mining providing 24,331 jobs in the 4th quarter of 2011, or about 70 percent of the 34,673 jobs in the overall “mining” sector (this is just NAICS 21 now, it doesn’t include logging too). The other big contributors to the mining sector are oil and gas extraction, support activities for oil ans gas, and support activities for coal mining.

The thing is, the data that would show whether Mark is right or wrong isn’t available yet. The more detailed industry-by-industry jobs figures don’t come out monthly (as the chart he points to does), but only quarterly — and the lag in collecting and releasing the data means that the most recent detailed breakdown that’s available is from the 2nd quarter of 2012. It’s interesting to compare those to the 4th quarter of 2011. If you do, you’ll see that “mining” in general (including oil and gas) dropped 1,680 jobs. Coal mining specifically lost 1,574 jobs — so that tends to support Mark’s contention that the bulk of the jobs losses in “mining and logging” come from coal.

Those figures came out in November, and the 3rd quarter of 2012 will be out soon. But even that won’t definitively say if Mark’s numbers are right.

The thing is … there is another set of data out there that is more up to date. The U.S. Mine Safety and Health Administration collects reports from mine operators about their employment. The numbers are updated every quarter, and MSHA does a pretty good job of posting the public version within a few weeks of the end of each quarter. For example, the most recent available are jobs figures for the 4th quarter of 2012, which we reported on in the Gazette on Feb. 6:

New federal data shows that coal-mining employment in West Virginia dropped by more than 1,200 jobs during the final quarter of last year, continuing a trend that industry analysts project is likely to continue.

The number of mining jobs in West Virginia dropped to about 21,400 in the last three months of 2012, according to disclosures that mining companies file with the U.S. Mine Safety and Health Administration.

Strip-mining accounted for nearly two-thirds of the jobs losses, the data shows.

Production from strip-mining in West Virginia during the period was down to 8.1 million tons, half of the total during the fourth quarter of 2008, and the lowest quarterly figure in 25 years.

For the record, the latest MSHA data shows that there were 24,768 coal-mining jobs in West Virginia in the 4th quarter of 2011, and 21,441 in the 4th quarter of 2012 — a drop of 3,327 jobs, or 50 percent lower than the figures state officials prefer to cite.

Of course, these are two different sets of figures collected from two different agencies for two different purposes. And it’s worth noting that the state data also includes jobs figures for the sub-category of “support activities for coal mining,” an area that saw jobs drop from 1,845 in December 2011 to 1,698 in June 2012.

I’m not sure why state officials never seem to want to look at the MSHA figures. I do know that there’s reason to be skeptical about the state’s information on this issue, given how the administration has touted the number of mining layoffs as proof an Obama “war on coal,” all the while knowing that their figures — based on WARN notice and unemployment filings — didn’t show the whole picture.

Muchow, for his part, wants to be able to look at consistent figures across a broad range of industry sectors, so he says it makes sense for him to monitor the Workforce West Virginia data, rather than delve into the MSHA database. And I also know that I’ve heard from media types in other states that they don’t much care for the MSHA data, because using it required plugging a big data-set into software like Microsoft Access, rather than just looking at a chart on a website.

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Where are all those friends of coal?

Members of the United Mine Workers of America take part in a protest outside the of headquarters of Peabody Energy, one of the companies the union accuses of orchestrating business deals that bankrupted Patriot Coal, Wednesday, Feb. 13, 2013, in St. Louis. Ten people were arrested during the protest of bankruptcy proceedings that the union says jeopardizes pension and health care benefits for some 20,000 retirees and dependents. (AP Photo/Jeff Roberson)

The United Mine Workers plans to continue its protests of the Patriot Coal bankruptcy situation, with another protest on Tuesday outside the headquarters of Peabody Coal in St. Louis.

And the problems faced by Patriot miners and retirees is getting more attention, first with this story in the Wall Street Journal:

Patriot Coal Corp., which is in bankruptcy-court proceedings, plans to seek to terminate the health benefits of up to 1,000 salaried retirees, according to court filings.

During the Patriot bankruptcy most attention has focused on about 22,000 active union miners, union retirees and their beneficiaries who are fighting to keep health benefits. While smaller in number, the salaried retirees could stand to lose more than unionized counterparts.

Salaried retirees, for example, would be ineligible to participate in a trust Patriot has proposed to cover some health benefits for retired United Mine Workers of America members …

… Many salaried retirees—including foremen, superintendents and other supervisors—worked alongside unionized miners in underground coal mines for decades but don’t have protections guaranteed by collective bargaining agreements.

In December, Patriot sent a letter to salaried retirees saying it intended to terminate all of their retiree health and life-insurance benefits. A hearing is scheduled for Tuesday in U.S. Bankruptcy Court for the Eastern District of Missouri to create a committee to represent salaried retirees’ claims.

“In this case the company is saying we want to terminate 100% of your benefits, and we don’t want you to have any unsecured claim,” said Jon Cohen, a Chicago attorney representing the retirees.

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Crutchfield: Much to be done on ‘Running Right’

This morning, Alpha Natural Resources is announcing its 4th quarter and full-year financial results for 2012 (a net loss of $2.4 billion for the year), and offering this outlook for 2013:

After a period of cyclical weakness in the global metallurgical coal market in the second half of 2012 during which approximately 30 million tons of uneconomic production was removed from the seaborne market, developments are beginning to point to gradual improvement … Throughout 2012, the market for domestic steam coal remained challenging due in part to the fourth warmest winter ever recorded, low natural gas prices and the long-term secular trend of coal-fired plant retirements all of which contributed to reduced coal usage and led to record-high inventory levels that peaked at an estimated 213 million tons in the spring of the year.  As natural gas prices have increased from their lows below $2 per MCF to a level in the low $3s and with forward pricing hovering around the $4 mark, coal has recovered some of its market share which bottomed at 32 percent of U.S. electricity generation and reached approximately 38 percent by year-end.  As a result of the increased usage of coal in the second half of the year, along with production cuts estimated at around 100 million tons during 2012, utility inventories have started to retreat but remain elevated at approximately 197 million tons as of the end of the year. 

In light of the continuing weakness in the U.S. steam coal market, Alpha adjusted its shipment levels and implemented a restructuring plan to right-size its operating footprint.  With respect to the PRB, Alpha has reduced its planned shipments in the near-term until elevated inventories eventually correct, allowing acceptable profit levels.  In the East, Alpha’s Pittsburgh seam longwalls, with high heat content and relatively lower costs, are expected to produce an estimated 9 million to 10 million tons in 2013.  In Central Appalachia, Alpha has idled or closed a number of higher production cost steam coal operations in order to control costs and match supply with structurally diminished demand that has decreased markedly over the course of the last year.  At the same time, Alpha more than doubled its Eastern thermal coal exports in 2012 to nearly six million tons, and the Company plans to continue to build its export thermal franchise in 2013, and beyond.

In their press release, Alpha CEO Kevin Crutchfield made note of safety improvements, but also of the fact that three Alpha miners in West Virginia died on the job last year (see here, here and here):

Once again Alpha improved its safety performance on several fronts.  Compared with the prior quarter, both our incident rate and our days-lost declined by 20 percent in the fourth quarter.  Looking at the full year 2012, Alpha achieved a 20 percent improvement in its incident rate and a 32 percent reduction in serious and substantial MSHA citations.  No matter what market headwinds or other challenges we face, we can never lose our focus on ‘Running Right.’  The year 2012 was no exception.  I would like to congratulate our entire workforce on their successful efforts.  While I am pleased with the efforts all of our employees are making on accident reduction, the loss of three of our fellow employees in 2012 is a somber reminder that there remains much work to be done, and we must remain vigilant at all times.

Darren Epps over at SNL Energy has a fascinating little piece out this afternoon about some remarks made by Alpha Natural Resources CEO Kevin Crutchfield:

In a wide-ranging keynote address at the CoalTrans USA conference in Miami on Jan. 31, a candid Alpha Natural Resources Inc. Chairman and CEO Kevin Crutchfield said coal will continue to lose market share in the U.S. and the influx of natural gas production is a positive development for the country’s economy.

In opening the event, Crutchfield criticized opponents of fossil fuels but acknowledged some of the rhetoric offered in defense of the coal industry “doesn’t always have the ring of truth.”

Specifically:

“Natural gas and other sources will form a more meaningful share of the domestic market, and coal — even if 2013 sees higher demand here at home — will likely constitute a lesser share in the years to come,” he said. “There was a time we always had a market in the U.S., where we could sell everything we produced. For every ton of American coal, there was an American buyer. We probably won’t see those days again.

“Instead of regretting it, let’s focus on where the need is — throughout much of the rest of the world.”

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‘War on coal’: Industry predicts good times ahead?

We all remember how the mining industry waged a non-stop campaign against President Obama’s re-election, saying the administration was engaged in a “war on coal.”  At one point, a top National Mining Association official invoked a Muslim reference, claiming the U.S. Environmental Protection Agency had unleashed a “regulatory jihad” against the industry.

So you would think that, now the President Obama has been re-elected and inaugurated for a second term, the world must be coming to an end, if not for the entire economy, at least for the coal industry, right?

Well, here’s what Hal Quinn, president of the National Mining Association, said yesterday at his group’s annual media briefing on their outlook for the future:

The outlook for U.S. coal and minerals mining in 2013 is positive due to clear improvements in key sectors of the U.S. economy and the global demand for mined products, particularly in developing economies … Coal is on track to become the world’s primary energy source—surpassing oil—by 2015, according to Wood McKenzie, two years ahead of the International Energy Agency’s current estimate. Here at home, coal’s contribution to meeting electricity demand will increase by nearly 45 million tons over 2012 levels, and total domestic consumption will rise by 50 million tons due to slight improvements in the U.S. economy; cooler weather; and natural gas prices that are expected to increase by 22 percent, according to the Energy Information Administration (EIA).

Quinn continued:

Demand for coal in Europe has increased—particularly in Germany and Britain—in response to higher gas prices. Demand for coal throughout Asia for electricity and steel production contributes to a robust U.S. coal export forecast of 111 million tons in 2013.

With these improved conditions for coal production and demand in 2013, NMA expects total U.S. coal production to come in at 1.016 billion tons in 2013—slightly more optimistic than EIA’s January short-term forecast.

Longer-term, NMA expects U.S. coal to benefit from recent and planned construction of higher efficiency coal-based power plants with higher output rates and lower emissions. The remaining coal fleet will, on average, be larger, more efficient and run at higher capacity—recovering at least 100 million tons of U.S. coal production lost to retirements of older plants.

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EIA: Coal production down in 2012

Here’s the latest out today from the U.S. Department of Energy’s Energy Information Administration:

U.S. coal production, down almost 7%, fell almost everywhere. Central Appalachia production decreased significantly, down 16%, followed by a 9% production decline in PRB. By contrast, coal production volumes in the Illinois Basin rose above its five-year range, up 9% from 2011.

Electric utility scrubber additions to meet proposed EPA regulations limiting sulfur dioxide (SO2) emissions underpinned much of the increasing demand for Illinois Basin’s low-cost, but high-sulfur coal. With a scrubber in place, a plant using high-sulfur coal can reduce its need to buy and surrender SO2 emissions permits by 90% or more compared to a plant using the same fuel without a scrubber, making Illinois Basin coal much more competitive,  especially against Central Appalachia which previously could rely on its low sulfur content as a competitive advantage. In addition to its relative low cost, Illinois Basin coal is more likely to be used in larger, more efficient plants with modern pollution control equipment, helping it compete against low natural gas prices.

King Coal Highway: If we build it, will jobs come?

You remember how just before the election — when residents around our state were worried about the approaching Superstorm Sandy — West Virginia political leaders put out a press release attacking the Obama administration, alleging permit reviews by the U.S. Environmental Protection Agency were holding up a mining project related to the King Coal Highway, and potentially costing the southern coalfields thousands of jobs?

Sen. Joe Manchin was especially upset, saying in the release:

As a West Virginian, I watched this project come together one partnership at a time for the past two decades. As Governor, I made sure that the state supported the project’s permitting and funding requests. Now, as Senator, I am incensed and infuriated that the EPA would intentionally delay the needed permit for a public-private project that would bring so many good jobs and valuable infrastructure to communities that so desperately need them. The EPA has lost court case after court case for its overreach, and it should be using better judgment by now. I vow to work with the Governor’s office, our entire Congressional delegation and members of both parties to make sure that this vital project will move forward.

Rather than fight this project, the EPA should be embracing it as a model of how to work together. We’ll put the land to good use after it has been mined by building the King Coal Highway. We’ll build a wastewater treatment plant that will clean up millions of gallons of water for people in the Pigeon Creek Watershed – eliminating raw sewage and other pollutants. Not only will we be protecting the jobs of the 145 people working at this project, we’ll be putting hundreds more people to work with good-paying jobs. The EPA’s callousness jeopardized the funding for all these projects. In short, this project is a win-win and the EPA is trying to make it a loser.

Let’s ignore for a minute the question of whether it is appropriate for a governor to step in and make sure the state “supported … the permitting” of a particular strip mine. Let’s focus instead on this job business, and look closely at what the congressional delegation’s press release, issued by Sen. Manchin’s office, said about the project related to CONSOL Energy’s Buffalo Mountain permit, on one end of the King Coal Highway project. Here’s the important line:

The Mingo County Redevelopment Authority estimates that 2,000 acres of land could be developed and 2,500 new jobs could be created in the next 15 years.

Sounds pretty great, right? I wanted to know more, so I asked Emily Bittner, Manchin’s media spokeswoman, where exactly Sen. Manchin got those figures. She was kind enough to send me this Mingo County Redevelopment Authority fact sheet, and to highlight what she felt was the relevant portion of it:

The most significant of our post mine land use projects which are currently under construction include a fifteen mile section of the I-73/I-74 King Coal Highway and the Mingo County Air Transportation Park. The completion of these projects in accordance with our LUMP [Land Use Master Plan] will result in a savings to taxpayers of nearly $400 million, the creation of over 2,000 acres of developable land in which new business and industry will be recruited, and the subsequent creation of 2,500 new jobs within the next 15 years.

Still sounds pretty great, doesn’t it? Keep in mind that the good folks at the Mingo County Redevelopment Authority are leaders in this area, being one of the few local development groups in West Virginia that’s been very successful in working on post-mining development projects for mountaintop removal and other mining sites.

But this was where I got a little confused, because when you check the authority’s website, they have this to say about post-mining development along the highway’s path:

Construction of the 15 mile section of the King Coal Highway as a Post Mined Land Use project will create 1,500 acres of developable property and tremendous potential for diversification of Mingo County’s job market.

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Yesterday morning, an interesting little e-mail message showed up in my inbox, alerting the Gazette that the folks at Walker Machinery were planning a “major announcement” later in the day …

While some prognosticators are signaling the decline of the coal industry, Whayne Supply Company and Walker Machinery Company will make an announcement regarding a major investment in underground mining equipment. Boyd LLC, the parent company of both Whayne and Walker, has created a new business division to sell and support new products in the mining market.

Well, it turned out that Caterpillar had already issued a press release on the matter, announcing earlier in the morning:

Caterpillar Inc. (NYSE: CAT), Boyd Company LLC, owner of Whayne Supply Company (Whayne Supply), and Cecil I. Walker Machinery Co. (Walker Machinery) today announced that Whayne Supply and Walker Machinery have acquired from Caterpillar Global Mining LLC the Bucyrus equipment distribution and support business for their territories. Whayne Supply and Walker Machinery are authorized Cat dealers in Kentucky, southern Indiana, southeastern Ohio and portions of West Virginia. Boyd Company LLC has established Whayne-Walker Underground Mining as the business unit to meet the distribution and support needs for these new products.

We banged out a quick story for the Gazette website, reporting:

The parent company of Walker Machinery will hire about a dozen new employees over the next several months as part of its purchase of an underground mining equipment distribution and support business from Caterpillar Inc.

Walker and an affiliate, Whayne Supply, will also be hiring 38 former workers from Caterpillar’s Bucyrus equipment division as part of the deal, said spokesman George Manahan.

Illinois-based Caterpillar announced that Whayne Supply co. and Cecil I. Walker Machinery Co. had acquired Caterpillar’s Bucyrus equipment distribution and support business for their territories.

Whayne Supply and Walker Machinery are authorized Cat dealers in Kentucky, southern Indiana, southeastern Ohio and portions of West Virginia. Walker employs about 745 people in West Virginia, Manahan said.

Wait just a second, you say … The coal industry is dying. President Obama and EPA Administrator Lisa P. Jackson killed it (just as sure as the Navy Seals killed Osama Bin Laden, according to UMWA President Cecil Roberts). So how could a mining equipment supplier here in West Virginia be expanding?

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Coal industry decline: What about the people?

This morning, CONSOL Energy is reporting a net loss for the 3rd quarter of 2012 of $11 million, compared to a net income during the previous quarter of $167 million. The company explained:

The loss was due to a series of planned and unplanned idlings, as the company scaled back production to meet a weaker market, which will also have a residual impact during the fourth quarter.

Now, part of the problem for CONSOL is that two new conveyor belts that move coal at its huge Enlow Fork and Bailey mines in western Pennsylvania collapsed back in July:

This incident caused a total of four longwalls to be idled for approximately three weeks, at which point one rebuilt conveyor belt was re-started. Production from these mines was at approximately 60% of normal for most of the remainder of the third quarter. The company’s third quarter net income would have been an estimated $53 million higher, had the conveyor belt incident not occurred.

But here’s the other thing:

Much lower sales from the company’s flagship low-vol Buchanan Mine also reduced third quarter profitability, as the company chose not to sell into a market that was experiencing an inventory de-stocking.

Now keep in mind, then CONSOL announced in early September that it was temporarily idling the Buchanan Mine, a southwestern Virginia congressman held up the move as evidence that the Obama administration’s “war on coal” was destroying the industry:

Incumbent Republican U.S. Rep. Morgan Griffith blamed President Barack Obama, the U.S. Environmental Protection Agency, and activist groups for attacking the coal industry.

“With current policies, the down economy is not going to improve soon,” Griffith said in a written statement issued Tuesday. “Obviously, this means that construction, including items built with steel, have been put on hold.

“President Obama, his Administration, and his allies – like MoveOn.org and the Sierra Club – are all very clear about their agenda – make using coal history,” Griffith said. “Today’s news is just the latest demonstration that this agenda is making gains. … I believe the administrative branch of the federal government and its leaders are arbitrarily and capriciously targeting this profession.”

CONSOL, of course, said nothing of the kind. It said the Buchanan idling was simply a response “to weak market conditions throughout its export markets in Asia, Europe and South America.”

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Another shakeup at Patriot Coal

Here’s the announcement this morning from bankrupt Patriot Coal:

Patriot Coal Corporation (OTC: PCXCQ), a producer and marketer of coal in the eastern United States, today announced that Bennett K. Hatfield (right) has been named President and Chief Executive Officer and has been appointed to the Board of Directors, effective immediately. As CEO, he succeeds Irl F. Engelhardt, who is stepping down from his duties as Chairman, CEO and member of the Board of Directors of Patriot.

Michael M. Scharf has been appointed Chairman of the Board of Directors. He previously served as the independent Lead Director of the Board.

Scharf said:

On behalf of the entire Board, I would like to thank Irl for stepping in at a critical time and providing a steady hand in leading Patriot through the initial phase of the restructuring process.  We appreciate his many contributions and wish him well.

Ben Hatfield is a respected and proven leader, with the executive and operating experience required to guide the Company through the restructuring process. With 30 years of industry experience, Ben has played an important role in improving the Company’s operations and is well-qualified to lead Patriot. The Patriot Board is confident that his leadership will be invaluable as we undertake changes necessary to position the Company for future success.

Of course, this move comes just five months after a previous management shakeup at Patriot and amid the company’s efforts to reorganize in bankruptcy court — a process that the United Mine Workers fears will include efforts to cut retiree pensions and health-care benefits, and perhaps rewrite the company’s union contract.

Hatfield, a former Massey Energy official who was also previously CEO of International Coal Group when the Sago Mine Disaster occurred, said in Patriot’s announcement today:

It is a privilege to be entrusted by the Board to lead this Company. My goal is to take the actions necessary to restore Patriot’s viability and keep our nearly 4,000 employees working.  We want to complete the reorganization of Patriot as swiftly and effectively as possible.

Don Blankenship: ‘American competitionist’

We’ve had a couple of posts over the last few weeks (see here and here) about the recent activities of former Massey Energy CEO Don Blankenship. Well, it seems Blankenship has also launched his own website, DonBlankenship.com.

The site makes for some interesting reading, proclaiming Blankenship an “American Competitionist” and offering what it calls “Factual discussions on America” like this:

Most every country in the world, in one way or another, benefits from a strong, healthy America. All Americans, and in fact all the world, are stakeholders in our country. It is America, and Americans, that have led the world’s progress in the improvement of people’s quality of life…

The “About me” section offers a first-person summary of Blankenship’s life. There’s this about his early years:

My life, like most of yours, has had its ups and downs. My father and my Mom each worked 80 to 90 hours per week, which taught me to be independent at a very early age.

As the saying goes, we were poor but didn’t know it. We had an outhouse that was nicer than the one most of our neighbors had. We always had shoes. My Mom was a McCoy, although not directly related to those who feuded with the Hatfield’s in the hills of Kentucky where I was born.

My early years were occupied by baseball, pumping gasoline into coal miners’ cars at our family gas station, and watching Gunsmoke, Andy Griffith, Bonanza, Wagon Train, and Rawhide – that is, after we got our first television when I was seven years old. The town I lived in most of my first 18 years was Delorme, West Virginia, population of 400 at the time – now maybe 200.

And then there’s this:

Next, it was on to Marshall University. I was there when the football team was killed in the plane crash in 1970. This was my first experience with a horrific tragedy. Of course, the worst tragedy of my life was the day of the Massey mine explosion on April 5, 2010. I also have vivid memories of the day President Kennedy was shot, and of course of 9/11. Those were three heartbreaking days to be sure.

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Fact check: Sorting out the coal jobs rhetoric

We’ve been writing in the Gazette and on this blog for more than a year now to try to explain what’s happened under the Obama administration regarding coal jobs here in West Virginia and across the Appalachian region (see here, here, here and here, just for example).

Despite our efforts, the rhetoric about coal-job losses continues, with some candidates, media personalities, and political leaders throwing around some interesting figures.

For example, Republican gubernatorial candidate Bill Maloney has gone as far as saying that “upwards of 3,000 jobs have been lost this year alone” in West Virginia. Hoppy Kercheval over at MetroNews has used the same figure. Rep. Shelley Moore Capito, R-W.Va., has used a figure of “over 2,000” jobs lost.

We’ve tried to rely at the Gazette on the latest U.S. Mine Safety and Health Administration quarterly figures, believing that they are the most accurate and up-t0-date numbers available that show the full coal employment picture — taking into account both job losses from layoffs and mine closures, and jobs added elsewhere in the coal industry.

But as the State Journal’s great energy reporter Pam Kasey explained recently, that’s not the way officials from the West Virginia Department of Commerce want to play. In a story headlined Rhetoric escalating in coal mine layoff numbers, Pam pointed out in a brilliantly subtle way that the state agency is really misleading the public here. How? Here’s what the wrote:

As announcements of coal mine layoffs small and large pile up this election season, the rhetoric is piling even higher.

References have appeared recently to “more than 2,000” and “more than 2,500” coal-industry layoffs in the state in 2012 — often with overt blaming of Democratic Gov. Earl Ray Tomblin and President Obama — and last Thursday it even went to “about 3,000.”

But any attempt to verify these figures runs up against some probably unavoidable squishiness in the data.

Unavoidable squishiness indeed. Read on:

The “more than 2,500” number traces, ultimately, to WorkForce West Virginia, which gets it from two places.

One is Worker Adjustment and Retraining Notification, or WARN, layoff notices issued by companies to employees. That’s not a complete list of layoffs: companies generally only have to issue those notices if they employ more than 100 and are laying off more than 50 at a single facility, and if there are no extenuating circumstances. In addition, companies don’t have to notify WorkForce later if they don’t carry out all of the WARNed layoffs. So the WARN list misses some layoffs and may include some that never take place.

WorkForce can come closer to the real number because it also can find out how many people apply for unemployment compensation at its field offices across the state and where they were laid off from.

And WorkForce West Virginia is apparently where some folks in the media were getting their numbers. The agency put out a figure of 2,646 layoffs. But after both Pam and I pointed out some double-counting, they backed their figure down to 2,592.  And, as Pam went on to write:

The office also indicated that it stands by its methods and does not intend to change them or to stop reporting numbers derived in this way.

WorkForce’s numbers are ballpark at best.

And there’s more:

That also misses a larger point.

Recall that, even with losses of coal mining jobs in the first and second quarters of this year, mining employment in the state as of June was still higher than in 30 of the past 37 quarters — far higher than most of the past decade.

Yet little is said about the mines opening or increasing production in this election year. Maybe, with a reasonable fear of drawing attention to itself, the industry keeps quiet about new sites and expansions.

Twenty-nine West Virginia coal mines reported their first production to the federal Mine Safety and Health Administration in 2011 or 2012. Those new mines reported a combined production in the second quarter of 2012 of more than 900,000 tons and combined employment — miners, not including administrative support staff — of 1,038.

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Alpha announces ‘strategic repositioning plan’

Here’s the announcement just out early this morning from Alpha Natural Resources:

Alpha Natural Resources (NYSE: ANR), a leading U.S.-based coal supplier, today outlined plans to reshape its portfolio of operations to meet the evolving demands of a changing global coal market.

By early 2013, the company will be fully aligned to focus on two key strategic priorities: enhancing Alpha’s metallurgical coal leadership position in both the domestic and international markets; and establishing a durable core of cost-competitive thermal coal assets better suited to supply structurally shifting power markets in the United States and tap into new thermal markets overseas.

Among the key announcements for coalfield residents:

Between now and early 2013 operational adjustments will reduce approximately 1,200 positions from the current workforce of 13,100 employees. The first of the planned reductions commence today with the idling of eight mines in Virginia, West Virginia and Pennsylvania. Approximately 400 positions will be eliminated, with some employees having job opportunities elsewhere in the organization.

UPDATED, SEPT. 19, 2012 —

As we explained in our print story,   in West Virginia, the mines affected are the Alloy deep mine near Powellton, the Alloy surface mine near Boomer, the Premium highwall mine near Gilbert and the White Flame surface mine near Wharncliffe.  As the AP first reported, the Virginia mines are Guest Mountain deep mines No. 8 and No. 9 near Norton, and Twin Star Surface Mine near Hurley and in Pennsylvania, Alpha will close its Dora deep mine in Jefferson County.

What’s behind these moves? Alpha explains this way:

Alpha’s rationalization efforts focus on thermal coal operations that have a cost, customer or transportation advantage. Operations that have competitive cost positions and more stable customer demand — such as supplying baseload power plants and generating units that will survive a stricter regulatory regime — will supply the majority of the company’s U.S. thermal coal output.

With the addition of a new international sales and trading function announced July 31, Alpha will also further develop its global marketing platform for its high-quality thermal coals.

A combination of mine and equipment idlings, production curtailments and mining out reserves will take place through early 2013, reducing annualized coal production and shipments by approximately 16 million tons. Approximately 40 percent of the reduction will come from higher-cost thermal coal operations in the East that are unlikely to be competitive for the foreseeable future. And approximately half of the reduction will come from production curtailments in the Powder River Basin in order to match currently committed sales volumes. The balance will be reduced production of lesser quality metallurgical coal.

Kevin Crutchfield, Alpha’s CEO, said:

With fundamental changes taking place in our business, we’re taking decisive actions that set the table for Alpha to compete successfully as a leader in the global coal markets for years to come.

We’re taking a long-term view of the thermal coal market, and we believe there are solid opportunities for diversified suppliers like Alpha to produce and sell thermal coal profitably into a smaller domestic market and to customers in new markets overseas. At the same time we have a big opportunity to advance Alpha’s position as a premier supplier of metallurgical coal. Forecasts point to more than 100 million tons of increased seaborne metallurgical coal demand by the end of this decade, and persistent structural supply limitations exist on sources of high-quality metallurgical coal. We intend to participate meaningfully in the market upside with costs that are globally competitive.

Paul Vining, Alpha president, said:

The focus and shape of our company need to change to reflect our new business environment.  We must have a nimble operating model, superior cost management and an overhead structure that matches our streamlined operational footprint. We recognize these changes will impact our people, suppliers and communities in some areas where we operate. Alpha is committed to acting transparently and responsibly throughout the transition, with respectful consideration of our people and all other stakeholders.

UPDATED: Two things to keep in mind, from Alpha’s announcement:

Between now and early 2013 operational adjustments will reduce approximately 1,200 positions from the current workforce of 13,100 employees. The first of the planned reductions commence today with the idling of eight mines in Virginia, West Virginia and Pennsylvania. Approximately 400 positions will be eliminated, with some employees having job opportunities elsewhere in the organization.

We don’t yet know how many of the 400 employees will be offered jobs elsewhere, but with previous layoff announcements, a significant number of affected workers have been offered other vacant positions within the company.

UPDATED 2: Alpha spokesman Ted Pile confirmed that about 270 of the 400 employees affected by today’s announcement will be offered jobs elsewhere in the company, through a combination of filling vacant spots and replacing outside contractors.

In addition, it’s important to note this explanation of how Alpha plans to meet is production reduction target:

A combination of mine and equipment idlings, production curtailments and mining out reserves will take place through early 2013, reducing annualized coal production and shipments by approximately 16 million tons. Approximately 40 percent of the reduction will come from higher-cost thermal coal operations in the East that are unlikely to be competitive for the foreseeable future. And approximately half of the reduction will come from production curtailments in the Powder River Basin in order to match currently committed sales volumes. The balance will be reduced production of lesser quality metallurgical coal.

Do you think many media outlets will mention this part about “mining out reserves” being part of what is happening here?