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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - The U.S. coal sector continues to suffer following the idling of coal mines in West Virginia by Alpha Natural Resources Incorporated (NYSE:ANR) (Bristol, Virginia) and weak year-end results by Peabody Energy Corporation (NYSE:BTU) (St. Louis, Missouri).
Alpha announced the idling at Highland Mining's Superior, North, and Trace Fork surface mines and a reduction in workforce at its Reylas and Freeze Fork surface mines. Around 100 jobs will be lost. Alpha blamed sustained weak market conditions at home and abroad and federal government regulations that have "challenged the entire Central Appalachian mining industry". The idling process and job cuts are expected to be completed by mid-April.
It also pointed to regulatory pressures forcing the "premature retirement of coal-fired power plants across the nation" and a global excess coal which has driven down prices.
"We made a short term decision in November to keep these mines operating as existing coal supply contracts were being fulfilled," said Alpha Chairman and CEO Kevin Crutchfield, who emphasized the continued need to adjust to challenged market conditions. "Unfortunately, despite the hard work of these operations to reduce costs in this unprecedented business climate, prices remain depressed and current coal supply simply exceeds demand. We are confident that a portion of the displaced miners will be able to fill available positions at other Alpha-affiliated mines."
U.S. coal prices have plummeted to their lowest point in six years, down to less than $46 per short ton at the start of this month, from over $56 per ton 12 months ago.
Peabody, the world's largest private-sector coal company, Peabody Energy Corp. slashed its quarterly dividend by 97% to 0.25 cents and announced weaker fourth quarter revenues from its U.S. mining operations as the price per ton decreased. The company said that for the year, U.S. mining operations reported EBITDA of $1.07 billion, which was impacted by a 3% decrease in revenues per ton, partly offset by a 1% reduction in operating costs per ton and a 3% increase in shipments.
"Peabody continues to drive improvements in safety, costs and productivity as we respond to challenging market conditions with additional cost reduction programs, capital efficiency initiatives and non-core asset sales," said Peabody Energy Chairman and Chief Executive Officer Gregory H. Boyce. "While we expect coal fundamentals to improve over time, we are implementing further steps in our comprehensive plan to improve competitiveness and maintain adequate liquidity."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
Alpha announced the idling at Highland Mining's Superior, North, and Trace Fork surface mines and a reduction in workforce at its Reylas and Freeze Fork surface mines. Around 100 jobs will be lost. Alpha blamed sustained weak market conditions at home and abroad and federal government regulations that have "challenged the entire Central Appalachian mining industry". The idling process and job cuts are expected to be completed by mid-April.
It also pointed to regulatory pressures forcing the "premature retirement of coal-fired power plants across the nation" and a global excess coal which has driven down prices.
"We made a short term decision in November to keep these mines operating as existing coal supply contracts were being fulfilled," said Alpha Chairman and CEO Kevin Crutchfield, who emphasized the continued need to adjust to challenged market conditions. "Unfortunately, despite the hard work of these operations to reduce costs in this unprecedented business climate, prices remain depressed and current coal supply simply exceeds demand. We are confident that a portion of the displaced miners will be able to fill available positions at other Alpha-affiliated mines."
U.S. coal prices have plummeted to their lowest point in six years, down to less than $46 per short ton at the start of this month, from over $56 per ton 12 months ago.
Peabody, the world's largest private-sector coal company, Peabody Energy Corp. slashed its quarterly dividend by 97% to 0.25 cents and announced weaker fourth quarter revenues from its U.S. mining operations as the price per ton decreased. The company said that for the year, U.S. mining operations reported EBITDA of $1.07 billion, which was impacted by a 3% decrease in revenues per ton, partly offset by a 1% reduction in operating costs per ton and a 3% increase in shipments.
"Peabody continues to drive improvements in safety, costs and productivity as we respond to challenging market conditions with additional cost reduction programs, capital efficiency initiatives and non-core asset sales," said Peabody Energy Chairman and Chief Executive Officer Gregory H. Boyce. "While we expect coal fundamentals to improve over time, we are implementing further steps in our comprehensive plan to improve competitiveness and maintain adequate liquidity."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
