WARN Notices Expire For 8 Alpha Natural Resources Coal Mines in West Virginia
12/18/2014 - Alpha Natural Resources Inc. operating affiliates announced that the WARN notices for eight coal mines in West Virginia have expired and the mines and their approximately 750 workers will continue to operate.
The longer-term plans for these mines will continue to depend upon market prices and demand.
In accordance with requirements of the Worker Adjustment and Retraining Notification (WARN) Act, notices were issued on 31 July 2014 at 11 different West Virginia surface mine sites, plus certain support operations, advising workers that their facilities were expected to idle. Eight of those mines received WARN extension notices on 26 September, two were idled due to sustained weak market conditions and government regulations challenging the Central Appalachian mining industry, and one other (Alex Energy's Edwight mine) continued to operate without extending its WARN notice.
As of this announcement, the mines that will continue to operate include Highland Mining's Superior, Reylas, Freeze Fork and Trace Fork surface mines in Logan County; the North surface mine in Mingo and Logan Counties; Black Castle Mining's surface mine in Boone County; and Republic Energy's Republic and Workman Creek surface mines in Raleigh County. Additional technical and other support services for these mine operations also saw the WARN extension notices expire without a reduction in force.
Alpha chairman and CEO Kevin Crutchfield credited the efforts that the mine operators and their workers undertook in reducing their costs to compensate for weak coal prices. Crutchfield said, "Many of these sites have made significant progress in improving efficiencies and finding cost savings. They were proactive in presenting ideas that helped move the mines toward enhanced contributions to earnings before interest, taxes, depreciation and amortization (EBITDA) while continuing to operate safely and in an environmentally sound way."
Alpha president Paul Vining said that in addition to reducing the cost of extracting the coal, sales opportunities have improved in some locations. Vining said, "Though demand for Central Appalachian thermal coal has declined, there is residual demand for the coal these mines produce and we've booked enough sales to allow the mines to continue operating."
Vining did express concern that the coal sales market is changing, increasing the likelihood of a more volatile market. Vining said, "The market is moving toward a spot market, away from longer-term agreements that coal suppliers and customers have worked with in the past. We're certainly mindful of the low stockpiles some utilities have on hand and are trying to ensure we are ready to respond should demand increase."
Vining said that buying coal as it is needed may not be an effective strategy if the U.S. has another cold winter, demand spikes and the rail system continues to struggle with performance. Already this year, PJM Interconnection – the regional transmission organization that coordinates wholesale electricity for 13 states (more than 60 million Americans) – set a new record for November demand, breaking the previous record set just last year. Another cold winter could put pressure on utilities' ability to procure fuel, whether coal or gas, on a prompt basis.
The cost efficiencies gained by these Alpha-affiliated operations were important in allowing the mines to continue to produce in a safe, cost-efficient manner and they remain ready to serve the continuing needs of our nation's coal-fired utility fleet.
In accordance with requirements of the Worker Adjustment and Retraining Notification (WARN) Act, notices were issued on 31 July 2014 at 11 different West Virginia surface mine sites, plus certain support operations, advising workers that their facilities were expected to idle. Eight of those mines received WARN extension notices on 26 September, two were idled due to sustained weak market conditions and government regulations challenging the Central Appalachian mining industry, and one other (Alex Energy's Edwight mine) continued to operate without extending its WARN notice.
As of this announcement, the mines that will continue to operate include Highland Mining's Superior, Reylas, Freeze Fork and Trace Fork surface mines in Logan County; the North surface mine in Mingo and Logan Counties; Black Castle Mining's surface mine in Boone County; and Republic Energy's Republic and Workman Creek surface mines in Raleigh County. Additional technical and other support services for these mine operations also saw the WARN extension notices expire without a reduction in force.
Alpha chairman and CEO Kevin Crutchfield credited the efforts that the mine operators and their workers undertook in reducing their costs to compensate for weak coal prices. Crutchfield said, "Many of these sites have made significant progress in improving efficiencies and finding cost savings. They were proactive in presenting ideas that helped move the mines toward enhanced contributions to earnings before interest, taxes, depreciation and amortization (EBITDA) while continuing to operate safely and in an environmentally sound way."
Alpha president Paul Vining said that in addition to reducing the cost of extracting the coal, sales opportunities have improved in some locations. Vining said, "Though demand for Central Appalachian thermal coal has declined, there is residual demand for the coal these mines produce and we've booked enough sales to allow the mines to continue operating."
Vining did express concern that the coal sales market is changing, increasing the likelihood of a more volatile market. Vining said, "The market is moving toward a spot market, away from longer-term agreements that coal suppliers and customers have worked with in the past. We're certainly mindful of the low stockpiles some utilities have on hand and are trying to ensure we are ready to respond should demand increase."
Vining said that buying coal as it is needed may not be an effective strategy if the U.S. has another cold winter, demand spikes and the rail system continues to struggle with performance. Already this year, PJM Interconnection – the regional transmission organization that coordinates wholesale electricity for 13 states (more than 60 million Americans) – set a new record for November demand, breaking the previous record set just last year. Another cold winter could put pressure on utilities' ability to procure fuel, whether coal or gas, on a prompt basis.
The cost efficiencies gained by these Alpha-affiliated operations were important in allowing the mines to continue to produce in a safe, cost-efficient manner and they remain ready to serve the continuing needs of our nation's coal-fired utility fleet.
