Alpha Natural Resources, Inc. plans to curtail coal mining operations in its northern and southern Kentucky business units as continued market pressures and new regulations on coal-fired power plants make production from certain mines in those areas uneconomic.
Alpha's Kentucky affiliates will discontinue mining at four mines and idle two coal preparation plants in Pike and Martin counties. Production will be scaled back at several other mines, and four contract mines will close. In aggregate the production cuts will reduce Alpha's shipments of thermal coal by an additional two million tonnes this year and four million tonnes in 2013.
Alpha is also undertaking a comprehensive study of its existing organisational model to ensure the company maintains efficient business processes and economises on overhead costs.
In its most recent quarterly earnings announcement, Alpha reduced its production guidance for 2012 in the face of declining thermal coal demand, mostly due to the mild winter and a wave of electric utilities switching from thermal coal to cheap natural gas to generate their power. Future sales forecasts also are being affected by a series of regulatory actions by the U.S. Environmental Protection Agency, which has resulted in utilities announcing plans to shut down a number of generating stations that have traditionally used Central Appalachia coal.
"This year, utilities in the U.S. are expected to burn the least amount of steam coal than at any time in the last 20 years, and the pressure's been very intense on coal sourced from eastern Kentucky, particularly operations rendered uncompetitive due to fuel switching, relatively high rail rates and competition from Illinois Basin coal," said Kevin Crutchfield, Alpha's chairman and CEO.
Adapted form press release by Peter Farrell.
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