Aug. 1 (Bloomberg) -- Alpha Natural Resources Inc., the second-biggest U.S. coal producer, plans to idle 11 West Virginia mines and 1,100 jobs may be lost because of weak market conditions and increased government regulation.
Notice was given to the workers yesterday and job reductions are currently planned to take place by mid-October, Bristol, Virginia-based Alpha said in a statement. The affected mines produced 4.2 million tons of thermal and metallurgical coal through the first half of this year.
“These actions are being triggered by persistent weakness in U.S. and overseas coal demand and depressed price levels, along with government regulations that are causing electric utilities to close coal-fired power plants and forgo new construction,” Alpha said.
Coal companies are facing stiff headwinds. Metallurgical coal prices are at a six-year low amid a supply glut. At the same time, low-cost natural gas has taken market share from thermal coal, which is used to generate electricity.
Of Alpha’s planned cuts, about 1 million tons are metallurgical coal, used in steelmaking, and 3 million tons are thermal coal.
The company had planned to ship 15 million to 18 million tons of metallurgical coal and 26 million to 30 million tons of thermal coal from Appalachia this year, Alpha said May 1. Alpha also had expected to ship 37 million to 40 million tons of thermal coal from its Wyoming mines.
“Altogether we’ve idled about 35 million tons of coal production in just three years, primarily operations with the highest cash costs,” Alpha President Paul Vining said in yesterday’s statement.
Alpha is scheduled to report its second-quarter earnings on Aug. 6. The shares fell 1.7 percent to $3.39 at the close in New York yesterday and are down 53 percent this year.
“The unlevel playing field of anti-coal regulations, market conditions, and the rise in natural gas production is turning the lights out on hardworking West Virginia families,” U.S. Representative Shelley Moore Capito, a Republican from West Virginia’s second district, said yesterday in a statement.