MORGANTOWN, W.Va. (AP) — Coal producer Alpha Natural Resources said Tuesday it's cutting production by 16 million tons and eliminating 1,200 jobs companywide, including 400 with the immediate closing of eight mines in Virginia, West Virginia and Pennsylvania.
The mine shutdowns start Tuesday, while the rest of the layoffs will be completed by the end of the first quarter after Alpha fulfills current sales obligations, Chief Executive Officer Kevin Crutchfield said. In all, the layoffs amount to nearly a tenth of Alpha's 13,000-person work force.
Alpha said it is closing four mines in West Virginia, three in Virginia and one in Pennsylvania. They are a mix of deep and surface mines. All the mines being closed are non-union operations.
Alpha didn't immediately name the mines because they wanted to inform all the workers first.
Though some miners will stay on to seal the operations, most will either be reassigned or laid off immediately.
Support positions will also be cut proportionally as Alpha reduces its operating regions from four to two, Crutchfield said, and two executives will retire Nov. 1.
Crutchfield called it "a difficult day," but said the shutdowns and layoffs are a necessary part of ensuring Alpha survives in what has become a difficult U.S. market, where coal companies face a dual challenge: Power plants are shifting to cheap, abundant natural gas, while companies like his face "a regulatory environment that's aggressively aimed at constraining the use of coal."
"We think the actions we're taking are aimed at getting ahead of this on a proactive basis and getting set up for 2013 going forward," he said.
Bristol, Va.-based Alpha will cut production 16 million tons by early 2013 and reduce overhead by $150 million as it shifts away from thermal coal used in domestic power generation to concentrate on metallurgical coal used in steelmaking overseas.
Globally, "there remains a structural undersupply" of metallurgical coal, Crutchfield said, and Alpha expects to see demand grow by more than 100 million tons by the end of the decade.
Alpha's $7.1 billion acquisition of Massey Energy helped create "one of the most valuable met coal franchises in the world," Crutchfield said, effectively doubling its production potential. Alpha now has the world's third-largest supply of coal, "more capacity than any of our peers."
Alpha has 25 million to 30 million tons of export capacity through the East Coast and the Gulf of Mexico, giving it the ability to scale up exports quickly, he said. The global sales and marketing initiatives will be led by Brian Sullivan, the current president of Alpha Australia LLC. He's transferring to the U.S. to fill the vacant post of chief commercial officer.
About 40 percent of Alpha's production cuts will come from high-cost eastern mines "that are unlikely to be competitive for the foreseeable future," Crutchfield said, while about half will occur in the Powder River Basin. The balance of the cuts will come from lower-quality metallurgical coal.
While mine closings and layoffs will be painful, Crutchfield said Alpha is trying to create "a long-term, sustainable footprint that can participate here in the U.S. in what is likely to be a smaller market than in the past."
"The elimination of jobs on this scale is something I take very seriously," he said, "... unfortunately, we think we have to do it to set the company on the right foot going forward."
In the long run, the new strategy will create a leaner, more agile company that can readily adapt to changing market circumstances, he said.
Alpha will try to find openings for some of the laid off workers in other locations or in contractor positions, Crutchfield said, but that will take time.
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Upper Big Branch
Twenty-nine <a href="http://www.facesofthemine.com/faces-of-the-mine-upper-big-branch-memorial-page/" target="_hplink">miners</a> died in an explosion at the Upper Big Branch mine on April 5, 2010. The mine, located in Montcoal, W.Va., was owned and operated by the Performance Coal Company, a subsidiary of Massey Energy.<br><br>The Mine Safety and Health Administration <a href="http://wvgazette.com/News/montcoal/201009170861" target="_hplink">has said</a> that sparks from a worn-out piece of machinery combined with a buildup of coal dust caused the accident. Massey Energy has <a href="http://blogs.wvgazette.com/coaltattoo/2011/01/28/massey-continues-to-dispute-msha-on-ubb-cause/" target="_hplink">continued to say</a> that a buildup of methane gas caused the explosion.<br><br>At a public meeting detailing the federal investigation, Kevin Stricklin, coal administrator for mine safety and health at MSHA, said that there were two sets of books on mine conditions kept by Massey workers -- an accurate log that included safety problems, and a separate, watered-down version for federal and state inspectors to see.<br><br>The Upper Big Branch explosion was the <a href="http://online.wsj.com/article/SB10001424052702304450604576415683464733192.html?KEYWORDS=upper+big+branch" target="_hplink">worst</a> U.S. coal mining disaster in 40 years.
Crandall Canyon Mine
On Aug. 6, 2007, six miners were trapped in the Crandall Canyon Mine in Huntington, Utah, after roof-supporting pillars <a href="http://www.msha.gov/genwal/ccSummary.asp" target="_hplink">failed</a> and ejected coal over a half-mile area. Ten days later, three more people were killed by a subsequent collapse during the rescue effort.<br><br>According to the <a href="http://www.msha.gov/genwal/ccSummary.asp" target="_hplink">official</a> accident investigation summary released by the Mine Safety and Health Administration, the catastrophe was the result of "an inadequate mine design." Unsafe pillar dimensions and an poor engineering management review contributed to the collapse.<br><br>In the above photo, family and friends carry the the body of Dale Black -- one of the rescue team members -- to his burial site at Huntington City Cemetery.
Darby Mine No. 1
On May 20, 2006, five miners were killed in an explosion at Darby Mine No. 1 in Holmes Mill, Kentucky. According to information <a href="http://www.usmra.com/saxsewell/darby.htm" target="_hplink">released</a> by the United States Mine Rescue Association, the explosion was the result of methane gas that was ignited by the cutting of a metal roof strap.<br><br>The miner who was working on the roof strap with a cutting torch had a functional methane detector tucked away in his pocket, a sign that it was not being used to check continuously for the potentially lethal gas. The USMRA also says a cutting torch should not have been used at the time.
On Jan. 2, 2006, an <a href="http://www.msha.gov/sagomine/sagomine.asp" target="_hplink">explosion</a> at a mine in Sago, W.Va., killed 12 workers and severely injured one. The 13 miners were <a href="http://www.msha.gov/Fatals/2006/Sago/ftl06C1-12.pdf" target="_hplink">forced</a> to barricade themselves within the mine after the explosion -- caused by elevated levels of carbon monoxide and methane -- destroyed 10 seals used to separate a closed area of the mine.<br><br>Ben Hatfield, CEO of the International Coal Group, which owned the Wolf Run Mining Company that ran the Sago Mine, received criticism when the families of the fallen miners were falsely informed that the 12 men had lived. In an interview with NPR, workers and family members who were present when Hatfield broke news of the deaths <a href="http://www.npr.org/templates/story/story.php?storyId=5134307" target="_hplink">described</a> the scene as "chaos."
In March 1976, a succession of explosions at the Scotia Mine in Oven Fork, Ky., claimed a total of 26 lives.<br><br>The first blast happened on March 9, killing 15 men. During rescue efforts on March 11, a second explosion killed 11 more.<br><br>Investigators <a href="http://www.usmra.com/saxsewell/scotia.htm" target="_hplink">concluded</a> that both explosions were caused by the ignition of a methane-air mixture inside the mine.
Consol No. 9
An explosion at the Consol No. 9 mine in Farmington, W.Va, killed 78 people on Nov. 20, 1968. The explosion was followed by raging <a href="http://www.wvculture.org/history/disasters/farmington02.html" target="_hplink">fires</a> that brought rescue operations to a halt.<br><br>A <a href="http://www.npr.org/templates/story/story.php?storyId=97115205" target="_hplink">memo</a> from a federal investigator that surfaced in 2008 revealed that a safety alarm on a ventilation fan had been deliberately disabled before the explosion. The alarm, which hadn't been working for as long as 90 minutes before the blast, could have saved the lives of the 78 miners.<br><br>The tragedy at Farmington led to the <a href="http://www.msha.gov/mshainfo/mshainf2.htm" target="_hplink">passage</a> of the federal Coal Mine Health and Safety Act in 1969. That act paved the way for the <a href="http://www.msha.gov/REGS/ACT/ACTTC.HTM" target="_hplink">Federal Mine Safety and Health Act of 1977</a>, the legislation that currently governs the Mine Safety and Health Administration's activities.
On Nov. 13, 1909, a fire killed hundreds of workers in a coal mine in Cherry Hill, Illinois.<br><br>According to <a href="http://www.usmra.com/saxsewell/cherry.htm" target="_hplink">reports</a> from the United States Mine Rescue Association, kerosene torches were used that day after the mine's electrical system broke down. Hay brought into the mine to feed mules that worked underground caught fire after being parked under one of the torches.<br><br>The fire quickly spread, causing the deaths of 259 men and boys who worked in the mine.
Monongah Nos. 6 And 8
On Dec. 6, 1907, explosions occurred at a pair of nearby mines in <a href="http://www.msha.gov/disaster/monongah/monon1.asp" target="_hplink">Monongah</a>, West Virginia, killing 362 men and boys. The blast could be felt as far as eight miles away.<br><br>It wrecked the mine's ventilation system, allowing toxic gas to fill the area and hinder rescue efforts. Though investigators aren't certain of the <a href="http://www.usmra.com/saxsewell/monongah.htm" target="_hplink">cause</a> of the explosion, it was probably started by the ignition of firedamp -- combustible gas made up mostly of methane -- and coal dust within the mine.