Thursday, June 21, 2012

Arch Coal lays off about 750 workers in Appalachian operations, closes 3 mining complexes - @AP

LOUISVILLE, Ky. — One of the world’s largest coal producers said Thursday it would lay off about 750 workers in the Kentucky, Virginia and West Virginia coalfields, the latest setback for an industry struggling to sustain market share as utilities switch to cleaner and cheaper alternatives to generate electricity.

The bulk of the cuts by Arch Coal Inc., almost 600, are in Kentucky. The disappearance of high-paying mining work heightened anxiety in hardscrabble Kentucky towns where officials worried declining demand for coal would result in leaner budgets and more people on unemployment rolls.

“This is just a start, I think,” said Dennis Ray Noble, the judge-executive of Perry County, which he estimated has lost about 30 percent of its mining jobs in the last year and the jobless rate is 12.4 percent.

The St. Louis-based company said its subsidiaries would close three higher-cost mining complexes and associated preparation plants: two in Kentucky and one in West Virginia. It will temporarily idle another complex in Kentucky and curtail production at other facilities in the three states. The company accounted for 16 percent of the coal production in the U.S. in 2010.

The layoffs come amid forecasts that the share of U.S. electricity coming from coal will fall below 40 percent for the year — the lowest level since the government began collecting data in 1949. Four years ago, it was 50 percent. By the end of this decade, it is likely to be near 30 percent.

“Current market pressures and a challenging regulatory environment have pushed coal consumption in the United States to a 20-year low,” Arch President and CEO John W. Eaves said in a news release announcing the layoffs.

Eaves said the company regrets the impact on its employees and their families and communities, but said the decision was necessary “to weather the current downturn and to position the company for long-term success.”

Arch said the reductions would trim its thermal coal production by more than 3 million tons annually. It said it continues to expect thermal coal sales volume in the range of 128 million to 134 million tons for 2012.

Meanwhile, the company said it is putting more emphasis on higher-margin metallurgical coal operations in the region.

The job losses come as utilities increasingly switch from coal to natural gas, which has become cheaper as supplies grow. Natural gas’ advantages over coal include producing fewer emissions of toxic chemicals and gases that contribute to climate change.

From Kentucky courthouses to Congress, officials blamed tougher environmental rules for coal’s woes and the resulting job losses.

“I think they saw the writing on the wall that it’s getting too difficult to operate at a profit,” Knott County Judge-Executive Randy Thompson said of the Arch layoffs.

He said about 250 jobs will be lost from his county, which had a 12.5 percent jobless rate in May. Meanwhile, coal severance tax revenues are dwindling, putting more strain on the local budget to keep up with demand for services.