Arch Coal cuts tenth of workforce on weak market
Thu Jun 21, 2012 6:13pm EDT
Reuters) - Arch Coal Inc ( ACI.N) will cut about a tenth of its workforce, or 750 jobs, as it closes three higher-cost mining complexes and associated plants in response to the weak U.S. market for thermal coal.
Coal producers are suffering because of the vast new supply of natural gas in North America, which has prompted electricity producers to switch off many older coal-fired power plants.
Apart from the three closures, Arch will also temporarily idle the Hazard/Flint Ridge complex and cut production at other operations in Kentucky, Virginia and West Virginia. The mine locations affected by the closures are the East Kentucky, Eastern and Knott County complexes, the company said.
The St. Louis-based company as of February 15 employed 7,442 full and part-time employees.
"This decision was difficult but necessary in order to weather the current downturn and to position the company for long-term success," Chief Executive John Eaves said in a statement.
Arch Coal expects to incur one-time, non-cash write-down charges of about $425 million this quarter, and $14 million in severance and related costs between the second and third quarters.
The moves will reduce Arch's annual thermal coal production by more than 3 million tons, though it still expects thermal coal sales of 128 million to 134 million tons this year.
The cutbacks will mean a reduction in annual capital expenditures of $30 million to $40 million, after investing $571 million in 2011.
(Reporting by Braden Reddall in San Francisco; Editing by Tim Dobbyn)
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