Alpha Natural Resources to Reduce Coal Production from Kentucky Mines
Alpha Natural Resources, Inc. (NYSE: ANR) 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 tons this year and four million tons in 2013. These actions, together with expected reductions resulting from production optimization and schedule changes at various operations through the course of 2012, were fully anticipated in Alpha's guidance provided in our first quarter 2012 earnings release issued on May 3, 2012, and Alpha's 2012 shipment guidance remains unchanged.
Management and human resources personnel are meeting with employees today at the affected sites in Kentucky. Of the 436 employees affected by these reductions, 286 employees will be offered positions at other operations in Kentucky, southern West Virginia and Virginia, while about 150 jobs will be lost. Employees who are displaced will remain on the payroll and will receive their normal wages and benefits for a 60-day period.
Alpha is also undertaking a comprehensive study of its existing organizational model to ensure the company maintains efficient business processes and economizes on overhead costs. By the end of this year, satellite offices will be closed in Richmond, Va., Denver, Co., Latrobe, Pa. and Linthicum Heights, Md. and support functions will be consolidated, leading to staff reductions at other locations as well. These and other SG&A expense reductions are expected to save the company approximately $50 million to $60 million a year.
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