Alpha Natural Resources down $46 million in 3Q - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Alpha Natural Resources down $46 million in 3Q

Posted: Updated:

Alpha Natural Resources, one of West Virginia's largest coal mine employers, posted a net loss of $46 million in the third quarter.

The coal company joins a number of its peers posting dismal numbers this quarter as operators await an expected rebound in steam and metallurgical coal markets. The loss came despite third quarter revenue of $1.6 billion.

"Market conditions for both metallurgical and thermal coal have been challenging throughout much of 2012, and continued in the third quarter," said Kevin Crutchfield, Alpha's chairman and CEO.  "In the face of these market headwinds, Alpha has taken swift and decisive actions to right-size our operational footprint and our cost structure.  In September, we announced a plan to reduce our annualized production rate by an additional 16 million tons.  These actions are being taken in a pricing environment where we estimate that the majority of U.S. thermal coal would be uneconomic to produce at today's spot market prices and, similarly, metallurgical coal has fallen to levels at which a significant percentage of worldwide supply is uneconomic."

The "right-sizing" of operations has already resulted in the loss of about 1,200 jobs when Alpha announced it would be shutting down 8 mines last month. About 50 percent of operational reduction, Alpha stated, will come from the Powder River Basin in Wyoming. About 40 percent of reductions will occur in Appalachia.

Overall, the cutbacks are expected to save the company about $150 million annually.

"This restructuring is a difficult but necessary step, impacting approximately 1,200 positions and the communities where we operate," Crutchfield said.  "We never take such actions lightly, but our goal remains to emerge from the current headwinds in an even stronger position within our industry, which ultimately will benefit all our constituents."

The losses have come despite significant increases in coal shipped in the first nine months of last year. Metallurgical coal shipments were up 11 percent, total coal shipments increased 75.2 million to 82.9 millions tons.

In its third quarter filing, Crutchfield also emphasized efforts to maintain safety were still a priority. Alpha currently owns former Massey Energy mines, the operator of the Upper Big Branch mine when it exploded in 2010, killing 29 miners.

The company instituted its safety program, called "Running Right" at all of the former Massey mines.

"Finally, even in this challenging environment, we never lose sight of Running Right and engaging all employees in the pursuit of a safe and well run workplace," Crutchfield said.  "In the third quarter, several of our mine rescue teams took home awards from the national mine rescue competition, with our Kingston White team placing first overall in Division 2.  Also, our AMFIRE Centre County Strip mine was recently awarded the esteemed Sentinels of Safety Award.  I would like to commend our entire workforce for their continued focus on Running Right and watching out for one another."