Alpha shuts down Boone mine, cuts 160 jobs - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Alpha shuts down Boone mine, cuts 160 jobs

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Alpha Natural Resources is shutting down a Boone County mine, leaving 160 in Madison faced without a job.

Alpha is shutting down the Justice #1 mine and slowing production at the Liberty Preparation plant. The subsidiary that operated the mine, Independence Coal, was purchased by Alpha when it acquired Massey Energy in a deal made in 2011.

"As you can imagine, shutting down a mine and sending good people home is the last thing we want to do," said Samantha Davison, an Alpha spokeswoman. "In an effort to continue to adapt to the challenging conditions in the coal market, we had to make the tough decision to idle a mine near Madison."

The coal mine produces metallurgical coal, a type of coal used in the steelmaking process. Davison said the coal from the Justice mine was of a lower value and rank, and demand for that coal was down.

"Demand and pricing for the type of coal mined at the Justice #1 mine is very weak," she said.

In numerous filings Alpha has said it would transition from the declining thermal market to metallurgical coal markets in Appalachia.

"As a key objective of its repositioning plan, Alpha is primarily focused on supporting and augmenting its global metallurgical coal business, which is the third largest in the world," the first quarter report states.

In its first quarter report Alpha attributed, among other factors, its recent $111 million loss to "to lower average realizations for metallurgical" coal.  Alpha's average per ton realization on metallurgical coal shipments in the first quarter was $103.28, down from $145.51 in the first quarter last year and $121.27 in the prior quarter.

"The restructuring plan we announced in September of 2012 is largely behind us, and we've taken many necessary steps to align our business with current market conditions from both an operational and capital spending standpoint," Crutchfield said in the filing. "Going forward, we will continue to assess the need for further adjustments to our portfolio and marketing strategy where necessary to position ourselves for both sides of the commodity cycle."

In that filing, the company said it was restructuring.

Davison said the employees weren't completely surprised by the announcement. She said Alpha had been communicating with employees about the precarious relationship between the mine and demand for that particular amount of coal.

"We will be meeting with employees next week to go over the pay and benefits they will receive if they are part of the reduction in force," Davison said. "With that said, there will be opportunities for some of the employees within the Alpha organization. As we have done in the past, we will treat everyone fairly."

She added that Alpha couldn't produce coal from that mine in a way that was profitable.

Davison also pointed out that Alpha still operates 50 operations across a dozen counties in West Virginia. Some Justice mine employees could have other opportunities with Alpha, Davison said. 

About 60 employees will remain on hand to help close the mine. Another 50 employees will continue to operate the Liberty Processing plant which also services other mines in the area.

The Justice mine had been placed on the Mine Safety and Health Administration's potential pattern of violations status in 2011. According to MSHA data, the mine was assessed $1.3 million in fines in 2011 and just over $1 million in fines in 2012, the first year Alpha took over the mine.

The assessed penalties include more than 30 citations for accumulations of combustible material such as coal dust. Some of those fines were assessed for several thousand dollars – five citations related to ventilation plans were assessed between $40,000 and $70,000 each.

Several MSHA citations in 2013 at Justice have yet to be assessed with a fine.