Virginia-based Coal producer, Alpha Natural Resources Inc. (NYSE: ANR) has officially announced today that it is closing down 8 mines effective immediately which will slash down the production by 16 million tons and cut 1200 jobs companywide.
Since employees havenâ€™t been notified about the job cut yet, the company did not specify more details about which mines are closing down. Â But it has quoted that all the 8 mines are a combination of deep and surface mines from the East Coast; 4 in West Virginia, 3 in Virginia and 1 in Pennsylvania. It seems that all these mines are operated by non-unions.
The entire close down is done on a proactive basis to reduce cost and improve efficiency. According to the companyâ€™s CEO Kevin Crutchfield, it is a very difficult time for coal industry especially in the US market since most power generating companies are opting for cheaper option of natural gas over the use of coal.
The company forecasts that the shutdown of 8 mines will cut production by 16 million tons in early 2013 and reduce cost by $150 million as it repositions itself from thermal coal used in domestic power generation to metallurgical coal used in steelmaking to capitalize new opportunities overseas.
Almost 10% of Alphaâ€™s total employee base of 13,000 is expected to be laid off, including miners, support position employees and few from the Top Management.Â The layoff process starts effective today and will be completed by end of first quarter 2013.
Majority of the production and job cuts are expected in the East Coast mining operations since they are the high cost regions for the company and few are expected in the Powder River Basin and other lower quality metallurgical coal producing regions.
Alpha is ranked as third largest in the world for its coal production. As per its latest released quarterly results for the period ended June 30th 2012, net revenues increased significantly by 16% to $1848.11 million from that of $1598.04 million in last June 2011. But operating losses had increased by over 500% from 25.91 million to 103.66 million, mainly due to increase in cost of production. Its net losses were 4563% higher at $2234.66 million for the June 2012 quarter.
It had total assets worth $13340.69 million including $252.19 as cash and its equivalents. Total liabilities were $8265.90 million, among which 18% were current.
Alphaâ€™s shares opened today at $8.11, slightly higher than its previous close of $8.08 and have been trading volatile today in the range of $7.78 and $8.25. It reached its 52 week high of $29.29 in last Nov 2011 and deteriorated since then. It is currently trading close to its 52 week low of $5.28.