2014-08-13 / News

Alpha boss: Appalachian slump here to stay

By MANUEL QUIÑONES
Energy & Entertainment News

Alpha Natural Resources Inc. CEO Kevin Crutchfield suggested last week that coal’s dramatic downturn in Appalachia is to a significant degree permanent.

Crutchfield made the comments as the company, which has substantial holdings in Appalachia, announced a $513 million net loss for the second quarter of this year.

Crutchfield said the downturn is “in part another cycle” in the up-and-down nature of the coal mining business. However, he also said the industry is seeing “what are likely to be permanent changes in the energy mix of the United States.”

Alpha executives, who recently issued potential layoff warnings to more than 1,000 workers, pointed to the rise of natural gas as an energy source but also said the Obama administration is making coal’s problem worse.

“It has been exacerbated or accelerated through very aggressive, very overt regulatory environment that frankly in our view has had coal right in its cross hairs,” Crutchfield said.

Alpha executives said mines in Appalachia were producing almost 300 million tons of coal a year. The expectation for this year, they said, was about 125 million.

Last week, Kentucky regulators made news by announcing an uptick in coal production in the severely hard-hit eastern coalfields. Production went up 15 percent there during the second quarter of the year.

But Crutchfield said that “it doesn’t look good” for the basin, citing the Obama administration’s regulatory agenda, and said the expectation was for production to “continue to shrink for a while.”

Alpha said power plant stockpiles were low in Appalachia, but the relatively mild weather and natural gas production, plus imports from Colombia, were affecting the area’s mines.

Alpha executives also complained about rail transport bottlenecks, particularly in the Powder River Basin in the western United States, for making it tougher to deliver coal to power plants.

Like other coal companies, Alpha has been restructuring to stay afloat during the downturn. The company also expects recovery in international markets. “Don’t count us out yet,” Crutchfi eld said.

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