Bristol-based Alpha Natural Resources, the nation’s second-largest coal producer, plans to eliminate 1,200 jobs by early 2013, including 400 positions with the closing of eight mines today in Virginia, West Virginia and Pennsylvania.
The layoffs represent more than 9 percent of the company’s 13,000 employees.
Alpha announced the move Tuesday in outlining an effort to reshape its operations, with a greater focus on metallurgical coal, as it meets a changing global coal market. The plan is expected to reduce overhead costs by $150 million.
By early next year, the company plans to realign itself to take advantage of rising demand for metallurgical coal while maintaining a cost-competitive position in thermal coal.
Metallurgical coal is used in making steel. Thermal coal is burned in many power plants to generate electricity, an industry practice that has come under increasing pressure from new EPA regulations.
“With fundamental changes taking place in our business, we’re taking decisive actions that set the table for Alpha to compete successfully as a leader in the global coal markets for years to come,” Kevin Crutchfield, chairman and CEO of Alpha Natural Resources, said in a statement.
Crutchfield said the company is “taking a long-term view of the thermal coal market” where it expects to operate profitably by selling to a smaller U.S. market and finding new markets overseas.
Alpha plans to reduce its annual thermal coal production and shipments by approximately 16 million tons. About 40 percent of that reduction will come from thermal coal operations in the East that the company says are unlikely to be competitive for the foreseeable future. The other half of the reduction will come from curtailed production in the Powder River Basin in Wyoming.
On the other hand, Crutchfield expects global demand for metallurgical coal to increase by more than 100 million tons by the end of this decade. Alpha is the third-largest supplier of metallurgical coal globally and has about 1.5 billion tons of metallurgical coal reserves.
In streamlining the company’s corporate structure, Alpha’s four existing operating regions will be consolidated into two.
Brian Sullivan, currently president of Alpha Australia LLC, will transfer to the United States to fill the vacant position of chief commercial officer, a post held by Paul Vining before he was named Alpha’s president. Sullivan will be responsible for all global sales and marketing activities.
Randy McMillion and Eddie Neely, both members of Alpha’s Executive Leadership team (ELT), will retire Nov. 1, 2012 as previously planned. Their responsibilities will be consolidated into the current duties of other ELT members and company executives.
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