Arch Coal lays off 750 workers due to 'unprecedented downturn'
Arch Coal (NYSE:ACI), the second largest supplier of coal in the USA, is laying off 750 full-time workers at its Appalachia mining operations after owners said that thermal coal demand had reached a 20-year low.
The company says it expects to incur one-time, non-cash asset write-down charges of around $425 million in the second quarter, and severance and related costs totaling approximately $14 million to be recorded between the second and third quarters.
"Arch's subsidiaries will close three higher-cost thermal mining complexes and associated preparation plants, temporarily idle Hazard's Flint Ridge complex and curtail production at other operations in Kentucky, Virginia and West Virginia," said the company in a news release.
"The mine locations affected by the announced closings are the East Kentucky, Eastern and Knott County complexes. For full year 2012, Arch expects average cash costs in Appalachia, excluding severance and related costs, to remain in the range of $68 per ton to $73 per ton."
The cuts will mean that Arch will be producing thermal coal production by more than thee million tons annually
Looking ahead, Arch Coal expects average cash costs in Appalachia, excluding severance and related costs, to remain in the range of $68 per ton to $73 per ton. The company expects thermal coal sales volume in the range of 128 million to 134 million tons for 2012.
The company says it is shifting away from thermal coal operations towards higher-margin metallurgical coal operations.
Arch Coal has lost 57% of its share value since the start of the year. It closed on Thursday at $6.20, just off its 52-week low of $5.62.