Sunday, May 24, 2015

Major layoffs: Coal analyst says industry facing toughest time

In what may be remembered as Black Friday for coal in West Virginia, the state’s two largest producers told 1,800 employees they would be laid off in 60 days.

Both Alpha Natural Resources and Murray Energy point toward a weak coal market and federal EPA regulations. Murray also took a swipe at President Obama, saying he has been the author of “the ongoing destruction of the United States coal industry.”

Industry analyst Bob Hodge of IHS Coal said EPA guidelines, tightened under the Obama Administration, have hurt the most.

“Even through the cheap natural gas is playing a huge role, I think if you look at the bottom of where things are right now, you’d find the (EPA) regulations are the driving force behind most of it,” Hodge said. “Then the economy and then cheap natural gas.”

The EPA’s Clean Power plan is up for final approval this summer. Critics have said the requirements make it almost impossible to have coal-fired power plants. Hodge said the role of the regulations can’t be overlooked.

“All of those things are related,” he said. “The cheap natural gas wouldn’t be such a problem if the regulations weren’t forcing utilities to close coal-fired plants and build or convert to gas-fired power.”

Alpha plans to idle its Camp Creek underground mine and preparation plant, near East Lynn in Wayne County, resulting in the furloughing of 439 workers. Alpha Chairman and CEO Kevin Crutchfield said there’s a persistent weakness in demand for coal in both the U.S. and overseas markets.