More bad news last night from the coal miners. Arch Coal Inc. (NYSE: ACI) announced that it would fire approximately 750 full-time employees and close 3 of its “higher-cost” thermal coal mines and associated plants. The company will also temporarily shut down another complex and curb production in Kentucky, Virginia, and West Virginia.
Arch expects production for 2012 to fall by more than 3 million tons, but maintains its expected sales volume of thermal coal at 128-134 million tons for the year. The company also said that capital spending will drop by $30-$40 million annually.
Other Appalachian miners like Patriot Coal Corp. (NYSE: PCX) and Alpha Natural Resources Inc. (NYSE: ANR) have been hammered recently as well. Miners with less exposure to Appalachia, including Peabody Energy Corp. (NYSE: BTU), James River Coal Co. (NASDAQ: JRCC), Consol Energy Inc. (NYSE: CNX), Walter Energy Inc. (NYSE: WLT), and Cloud Peak Energy Inc. (NYSE: CLD), have not fared much better, but for different reasons.
The big reason for the decline of the coal miners is, of course, the rock-bottom price for natural gas which has led to fuel-switching at many power generation plants. Arch blames “current market pressures and a challenging regulatory environment” for driving coal consumption to a 20-year low.
Arch expects to take a non-cash write-down of about $425 million in the second quarter, and a $14 million charge for severance and related costs.
Shares of Arch are down less than -1% just minutes before today’s opening bell at $6.15 in a 52-week range of $5.62-$28.76.