It is no secret that the coal sector is in the doghouse. James River Coal Co. (NASDAQ: JRCC) announced its earnings this morning which was actually another loss for the quarter and for the year. The loss was $138.9 million, or $3.99 per share, for the year 2012 and a loss of $76.9 million, or $2.21 per share, for its fourth quarter, both of which are wider than the corresponding period of 2011.
While James River has tried to talk about 2012 being the toughest year and some stability forming, the long and short of the matter is that restructuring efforts are bringing more layoffs. If you look through this, you will also see that the layoffs in the coal sector go above and beyond this one company.
Charges also impacted that loss, coming from goodwill impairments, a gain from the repurchase of debt, and restructuring. James River said that the markets for domestic thermal coal and met coal were awful in 2012, but the company’s statement shows a belief that both markets are showing some marginal improvement as 2013 is underway with reduced production by the coal industry, slightly better weather and increased demand from Asia. The company closed and idled mines, reduced working hours, reviewed and changed the purchasing process for its expenses and has lowered its headcount and expenses. Here are the mines and units affected:
- Idled five underground mines (Abner Branch, Mine 16, Mine 6A, Mine 31, Jellico).
- Idled two preparation plants (BL1 Plant and Burke).
- Idled one load out (Sunny Knot).
- Reduced production at three surface mines (Frasure, Buckeye, Montgomery Creek).
The efforts taken have cut out its production capacity by 3 million tons. It also has had an impact on about 400 employees and contractors.
Layoffs are being felt elsewhere in the coal sector:
- The Department of Labor recently awarded $5.2 million to help laid-off coal workers in Eastern Kentucky to find new jobs as more than 2,000 of these workers in that area have lost jobs since the start of 2012.
- Another 90 workers were shown to be laid off at a mine in Virgina just in February.
- Alpha Natural Resources Inc. (NYSE: ANR) had 200 layoffs in Kentucky discussed in January.
- Consol Energy Inc. (NYSE: CNX) said in December that it had laid off 147 workers as it idled a West Virginia plant.
These are just the recent layoffs, and the cuts affected many more workers earlier in 2012.
Jon C. Ogg