Eastern US miner James River Coal has cut about half of its annual Central Appalachian coal production "in response to continued weak coal markets," the company said Monday night after the close of markets.
The cutbacks amount to about 3.7 million st in coal sales and production, based on 2012 figures from the Richmond, Virginia-based James River and the US Mine Safety and Health Administration.
The cutbacks -- mostly thermal coal and nearly 50% of James River's 2012 Central Appalachian coal sales, based on its own sales figures -- affected a number of operations in eastern Kentucky served by CSX railroad.
James River is idling the McCoy Elkhorn underground coal mines and preparation plants in Pike and Floyd counties, Kentucky, from which the company said it sold 1.6 million st in 2012, and the Bledsoe coal mines and preparation plants in Leslie and Harlan counties, Kentucky (1.1 million st sold in 2012).
Also being idled is the Long Branch surface mine in Johnson County, Kentucky, which produced a little over 1 million st in 2012 and 766,000 st in the first two quarters of 2013, according to the US Mine Safety and Health Administration.
The action means about 525 full-time employees are being furloughed, James River said in its statement. "The anticipated date to restart these operations is unknown at this time and subject to the coal market," the company said.
Apparently unaffected are James River's metallurgical coal operations, whose coal is marketed globally through the West Virginia-based Logan & Kanawha business unit, and the Triad Mining thermal coal operations in Indiana, which sold 2.3 million short tons in 2012.
Company representatives were not immediately available for comment Tuesday.
"I'm not surprised," said an eastern Kentucky-based coal sales executive, noting the continuing doldrums for the Central Appalachian thermal coal markets, both domestically and globally.
James River's Logan & Kanawha met coal properties should survive the cutbacks, he said, adding: "That's where the money is right now."
Also saying the cuts were "not surprising" was Tudor Pickering Holt Energy Research, which said in a Tuesday investors' note that James River's "high-cost Eastern Kentucky production looks to us to have been well out of the money for a while (costs greater than $85/ton)."
Also in a Tuesday investors' note, Daniel Scott, the mining research director at Cowen & Co. metals, wrote: "The CAPP quandary persists as anemic API2 pricing [CIF ARA] leaves US thermal exports uneconomic and competing domestic basins continue to gain market share. Further, the competitive landscape for met volumes remains challenging at current seaborne pricing levels."
