Arch Coal shuts down production at Cumberland River Coal complex in US

22 July 2014 (Last Updated July 22nd, 2014 04:17)

Arch Coal is closing down its operations at the Cumberland River Coal complex in the US in order to maintain its profitability amid falling prices.

Coal

Arch Coal is closing down its operations at the Cumberland River Coal complex in the US in order to maintain its profitability amid falling prices.

The closure will result in the loss of 213 full-time jobs but the company said it is taking steps to accommodate the workers in other subsidiaries of Arch Coal.

Arch Coal president and CEO John Eaves said: "We deeply regret the need to take this action."

Located in the Wise county of Virginia and Letcher county of Kentucky, the complex has two underground operations and related facilities.

The Cumberland River mine had a turnover of approximately 290,000t in the first half of the year. Closure of the mine will reduce Arch Coal's 2014 metallurgical coal sales volumes by approximately 200,000t and the company expects to ship between 6.3 million and 6.9 million tonnes.

"With this move, we are actively responding to currently challenged metallurgical coal markets while striving to enhance our overall competitive cost position."

Eaves added: "With this move, we are actively responding to currently challenged metallurgical coal markets while striving to enhance our overall competitive cost position in Appalachia.

"Our strategy is to increasingly shift our portfolio toward higher-margin, lower-cost metallurgical coal operations, while retaining our valuable reserves for when market conditions strengthen in the future."

The mining complex closed two contract mines during the second quarter of 2013.

According to a report by Moody's released earlier this month, the benchmark price of metallurgical coal is expected to remain at $120 a tonne in the third quarter. It is likely to increase to $140 by the end of 2015.

The Moody's report said: "At these prices, all Moody's-rated US met coal producers will continue to be stressed, with those that acquired met-coal assets at the height of the market labouring under very high leverage.

The key drivers for the recent price collapse were the drop in Chinese imports, coupled with a ramp-up in Australian production and the downshifting of the global cost curve."


Image: The benchmark price of metallurgical coal is expected to remain at $120 a tonne in the third quarter. Photo: courtesy of Dan / Freedigitalphotos.net.

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