Weak coal demand makes Cliffs Natural halt production at Pinnacle mine in US

25 June 2014 (Last Updated June 25th, 2014 18:30)

Cliffs Natural Resources will halt operations at its Pinnacle mine in Western Virginia for six months from August, due to the poor demand for metallurgical coal.

Cliffs Natural Resources will halt operations at its Pinnacle mine in West Virginia for six months from August, due to the poor demand for metallurgical coal.

The company said in a regulatory filing that it has notified the workers at the mine 60 days in advance in accordance with the Worker Adjustment and Retraining Notification Act. Approximately 400 workers are likely to be affected.

"Pricing is below the mine's cash costs and at a point where it is becoming uneconomical to operate at these levels."

Cliffs Natural Resources spokesman Ryan Thorn was quoted by WOWK-TV as saying that the persistent depressed pricing and oversupply in the metallurgical coal market for the past year has put cost pressures on the business.

"Pricing is below the mine's cash costs and at a point where it is becoming uneconomical to operate at these levels.

"Cliffs' senior leadership team will monitor industry and business conditions over the next two months. If market dynamics do not improve, we will temporarily idle operations at Pinnacle mine beginning on or around August 25, 2014," Thorn said.

Cliffs owns and operates one thermal coal mine in West Virginia and four metallurgical coal operations, including Pinnacle, in West Virginia and Alabama.

Pinnacle mine had a workforce of 552 and produced 2.8 million tonnes of coal in 2013.

The Pinnacle complex includes Pinnacle and Green Ridge mines. One of the units in Green Ridge was closed in January 2012.

The company has recently started cutting down its expenses, following pressure from investor Casablanca Capital to split its US and international operations.

Energy