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Alpha to cut 1,200 jobs in ops restructure

U.S. miner Alpha Natural Resources, the largest coal producer in the Appalachia region, is to cut 1,200 jobs, about 9% of its workforce, and idle mines across West Virginia, Virginia and Pennsylvania in response to a downturn in demand for both metallurgical and thermal coal.
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Mine closures and production curtailments will take place through early 2013, reducing annual coal output and shipments by about 16 mt.

Approximately 40% of the reduction will come from higher-cost thermal coal operations in the eastern U.S that are unlikely to be competitive for the foreseeable future, and approximately half of the reduction will come from production curtailments in the Powder River Basin in order to match currently committed sales volumes.

The balance will be reduced production of lesser quality metallurgical coal, it said.

“With fundamental changes taking place in our business, we're taking decisive actions that set the table for Alpha to compete successfully as a leader in the global coal markets for years to come,” said Kevin Crutchfield, chairman and CEO of Alpha Natural Resources.

"We're taking a long-term view of the thermal coal market, and we believe there are solid opportunities for diversified suppliers like Alpha to produce and sell thermal coal profitably into a smaller domestic market and to customers in new markets overseas.

"At the same time we have a big opportunity to advance Alpha's position as a premier supplier of metallurgical coal. Forecasts point to more than 100 million tons of increased seaborne metallurgical coal demand by the end of this decade, and persistent structural supply limitations exist on sources of high-quality metallurgical coal. We intend to participate meaningfully in the market upside with costs that are globally competitive," Crutchfield said.

In the same announcement, Alpha said that it expects demand for metallurgical coal to grow from new steel mills being planned or under construction in developing areas of Asia, South America and elsewhere which would provide long-term growth opportunities for the miner.

“At the same time, there are persistent structural limitations globally on sources of high-quality metallurgical coal,” it said.

“With the most flexible logistics network, an outstanding reputation in the international marketplace and broad range of products, Alpha is well positioned to capitalise on new opportunities and is better protected from customer and country risk.”

As the third-largest supplier of metallurgical coal globally, Alpha has 25-30 mt of export capacity through the East Coast and Gulf of Mexico which is partially untapped, giving Alpha the capability to scale up exports swiftly.

With approximately 1.5 bt of quality metallurgical coal reserves, and a number of significant organic growth projects in various stages of development, Alpha is well positioned to scale up quickly as demand from steelmakers around the world warrants, it said.

In June, Alpha said it would stop production at four mines in Kentucky, reduce thermal coal production and cut 150 jobs.

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