UPDATE 2-Alpha to curtail coal output, cut 150 jobs
* To cease operations at four Kentucky mines * Says 150 jobs to be lost * Stock falls 2.8 percent on NYSE By Steve James June 8 (Reuters) - Coal miner Alpha Natural Resources Inc said on Friday it will stop production at four mines in Kentucky, reduce thermal coal production and slash 150 jobs, as low coal prices and high costs have hurt profitability. These and other cost-cutting measures are expected to save the company $50 million to $60 million a year, the company said. The announcement sent the company's stock down 2.8 percent to $9.30 in morning trading on the New York Stock Exchange. Analysts said the production cuts were not unexpected at a time when coal prices have slumped and mining costs have risen in the Appalachian coalfields of Virginia, West Virginia and eastern Kentucky. Also, thermal coal demand has fallen as utilities have switched to cheaper natural gas to fire their power plants. Analyst Lucas Pipes, of Brean Murray Carret & Co said he expected more production cuts, particularly in Central Appalachia (CAPP), as natural gas continues to sell for prices which make burning such coal uneconomical. "What is important to note is Alpha's far-sighted cuts which will continue into 2013, confirming our expectation that CAPP thermal coal will remain challenged by cheap natural gas and expansive production in cheaper U.S. basins," he wrote in a research note. Alpha, which last month cut its total 2012 output target to a range of 100 million tons to 116 million tons, said the Kentucky production cuts will reduce shipment of thermal coal, used for power generation, by 2 million tons this year and 4 million tons in 2013. It said the actions would not affect the company's shipment outlook for the year. The company has said previously that it expects to ship a total of 38 million to 44 million tons of thermal coal from Central Appalachia this year. The company also produces thermal coal in the Powder River Basin of Wyoming and steel-making metallurgical coal in Appalachia. Virginia-based Alpha said it plans to curtail coal mining operations in its Kentucky business units "as continued market pressures and new regulations on coal-fired power plants make production from certain mines in those areas uneconomic." Alpha's Kentucky affiliates will discontinue mining at four mines and idle two coal preparation plants in Pike and Martin counties, it said. Production will be scaled back at several other mines, and four contract mines will close. It said 436 employees were affected, of which 150 will lose their jobs, while 286 will be offered positions at other operations. Alpha said it was also trimming overhead costs, and will, by the end of the year, close satellite offices in Richmond, Va., Denver, Co., Latrobe, Pa., and Linthicum Heights, Md.
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