Alpha Natural Resources Inc.
) decided to realign its operations taking into consideration the
changing global scenario for the demand of coal. This strategic
move aims to lower operating cost and strengthen the company's
position in the global metallurgical coal market. The decision
taken by the company validates the announcement made by it at the
beginning of the year.
The streamlining of operation will lower annual coal production by
16 million tons. 40% of the reduction will come from its high-cost
mines in the east, 50% reduction will come from the Powder River
Basin and the balance 10% from the decline in quality metallurgical
coal production. The company decided to curtail production to match
currently committed sales volumes and avoid a piling up of coal
This decision will allow the company to lower its operating cost by
$150 million, with savings coming from low cost of sales and
decline in selling, general and administrative expenses. The
streamlining process will also inhere a reduction in its workforce
by 1,200 employees, with some employees inducted in other
departments of the company.
Earlier, in the second quarter, the company had decided to lower
coal production from its northern and southern Kentucky business
units. Given the softness in coal demand and an expected reduction
in capital purchases and leasing of selected items, the company
narrowed its 2012 capital expenditure guidance to a range of $450
million to $600 million, from the prior range of $450 million to
We believe the gradual recovery in natural gas prices will allow
the company to sell coal profitably in the smaller domestic
market. Besides, its robust metallurgical coal export
capacity of 25-30 million tons will help it to cater to demand from
Alpha Natural Resources, Inc. retains a Zacks #3 Rank (Hold
rating). The company competes with the likes of
Arch Coal Inc.
CONSOL Energy Inc.
Based in Abingdon, Virginia, Alpha Natural Resources Inc. along
with its subsidiaries engages in the production and selling of
steam and metallurgical coal in the United States. The company was
founded in 2002 and has 13,100 full time employees.
ARCH COAL INC (ACI): Free Stock Analysis Report
ALPHA NATRL RES (ANR): Free Stock Analysis
CONSOL ENERGY (CNX): Free Stock Analysis Report
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