The decision is due to continued market pressures and new regulations on coal-fired power plants which the company says make production from certain mines in those areas uneconomic.
As per the plan, Alpha’s Kentucky affiliates will discontinue mining at four mines and idle two coal preparation plants in Pike and Martin counties.
At several other mines, production will be scaled back while four contract mines will close.
Alpha expects the production cuts will reduce shipments of thermal coal by an additional two million tons this year and four million tons in 2013.
Alpha Natural Resources chairman and CEO Kevin Crutchfield said, "This year, utilities in the U.S. are expected to burn the least amount of steam coal than at any time in the last 20 years, and the pressure’s been very intense on coal sourced from eastern Kentucky, particularly operations rendered uncompetitive due to fuel switching, relatively high rail rates and competition from Illinois Basin coal."
The company is also studying its existing organisational model to ensure it reduces overhead costs, and is closing satellite offices in Richmond, Virginia; Denver, Colorado; Latrobe, Pennsylvania; and Linthicum Heights, Maryland by the end of this year.
These and other expense reductions are expected to savings of around $50m to $60m per annum.
In its recent quarterly earnings announcement, Alpha reduced its production guidance for 2012 in the face of declining thermal coal demand, mostly due to the mild winter and a wave of electric utilities switching from thermal coal to cheap natural gas to generate their power.
The company stated that future sales forecasts also are being affected by a series of regulatory actions by the US Environmental Protection Agency, which led utilities announcing plans to shut down a number of generating stations that have traditionally used Central Appalachia coal.
