Alpha Natural Resources (NYSE:ANR) revealed plans on Tuesday to idle mines, revamp its operations and slash about 1,200 jobs as the company doubles down on metallurgical coal.
The No. 2 U.S. coal miner by revenue said it hopes the restructuring moves will cut overhead costs by $150 million and also reduce annual coal output by about 16 million tons by early next year.
“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,” CEO Kevin Crutchfield said in a statement.
Coal companies are dealing with slumping demand for power plants, which are increasingly turning to natural gas for energy.
Through a series of moves, Alpha increasingly focusing on metallurgical coal, pointing to predictions for a 100 million ton surge in seaborne metallurgical coal demand by the end of the decade.
“We have a big opportunity to advance Alpha's position as a premier supplier of metallurgical coal,” said Crutchfield. “We intend to participate meaningfully in the market upside with costs that are globally competitive."
Alpha said it plans to cut 1,200 jobs between now and early 2013, representing 9% of the company’s workforce.
The headcount reductions began on Tuesday as the company is idling eight mines in Virginia, West Virginia and Pennsylvania, impacting 400 positions.
Alpha also announced plans to restructure its corporate structure by consolidating its four existing operating regions to two in an effort to cut overhead costs and improve effectiveness.
The company expects overhead cost savings of about $150 million, including $50 million to $60 million of cost reductions disclosed in June.
Shares of Abingdon, Va.-based Alpha retreated 1.36% to $7.97 on Tuesday morning, extending their 2012 tumble to nearly 61%.