Walter Energy to Idle Canadian Coal Mines, Cut 700 Jobs
Coal miner Walter Energy Inc said it would idle its operations in Canada and temporarily lay off about 700 workers as it struggles with weak prices.
Walter's shares, which have fallen nearly 70 percent in the past 12 months, rose as much as 5.7 percent in early trading.
The company said it would immediately stop production at its Wolverine and Willow Creek mines in British Columbia, while its Brule mine in the same province would likely shut down by July.
The company said it would continue to operate preparation plants at the mines to complete processing of stockpiled coal.
"Given the current (metallurgical) coal pricing environment, our best course of action at this time is to idle these operations until we can achieve reasonable value from these reserves," Chief Executive Walter Scheller said in a statement.
Metallurgical coal is mainly used to make steel.
The Wolverine mine, which produces mid-volatile hard coking coal, produced 1.6 million metric tons in 2013. About 415 employees will be laid off at the mine.
About 280 workers will be laid off at the Brule and Willow Creek mines, which produced about 1.9 million metric tons of low volatile pulverized coal injection product and about 100,000 metric tons of hard coking coal in 2013.
The company said it expected to incur severance charges of about $7 million in the second quarter of 2014.
Walter cut its capital expenditure by more than 60 percent to $153.9 million in 2013 and expects to spend less than $150 million this year.
The company, like other coal miners, has been trying to cut costs to fight weak prices due to low demand and excess supply for the past year or so.
U.S. power companies have switched to cheaper natural gas, depressing thermal coal prices, while weak steel demand and excess supplies have weighed on prices for metallurgical coal.
Coal miners also been hit by President Barack Obama's push for stricter regulation of greenhouse gas emissions.
James River Coal Co filed for Chapter 11 bankruptcy protection last week.
Walter's shares were up 2.4 percent at $7.99 at 1445 GMT on the New York Stock Exchange on Tuesday.
(Reporting by Anannya Pramanick and Kanika Sikka in Bangalore; Editing by Joyjeet Das and Prateek Chatterjee)
