CHARLESTON, W.Va. -- Alpha Natural Resources Inc. has reported a first-quarter net loss of $29.1 million or 13 cents a share on revenue of $1.9 billion.
Facing weak demand for steam coal used by power companies to generate electricity, Alpha announced production cuts in February that will reduce annual output by about 4 million tons.
Kevin Crutchfield, Alpha's chief executive officer, hinted that even bigger cuts are in the works.
Since the February cuts, "unusually mild winter weather and decade-low natural gas prices have significantly reduced domestic steam coal consumption and driven utility inventories to near record levels," he said in a prepared statement. "In response coal producers continue to announce plans to reduce production. Alpha plans to introduce additional production adjustments in the near future."
The changes to be announced will reduce Alpha's steam coal production by the equivalent of an additional 7 million tons a year, he said.
The market for low-quality metallurgical coal also has weakened so Alpha will reduce production by the equivalent of 500,000 tons a year, Crutchfield said. Metallurgical coal is used in steelmaking.
The total impact the additional cuts will have on employment was not immediately known. Alpha has about 14,500 employees. Of that total, about 8,000 are in West Virginia.
Crutchfield had predicted there would be more production cuts when he spoke at the University of Charleston on March 27.
He said on Thursday, "In this environment, Alpha will remain focused on selectively pruning our portfolio, controlling costs, and maximizing free cash flow generation."
Alpha was formed from the coal assets of Pittston Coal Co., Coastal Coal Co., U.S. AMCI and Mears. Alpha became a publicly traded company in 2005. Last June, after the 2010 explosion that killed 29 miners at Massey Energy Co.'s Upper Big Branch mine, Alpha acquired Massey for $6.7 billion.
The acquisition of Massey made Alpha the second-largest coal producer in America by revenue and third largest by production.
Alpha is the third-largest private-sector employer in the state, behind Walmart and the West Virginia United Health System. But Alpha's average pay is about $82,000 a year, making it No. 1 in the state in average pay.
Crutchfield said Alpha's employees are embracing the company's "Running Right" safety program. He noted that eight operations recently received federal Mine Safety and Health Administration safety awards and two received West Virginia safety awards.