Due to a decline in the coal market, the largest coal manufacturer in Appalachia, Alpha Natural Resources, Inc., will have to cut 10% of its employees and close mines in West Virginia, Virginia and Pennsylvania.
The downsizing in Alpha Natural Resources is reflective of the downturn in the coal industry, which is experiencing the worst recession in decades. Recently, cheap natural gas has been preferred to coal, and the overseas market for metallurgical coal has plummeted.
Alpha will center its attention elsewhere in the company, especially on growing its ventures in metallurgical coal. The company will also widen its operations in low-cost thermal-coal operations, a development aimed at power plants that use thermal coal for base-load electricity generation.
In order for supply to meet demand, every key producer of coal in the US has had to curb production. It is expected that US coal demand will drop 10% this year, which is almost 100 million tons. The demand for thermal-coal is also falling, demonstrating a shift to metallurgical coal. After a record high in 2011, the price for metallurgical coal has been almost halved to $170 a ton.
The question to answer: how badly will this industry’s layoffs affect our unemployment rate?
Conceived, Developed and Written by Dr. Subodh Das and Tara Mahadevan
October 19th, 2012
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