Global market conditions idles CONSOL mine Weak market conditions in exports to Asia, Europe and South America cited

05 Sep

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Published: September 05, 2012

CONSOL Energy said global market conditions led to the idling of one of its two Virginia coal mines – the Buchanan Mine complex near Oakwood in Buchanan County – and could result in the idling of another.

The decision has Buchanan County officials worried, because it could mean a $2 million hit against the county’s 2012-13 budget revenues.

“It’s a major impact,” County Administrator Craig Horne said Tuesday. “We’ve been planning for some time because of the state of the coal and gas industry. It’s hard to predict, but we will see a loss of revenue.”

The Pittsburg, Pa.-based CONSOL, which operates coal mines across Virginia, West Virginia, Ohio and Pennsylvania, announced Tuesday that it was idling the Buchanan Mine for 30 to 60 days.

“CONSOL Energy is responding to weak market conditions throughout its export markets in Asia, Europe and South America,” the company said in a written announcement of the decision.

The Buchanan Mine – CONSOL’s only mine in the county – produces about 400,000 tons monthly of metallurgical-grade coal for steel production. According to information on CONSOL’s website, Buchanan set a company record for coal production in 2011 with 5.7 million tons mined that year.

CONSOL, employing about 9,000 workers, produced a total of 62 million tons of coal across all of its operations in 2011; and also produced 127 billion cubic feet of gas, according to its website.

The company’s other mine in Virginia, the CONSOL-owned, contractor-operated Amonate mine complex, which straddles Tazewell County, Va., and McDowell County, W.Va., and produces about 35,000 tons of metallurgical coal a month, could face a similar idling.

CONSOL spokeswoman Cathy St. Clair said Tuesday that the company has furloughed 606 employees at the Buchanan complex. The complex’s preparation plant will retain six employees while another 160 salaried employees and 11 mine rescue team members will stay on the job, St. Clair said.

St. Clair said she did not have the total number of employees at the Amonate complex, because contractors operating the mine and preparation plant staff the complex.

Buchanan Mine employees on furlough will be eligible for unemployment benefits, St. Clair said, and CONSOL will cover their health and life insurance benefits during the idling for at least 60 days.

CONSOL is still reviewing the market for coal and steel production before any decision is made on idling Amonate and whether benefits for furloughed employees will continue if Buchanan is idled longer, she said.

In Buchanan County, Horne said that Virginia coal severance tax revenues make up a significant portion of the county budget. Horne said he and Buchanan County Treasurer Bill Keene began another look at county revenues Tuesday in the wake of CONSOL’s news, and both agreed that the Buchanan idling could mean as much as $2 million in lost revenue for the 2012-13 county fiscal year.

“It’s hard to say right now, but we could lose about $1 million a month,” Keene said of the idling. “This gas and coal market has bottomed out.”

With the state of the coal market overall, Keene said, Buchanan County could see a loss of $8 million to $10 million in severance tax revenue this fiscal year.

“That revenue just about runs the county,” said Keene, who was working on detailed revenue estimates this week for the county Board of Supervisors.

Candidates for the 9th District congressional election both cited CONSOL’s idling as evidence of their economic campaign positions.

Incumbent Republican U.S. Rep. Morgan Griffith blamed President Barack Obama, the U.S. Environmental Protection Agency, and activist groups for attacking the coal industry.

“With current policies, the down economy is not going to improve soon,” Griffith said in a written statement issued Tuesday. “Obviously, this means that construction, including items built with steel, have been put on hold.

“President Obama, his Administration, and his allies – like and the Sierra Club – are all very clear about their agenda – make using coal history,” Griffith said. “Today’s news is just the latest demonstration that this agenda is making gains. … I believe the administrative branch of the federal government and its leaders are arbitrarily and capriciously targeting this profession.”

Democratic 9th District challenger Anthony Flaccavento said the CONSOL idling represents a need for comprehensive economic planning in Southwest Virginia.

“The idling of the Buchanan Mine is another sign that we need a strong, comprehensive plan to help put Southwest Virginia back to work,” Flaccavento said Tuesday. “We need to develop regulations that strike a better balance between jobs, the safety and health of miners, and protection of our neighbors’ land, air and water. We must free up the real job creators: the middle-class and working-class families who represent the majority of consumer demand, the small business owners and entrepreneurs who expand to generate the majority of new jobs, and the independent community banks that help finance that expansion.”

Flaccavento said that focusing on the region’s overall economy will increase demand for steel and other construction materials, helping to boost demand for the region’s metallurgical coal.

“As we do this, we also need to fully support laid-off miners and their families,” Flaccavento said.


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