The utility landscape is changing dramatically as power producers are downsizing, shutting down or idling their coal-fired plants.
Bristol, VA-based coal miner, Alpha Natural Resources, Inc. ANR announced on May 22, 2015 that its operating affiliates have given notices to employees of the likely idling of Rockspring Development's Camp Creek Underground Mine and Processing Plant in Wayne County, WA.
Moreover, Alpha Natural’s three other mine operators revealed that 71 workers were laid off in Kentucky and Virginia as a result of declining market conditions in the region. This is especially due to government regulations that have risked the entire Central Appalachian coal industry.
U.S. environmental legislations discouraging the use of coal for producing electricity have led to frail coal demand. Many of the power producers have either shuttered or idled their coal-fired facilities. New investments in coal plants have been almost next to none. Per the U.S. Energy Information Administration, 4.1 gigawatts (“GW”) of coal capacity was retired last year and plant operators plan to retire 12.8 GW of coal capacity in 2015.
Management believes that it is taking the necessary steps to ensure that its production is aligned with demand.
Alpha Natural Resources incurred a loss of 79 cents per share for the first quarter of 2015, wider than the Zacks Consensus Estimate of a loss of 76 cents. In the year-ago quarter, the company had generated earnings of 7 cents per share.
Hit by the downturn, coal producers and operators like Arch Coal Inc. ACI and Peabody Energy Corp. BTU also reported a wider-than-expected loss in the first quarter of 2015.
Alpha Natural Resources currently has a Zacks Rank #3 (Hold). Rhino Resource Partners LP RNO is a better-ranked stock in the coal industry having a Zacks Rank #2 (Buy).
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