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Patriot Coal Idles Two Large Mines in Western Kentucky

Patriot Coal will idle two large coal mines in Western Kentucky, beginning today. As many as 650 workers could be affected.

Patriot warned layoffs could be coming earlier this month, when it issued WARN notices to employees at its Highland and Dodge Hill mines. Coal mine closures are becoming predictable in Eastern Kentucky; the region has shed more than 6,000 coal jobs in the past three years. But production and employment have been steadier in Western Kentucky, with fewer large-scale layoffs.

In a WFPL interview earlier this month, IHS Global Insight analyst James Stevenson said the potential closures of Highland and Dodge Hill weren’t necessarily a sign that Western Kentucky coal was about to begin a decline like the eastern coalfields.

[Stevenson] said structurally, not much has changed. Power plants that want to continue to burn coal are switching to the cheaper Illinois Basin mines. But more and more coal mines in the region now longwall mines, which is a method of underground mining. And Patriot’s two operations use what’s known as a “continuous miner.”
“The only real structural thing is that a higher and higher percentage of mining in the Illinois Basin is coming from longwall mines,” Stevenson said. “If you have a continuous miner, that’s more expensive than longwall. And insofar as there’s kind of competition between Illinois Basin mines, a longwall will win every time.”

So, Patriot’s Highland and Dodge Hill mines are facing more competition from cheaper coal in their own basins. To add to that, Stevenson said barge rates are up, so it’s less feasible right now to try to send excess coal to Europe.

But overall, he said even if Highland and Dodge Hill close, he’s projecting an increased demand for Illinois Basin coal over the next decade.

“You’ll see perhaps some erosion in the more expensive Illinois Basin mines, but for the most part, the demand for Illinois Basin coal has been rising enough to keep all of them running,” he said. “Illinois Basin in aggregate is going to grow for the next 5-10 years. And then a decade or so of stability, and after that, decline. And that decline is driven by domestic retirements and decline of European coal demand.”

Patriot’s Highland Mine was in the news again only two weeks ago, when a coal miner was killed there. Eli Eldridge, 34, was struck by a coal hauler on Dec. 16, and state and federal regulators are investigating the accident.

Patriot cited low natural gas prices and federal environmental regulations as the factors making the company’s mines less competitive. The mines are in Rep. Ed Whitfield’s district; he issued a statement blaming the idling on President Obama.

“(Patriot Coal) is one of many mining companies threatened as a direct result of President Obama's agenda to destroy the coal industry in America,” he said in a statement.

Patriot Coal hasn’t said what the future holds for the two mines, only that a decision about future coal productionwill be made after reviewing the company’s strategic options.