Two coal producers announced massive layoffs at their Powder River Basin operations on Thursday, totalling 300 mining jobs, and attributed the cuts to ongoing coal market pressures made worse by the COVID-19-related economic shutdown.
Peabody energy cut 170 jobs at its North Antelope Rochelle mine, the largest mine in the U.S. by production. Navajo Transitional Energy Co. cut a total 130 jobs at its Antelope mine in Wyoming and its Spring Creek mine in Montana, just across the border from Sheridan where many of the miners live.
“We know this announcement comes at a time when many are already challenged with circumstances surrounding the current national emergency, and we very much regret the added impact this difficult decision has on employees, their families and our nearby communities in northeast Wyoming,” Peabody president of U.S. operations Kemal Williamson said in a prepared statement.
NTEC, which in 2019 acquired three Powder River Basin mines from bankrupt Cloud Peak Energy, also cited COVID-19 as part of its decision to cut its labor force.
“The decision comes after weeks of monitoring the unprecedented COVID-19 pandemic, its existing and expected impacts on our customers, and the resulting reduction in coal demand,” NTEC said in a prepared statement. “We will seek to bring back employees as economic and market conditions improve.”
So far this year, Powder River Basin mines have cut more than 400 jobs. Kiewit’s Buckskin mine cut 60 positions in March, and Peabody cut 50 temporary positions at North Antelope Rochelle, also in March.
Last summer, Blackjewel stunned miners when it locked gates at its Eagle Butte and Belle Ayr mines, putting hundreds of jobs in doubt, shirking responsibilities to pay miners full wages and benefits and leaving state and local governments on the hook for millions in back-taxes.
Blackjewel resumed operations at both mines later in 2019 with a reduced workforce.
Coal crunch meets COVID-19
This year was shaping up to be a bad one for Wyoming coal producers even before the COVID-19 pandemic. However, the unprecedented pinch on electrical power demand due to the economic shutdown has hit coal much harder than other power generation sources, University of Wyoming energy economist Robert Godby told WyoFile on Thursday. That means that a bad year for Wyoming coal will likely become much worse.
Depending on how long the economic shutdown lasts, COVID-19 could double the losses predicted for Wyoming coal production in 2020, Godby said.
Before the COVID-19 pandemic, Wyoming’s coal industry faced an estimated production decline of more than 15% compared to last year — and 2019 marked Wyoming’s lowest coal production in 20 years, Godby said.
Godby has been tracking the U.S. Energy Information Administration data on weekly coal production in Wyoming. He said weekly coal deliveries in 2020, ending March 9, averaged nearly 4.5 million tons compared to 5.3 million tons for all of 2019 — a 15% decline.
Since March 9 — and the COVID-19 economic shutdown — Wyoming’s weekly coal deliveries fell to a weekly average of 3.8 million tons — a 28% decline.
“COVID-19 has doubled the losses we were already seeing,” Godby said.
Exacerbating market uncertainty, the federal government has objected to a proposal by Arch Coal and Peabody Energy to merge their western coal mining operations. Both coal companies have said they will challenge the federal assertion that their merger would result in inadequate competition among Powder River Basin coal producers.
Arch and Peabody argue that the actual field of competition is among Powder River Basin coal producers and natural gas and renewables competing for the U.S. electrical power fleet.
Godby said that if Arch and Peabody are allowed to merge their operations, they can help “right-size” the number of Powder River Basin coal mines chasing a shrinking customer market by closing their smaller mines, such as Arch Coal’s Coal Creek and Peabody’s Rawhide mine, for example.
Too many coal mines in the Powder River Basin are courting a shrinking number of customers. Right now that results in mines curtailing production and labor, and trying to cut costs at mines that only make financial sense if they’re producing in large volumes. If the basin’s two largest, publicly-traded companies can’t merge to correct that “over-capacity,” then Wyoming risks seeing more bankruptcies and the possibility of abrupt, disruptive mine closures among smaller, less financially-stable producers in the basin, Godby said.
“There’s no good news for the coal miners, either way.”
For now, Powder River Basin coal producers find themselves with no choice but to cut their operating expenses as much as possible, and wait to see who can weather the chaos of a permanently shrinking market.
“The shoe is yet to drop for other mines around the Powder River Basin,” Godby added.
This week, Arch Coal reported a “negative cash margin of $0.13 per ton” for its Powder River Basin coal in the first quarter of 2020. On a call with reporters on Thursday, Arch executives said “Arch Coal is not afraid to idle operations that are not performing.”
Lynne Huskinson was among hundreds of Blackjewel employees who found themselves in job limbo when the company locked its gates to the Eagle Butte and Belle Ayr mines in July. She told WyoFile on Thursday that the continuing layoffs in the coal mining industry weighs on the community, and it’s not good for the crews who remain at the mines.
“It’s going to have everybody stressed,” Huskinson said. “That’s just not any kind of work atmosphere to be in.”
Huskinson, who would have marked 40 years as a Powder River Basin coal miner in December, decided to retire rather than return to work for Blackjewel. “I just hope people have been saving their money,” she said.
Gillette and other communities that serve the Powder River Basin coal mines were already hurting before the market forces and COVID-19 made things worse. Earlier this month, mobile delivery staff for the Wyoming Food Bank of the Rockies had to move to a bigger parking lot in Gillette to serve the hundreds of people who needed help.
On March 31, 2016, Arch and Peabody collectively laid off nearly 500 workers. Since, Wyoming leaders have found themselves powerless to combat national markets that threaten one of the state’s largest revenue producers.
Earlier this year, Wyoming lawmakers floated proposals that would have benefited the industry with $47 million, including coal-technology research, while largely ignoring a social safety net that might help out-of-work coal miners.
“We still remember 2016 as some of the darkest times we’ve gone through in Campbell County, and this is rivaling that,” Gillette Mayor Louise Carter-King told WyoFile on Friday. “We’re going through all of the layers; oil is going to nothing, now these layoffs, and on top of it you have a pandemic. We hate that we’re going through this again. It’s just heartwrenching.”
In a press conference on Thursday afternoon, Gov. Mark Gordon said that the Department of Workforce Services deployed staff to help those who’d been laid off in coal country this week, and said the state’s university and community colleges continue to offer programs for retraining.
That’s about all the state can do right now, Gordon said. Beyond investing in coal technology research and pursuing lawsuits against policies in other states that threaten Wyoming coal, Wyoming leaders are essentially powerless to sway the circumstances that have put the squeeze on coal.
“I don’t think anybody is prepared for the losses we’ve seen periodically over the past several years,” Gordon said. “We’ve never indicated that the state is going to bounce back from this with ease.”
Godby said the past several years have only made Wyoming coal more vulnerable to market forces beyond the state’s control. “Wyoming only faces worse revenue outcomes the longer we continue to be reliant on energy revenues.”
This story was updated to correct the spelling of Lynne Huskinson’s name. -ED.