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By Steve Block, Staff writer, TTi
• July 13, 2012
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Coal mining has been temporarily shut down at the New Elk Coal Mine west of Trinidad. Toronto-based mine owner Cline Mining Co. announced the layoff of 200 mostly hourly employees, as part of an ongoing mine review process, in a Wednesday press release. Seven of the company’s employees live in Colfax County, according to a company spokesman.
The layoff is expected to last 60 days and will impact 78 percent of New Elk’s workforce, according to the press release. About 35 mostly salaried employees will not be affected by the layoff.
The market for the metallurgical, or coking, coal the mine produces has been soft lately. Coking coal is used in steel production, and the New Elk Coal is shipped to Corpus Christi, Texas, where it’s shipped overseas, mostly to China and India, whose economies have slowed down recently.
Cline Mining is a privately held company and its press release said the layoffs were part of “its ongoing mine plan review process, intended to maximize short-term production values and ensure the viability and … growth of the New Elk coal mine, the company will be temporarily suspending production at New Elk to manage costs. Cost efficiency, the preservation of the company’s financial condition and achieving sustainable sales contracts remain a priority for the company.”
The company’s shares fell as much as 30 percent to a low of 30 Canadian cents in early trade Wednesday on the Toronto Stock Exchange, according to information from Reuters News Services.
The company will continue to provide health, vision and dental benefits to employees, who are currently receiving them. While the company anticipates that the duration of the layoffs will last for approximately 60 days, the variability of market conditions and other economic factors make it impossible to project an exact personnel return date with certainty, according to the release.
The company currently has about 70,000 tons of saleable coal stockpiled at New Elk and the company will retain personnel on an as-needed basis to load stockpiled product and maintain the asset for any sales made during this period, according to the release.
New Elk Coal Company’s recently-appointed chief operating officer, David Stone, had this to say about the layoffs: “The company acknowledges it is extremely regrettable that the workforce is being temporarily laid-off, but Cline believes it is in the company’s best interest to manage its cash position during the mine optimization period. The combination of cash conservation from the temporary suspension of operations and reduction of our workforce will enable both the plan to be properly developed and implemented efficiently and effectively. During this time, the company has a significant stockpile of quality coal product and a workforce capable of loading the coal should a sales agreement be made.”
Cline Mining has metallurgical coal property interests in Colorado and British Columbia, Canada. It also mines iron ore in Madagascar, and gold in northern Ontario, Canada.
A local official of New Elk Coal said about one-third of the company’s employees were from the Trinidad area, and that 70 percent of company employees work below ground.