Biggest Private Coal Producer in U.S. Warns of Massive Layoffs

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Trucks dump their loads of coal at Murray Energy Corp.’s New Era Mine outside of Galatia, Ill. The mine is expected to close this year. Murray said Friday that it could soon lay off as much as 80% of the company’s workforce. ENLARGE
Trucks dump their loads of coal at Murray Energy Corp.’s New Era Mine outside of Galatia, Ill. The mine is expected to close this year. Murray said Friday that it could soon lay off as much as 80% of the company’s workforce. Photo: Associated Press

Murray Energy Corp., the largest privately held coal miner in the U.S., has warned that it may soon undertake one of the biggest layoffs in the sector during this time of low energy prices.

In a notice sent to workers this week, Murray said it could lay off as many as 4,400 employees, or about 80% of its workforce, because of weak coal markets. The company said it anticipates “massive workforce reductions in September.”

The law requires a 60-day waiting period before large layoffs occur.

The American coal industry, especially in Appalachia, has languished as cheap natural gas replaces coal as fuel for power plants. World-wide demand for coal has also slumped, and new environmental regulations are making many coal mines unprofitable to operate.

The Central Appalachian coal price benchmark is $40 a ton, or half its level from five years ago. Almost all of the biggest coal producers in the U.S. have declared bankruptcy in the past 18 months, including Peabody Energy Corp., Arch Coal Inc. and Alpha Natural Resources Inc. ANRZQ -15.56 %

Robert Murray, the controlling owner of Murray, is a fierce opponent of President Barack Obama and a supporter of Donald Trump. In a statement, the company said the potential layoffs were “due to the ongoing destruction of the United States coal industry by President Barack Obama, and his supporters, and the increased utilization of natural gas to generate electricity.”

The move came just a day after the United Mine Workers of America said it would reject a proposed new labor deal with Murray. The existing contract expires at the end of this year.

Phil Smith, a spokesman for the union, said the rejected deal is just a first step.

“Hopefully the coal market will come to the point where [the layoffs are] not necessary,” he said. “It’s no secret the coal market is bad right now.”

The UMWA represents about 3,000 Murray workers, half of whom have already been laid off.

Murray has struggled financially this year and is renegotiating with its creditors after a debt-funded, $1.4 billion deal for Foresight Energy FELP 3.85 % LP soured. At the time of the deal in March 2015, Foresight traded at roughly $16 a share. A small number of shares that still trade publicly settled at $1.62 a share Friday.

Mr. Murray, at a Tuesday fundraiser for Mr. Trump in Wheeling, W.Va., said the company was down to 5,356 employees from 8,400 a year ago. Most of those workers are based in West Virginia, Illinois and Ohio, where the company has its headquarters in St. Clairsville.

“Frankly, I am frightened for you, my employees, and the survival of your jobs and family livelihoods,” Mr. Murray told the crowd while introducing Mr. Trump, according to a copy of his prepared remarks. He added that electing “friends of coal” like Mr. Trump were the only hope the industry has.

The ailing U.S. coal sector, focused in Wyoming, Illinois and the Appalachian region, has lost more than 30,000 jobs since 2009, according to the Mine Safety and Health Administration.

John W. Miller at john.miller@wsj.com and Tim Puko at Tim.Puko@wsj.com



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