Walter Energy Plans to Close 2 Coal Mines to Cut CostsSimon Casey
Walter Energy Inc., a producer of metallurgical coal that’s declined 52 percent in the last year, plans to close an Alabama mine earlier than expected and end operations at a British Columbia mine as it looks to cut costs.
The company will record a one-time expense related to closing its North River mine, Birmingham, Alabama-based Walter said today in a filing. Walter said in February that the North River mine’s resources would be depleted in 2014. Willow Creek in Canada will close in the next several weeks and Walter will take a $7.5 million charge, it said.
“Given the slow recovery in metallurgical coal pricing, the company is currently evaluating its operations with respect to cost-reduction initiatives,” Walter said.
Walter rose 3.5 percent to $29.45 at the close in New York. The shares have dropped in the last year as the price of the steelmaking ingredient tumbled amid slower growth in China, the largest producer of the metal, and declining output in Europe.
“The idling reflects the slow recovery of global coking coal markets,” Daniel Scott, a New York-based analyst at Cowen Securities LLC, said in a note today. “We view the announcement as a slight positive.”
Full-year metallurgical coal output will be in line with last year’s level, it said. The company sold 10.4 million metric tons of metallurgical coal in 2012, the company said in February.
Walter also said that British Columbia’s Environmental Crown Counsel is seeking a C$100,000 ($98,000) penalty for alleged violations associated with the release of sediment and debris into Willow Creek from the nearby mine in 2011. Walter said it intends to negotiate a settlement with the authorities.