Alpha Sees as Few as 2 Large U.S. Coal Miners After Slump

There may be only two to four “really, really” large U.S. coal producers left in the future as the industry shrinks amid moribund demand and falling prices, Alpha Natural Resources Inc. Chief Executive Officer Kevin Crutchfield said.

“How long that takes is obviously the bazillion-dollar question, but I think that’ll happen for sure,” Crutchfield, who’s also Alpha’s chairman, said in an interview yesterday at Bloomberg headquarters in New York. The Bristol, Virginia-based company is the largest U.S. coal producer after Peabody Energy Corp. by sales.

Alpha and other U.S. coal producers are trying to cut costs amid the commodity’s worst decline in decades. Alpha idled three unprofitable West Virginia coal mines last week and plans to cut production at eight more in November or December. It will produce and sell 85 million tons of coal this year, down from 130 million in 2011, Crutchfield said.

Crutchfield, who’s also chair of the trade group American Coalition for Clean Coal Electricity, is among the industry leaders pushing back against tightening government regulations on carbon emissions.

He said the ACCCE would continue to fight the Environmental Protection Agency’s emission restrictions and that the uncertainty surrounding them made it difficult to know how much the coal industry will shrink. He also said that a global oversupply of the commodity and the boom in low-cost natural gas contribute to the coal industry’s current gloom.

‘Worst Case’

Crutchfield said a forthcoming study by the National Economic Research Associates concluded the EPA measures could cause the amount of U.S. coal-fired electricity to drop to a third of its current capacity by 2020, to 100 gigawatts from 330 gigawatts. “That’s worst-case scenario,” he said.

Robert Murray, the head of Murray Energy Corp., said last week that the curtailment could reach 100 gigawatts by 2016 and that he saw more bankruptcies for U.S. coal producers in the future.

Alpha may be in the market to acquire “high-quality” metallurgical coal assets, used in steelmaking, at “reasonable valuations,” Crutchfield said.

Because of the competition from natural gas and the tightening government regulations, he said, the type of coal used in power plants would be a tougher sell.

Alpha dropped 4.4 percent to $2.37 at 9:35 a.m. in New York. It has declined 67 percent this year.

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