Berkshire to Close Utah Coal Mine With 182 WorkersDan Reichl and Tim Loh
Berkshire Hathaway Inc., the company controlled by billionaire Warren Buffett, plans to close a coal mine in Utah after attempts to sell the property failed amid rising costs for pension obligations and environmental upgrades.
The Deer Creek mine in Emery County employs 182 workers, according to a statement today from PacifiCorp, a Berkshire utility unit. It is scheduled to close by the middle of next year. PacifiCorp said it’s been trying to sell the mine for 18 months.
The Berkshire unit said much of the coal in the mine has higher ash and sulfur content, making it more expensive to process. PacifiCorp will make up for the mine’s lost production by purchasing thermal coal from Bowie Resource Partners LLC.
“It no longer makes economic sense to keep the Deer Creek mine open,” PacifiCorp Chief Executive Officer Micheal Dunn said in the statement. “The new long-term coal supply agreement with Bowie will supply PacifiCorp with reasonably priced coal.”
U.S. coal producers have been cutting costs and idling mines amid the deepest downturn for the sector in decades. Thermal coal prices have slumped in the past three years as some power utilities switch to cheaper natural gas. Demand is also suffering from the effects of tighter government regulations on emissions.
Companies including Alpha Natural Resources Inc. have idled mines and cut jobs. Further declines in thermal coal prices may occur in early 2015, according to Andrew Cosgrove of Bloomberg Intelligence.
Production has already slowed at Deer Creek. The mine produced 1.59 million tons of the power-plant fuel through Sept. 30, down 30 percent from the same period in 2013, according to the Mine Safety and Health Administration.