Patriot Coal plans to cut production at two mining complexes in southern West Virginia and potentially lay off workers.
St. Louis-based Patriot announced Wednesday that it has issued 60-day layoff notices to workers at its Wells mining complex near Wharton and its Corridor G complex near Danville. The federal Worker Adjustment and Retraining Notification, or WARN, Act requires companies to provide notice to employees if large layoffs are possible.
Patriot employs 450 workers at the Wells complex and 397 workers at the Corridor G complex.
Patriot president and CEO Bennett K. Hatfield says in a news release that the company needs to align its production with expected sales. He says pricing for both metallurgical and thermal coal is well below production costs at many mines in Central Appalachia.
At this point, THE ONLY question that a potential buyer of a coal stock should be asking is? Will this company survive for the next 12 months? Why? Because 3 years from now when they are trading for $20 or more per share you will look back and understand that it didn't matter whether you bought at 3 or 4 or 5.
This is exactly how something like this is supposed to play out and why ACI, ANR, and just about any coal company is a BUY right now.
Demand starting to slowly tick up
Price starting to slowly tick up
Companies continue to cut production
Some go under, bk.
Surviviors become lean and mean via Capx, layoffs, cashmax, etc.
Survivors become SMART
Consolidation in the industry
Look out a year or two and there will be sheer panic when the stockpiles are still low, prices are skyrocketing, and no one can figure out how to turn on the supply quickly. When analysts finally go upgrade crazy and start forecasting EPS of $5 or $6 per share that will be the time to sell...maybe 5 years from now.