PITTSBURGH (AP) -- Consol Energy shares dropped more than 4 percent on Tuesday as the company announced it is temporarily idling a coal mine in Virginia and at least part of a coal mining facility in West Virginia because of weaker steel demand. Those mines produce metallurgical coal used to make steel.
THE SPARK: Consol said that it will decide soon on whether to partially or fully idle the Amonate complex in West Virginia. The Amonate facility produces about 35,000 tons of coal monthly.
The Buchanan mine in Virginia typically produces about 400,000 tons of coal a month. The mine has about 620 workers, with most expected to be furloughed.
The shutdowns are expected to last 30 days to 60 days.
THE ANALYSIS: Michael Dudas of Sterne, Agee & Leach believes that the timing for when operations will start back up will likely depend on demand improving and pricing for metallurgical coal. He thinks idling the facilities for a while is a good idea.
"Since Consol has a strong balance sheet, management can rein in production for better market conditions. Such restraint helps the company capture better long-term value for its high-quality coals," he wrote in a client note.
SHARE ACTION: Shares of Consol Energy Inc. fell $1.25, or 4.1 percent, to $28.95 in afternoon trading. The stock has traded in a 52-week range of $26.41 to $46.90. It's down 21 percent since the beginning of the year.