James River Coal Co. (JRCC) has had a rough couple of years. Monday’s announcement that the company was cutting production and laying off 525 workers is just the latest installment of bad news for the company and the coal industry.
As domestic demand for coal has fallen due to competition from natural gas, the company’s stock has lost about 80% of its value in the past two years. Arch Coal Inc. (ACI) and Alpha Natural Resources Inc. (ANR) wallow in the same puddle, and industry biggie Peabody Energy Co. (BTU) can only claim a shallow victory -- its stock is down just 60% in the past two years. Coal mining is in very bad shape.
ALSO READ: States Where the Most People Go Hungry
Yesterday’s announcement from James River was brief. The company said it had “idled coal production” at several of its central Appalachian mines as a result of “continued weakness in the domestic and international coal markets.” The press release continued:
Today's actions will result in approximately 525 full-time employees being furloughed. The anticipated date to restart these operations is unknown at this time and subject to the coal market.
ALSO READ: The Worst Economies in the World
Not only is the situation bad today, there is no expectation of a turnaround in the foreseeable future. James River’s losses have been shrinking, and shutting down more mines and cutting more workers likely will give shares a bit of a boost today. The company’s quarter ends this month, and this looks like an effort to ensure that the quarterly loss does not exceed expectations for a loss of $1.22 a share.
Shares closed at $2.18 on Monday, up 1.4%, and are inactive in premarket trading Tuesday morning. The stock’s 52-week range is $1.46 to $5.89.