West Elk Mine undergoes layoffs

The North Fork Valley is coping with the news that the last operating local coal mine is making layoffs as the coal industry in the valley continues contracting to a mere fraction of its former size.

Arch Coal said Thursday that it is laying off 80 employees at its West Elk Mine near Somerset. It said the action was made necessary by continuing challenges in the domestic and international markets for thermal coal, which is used in power generation.

“We want to thank the employees for their hard work, significant contributions and years of faithful service to West Elk,” Jim Miller, general manager of the mine, said in a news release from Arch Coal. “We regret the need for this difficult action and the resulting impacts on our employees, their families and the North Fork community. We greatly appreciate the strong support we have received and we continue to pursue markets for West Elk’s high-quality, low (pollution) emitting product.”

The West Elk layoffs come as the North Fork Valley in recent years has seen the permanent closure of Oxbow Mining’s Elk Creek Mine and multiple rounds of layoffs at Bowie Resource Partners’ now-idled Bowie #2 Mine. Delta County Administrator Robbie LeValley said the three mines employed more than 1,200 miners as of about three years ago and the valley’s mining employment had fallen to about 350 before the new West Elk layoffs.

Arch Coal had about 280 miners as of the end of March, according to the Colorado Division of Reclamation, Mining and Safety.

Paonia town administrator Jane Berry said everyone was talking about the new layoffs Thursday because the West Elk is the “last big holdout” in the valley, the last mine to have avoided ceasing operating.
“The community feels the impact of all layoffs of each of the mines in a dramatic fashion because of how it affects our families and our communities and our schools,” she said.

Arch Coal filed for Chapter 11 bankruptcy reorganization in January, one of numerous coal companies to have gone bankrupt as the industry struggles with competition from natural gas in the energy generation sector, slowing exports and increasing regulations related to the environmental impacts of burning and mining coal. At the time, Arch Coal had said the bankruptcy filing shouldn’t in itself result in any mine closures or curtailments in operations, and in fact should strengthen the company’s financial position. But it also said additional steps may be needed if market conditions continue to deteriorate.

“Up to this point, the (West Elk) operation has managed the current market downturn through cost-reduction initiatives, efficiency improvements, and natural attrition. However, lack of incremental coal demand has forced us to take further action to better align production and staffing levels with customer needs, and to ensure West Elk remains competitive long-term,” Arch Coal said in its release.

Last year West Elk was Colorado’s most productive coal mine, mining more than 5 million tons. But it has produced only about 550,000 tons altogether in the first three months of this year, according to state data. Even last year’s state-leading production by West Elk was down more than a million tons from 2014.

LeValley said Delta County has been in communication with the mine and knows it has worked hard to stay at full employment.

Said Berry, “West Elk was really, really trying to hang in there (without making layoffs) and this is just unbelievable to hear about this.”

LeValley said Delta County has continued to operate in a very fiscally conservative manner in preparation for further mining layoffs and associated revenue and budget impacts for the county.

The West Elk Mine sits in Gunnison County, where the tax-revenue impacts of falling production primarily will be felt.

However, “The majority of the (workers’) families live in Delta County,” LeValley said. “They send their kids to school in Delta County so the primary impact for Delta County is in the (affected) families.”

Berry said that Paonia used to get up to about $125,000 a year from severance tax and mineral leasing revenues, and the latest projection is that it will be lucky to get about $40,000. The difference could pay for two full-time police officers, she said.


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