Walter J. Scheller III, Chief Executive Officer of Walter Energy, Inc. provided on March, 27th an update on the Company’s decision to curtail production at its Willow Creek mine.
“Over the past 18 months, since I became CEO, one of my key priorities has been aggressive operational management,” Mr. Scheller said. “While it is never easy to curtail operations at a facility, our commitment to idle operations where necessary is central to the Company’s operating plan. This plan has been developed with the full support of our Board.
“We greatly regret the impact this decision will have on many of our dedicated employees,” Mr. Scheller continued. “I would like to commend them for their work in significantly improving our productivity and costs at the mine over the past year.
“The current price environment for met coal dictated that we curtail production at Willow Creek in order to ensure we generate a sufficient economic return in mining the high quality met coal reserves at the site. Given the tremendous progress that has been made in the cost structure at the mine, when we see signs of sustainable market pricing conditions we would expect to ramp up production,” Mr. Scheller concluded.
The mine, which will be curtailed in April, currently employs approximately 350 employees, of which approximately 250 will be affected by the decision to curtail production. The Willow Creek mine will continue with limited operations to support Walter Energy’s Brule mine.
Willow Creek is the fifth mine Walter Energy has announced plans to curtail or idle as part of its initiatives to address underperforming assets. Last week the Company said it was accelerating the closure of its North River underground mine in Alabama. In addition, the Company has also idled the Aberpergwm mine in South Wales and the Gauley Eagle underground and surface mines in West Virginia, and has curtailed production at its Maple underground mine, also in West Virginia.
As previously disclosed, the Company expects to record a one-time cash charge of approximately $7.5 million in severance costs in connection with its curtailing production of the Willow Creek operations. The Company currently expects that full year 2013 metallurgical coal production will be in line with production levels in 2012.
The Willow Creek surface mine, located near the town of Chetwynd in Northeast British Columbia, produces metallurgical coal with production plans of one third hard coking coal and two thirds low-volatile PCI coal over the mine's expected 20-year life. The Willow Creek mine had approximately 19.0 million metric tons of recoverable coal reserves as of December 31, 2012.
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