By Jim Levesque

September 20, 2017 - ERP Compliant Fuels has begun layoffs at the longwall Federal No 2 coal mine in West Virginia as it grapples with geological challenges that could result in the facility being idled, the company's CEO said Monday, noting that market conditions would also play a role.

"We've had ongoing geological conditions that really hurt us for the last year that have really hampered our ability to operate properly," ERP CEO Ken McCoy said Monday. "We hope our conditions improve, and they have before, but we've given the WARN notice as a precautionary measure. Should geological conditions re-occur, then we would close the mine out."

ERP notified personal of the approaching layoffs September 8 ahead of an official Worker Adjustment and Retraining Notification Act filing September 11, when 59 employees were immediately laid off. The notice said a total of 252 could lose their jobs as early as November 10 and cited geological and market conditions as reasons for the mass layoffs.

McCoy said the company has experienced roof falls and other geological issues as it reaches the end of reserves in the active part of the mine. Employees are currently working through a panel, with one final panel scheduled to start at the beginning of the year. In a best-case scenario, McCoy said, the company would finish the current panel and mine the final panel for six to eight months to completion, before a "decision would be made based on market conditions" whether to continue or end production at the mine.

If miners run into more geological issues before the end of the year, that final panel might not be mined, McCoy said.

McCoy noted seeing an improved international thermal and crossover metallurgical market for the mine's 13,000-plus Btu/lb coal and said he hoped production would continue into 2018. He also noted that October would mark the two-year anniversary of ERP owning Federal after buying the mine from Patriot Coal during that company's Chapter 11 reorganization.

"It's a good mine; an old mine from the 1960s, but a good mine for a long time," McCoy said.

Federal reached a peak annual output of 4.9 million st in 2002, according to Mine Safety and Health Administration data. Production, while still high, has declined since 2012 to 3.3 million in 2013, 2.9 million in 2014 and 2.4 million in 2015.

Under full ERP control, production at Federal slipped further to 1.5 million st in 2016 and totaled 828,000 st through the first half of this year.