Predicted coal production drop prompts staff cuts

GILLETTE — An expected significant drop in first-quarter thermal coal production has the Powder River Basin’s largest producer making more adjustments to its workforce.

Peabody Energy Corp., which operates three mines in Campbell County and accounts for more than 40% of the overall coal production in the PRB, has eliminated three permanent positions at its Wyoming operations, the company has confirmed. It also has reduced its temporary workforce by 10 people between its Rawhide and Caballo mines.

The move is driven by lower coal production and demand for PRB coal, said Peabody spokeswoman Charlene Murdock in a prepared statement.

“We routinely match staffing levels with production needs and this action is consistent with that approach,” she said.

The move comes about a month after Peabody reduced its temporary workforce at its flagship North Antelope Rochelle mine by 50, also a reaction to a weak market for thermal coal.

That weak market is expected to produce historically low production for Wyoming coal, said Rob Godby, a University of Wyoming energy economist.

Although official first-quarter production and employment reports haven’t been released by the federal Mine Safety and Health Administration, projections by the Energy Information Administration say the first quarter will come in at about 54.6 million tons produced in Wyoming, he said. That’s down about 10.8 million tons from the first quarter of 2019, a drop of about 16.5%.

“If these estimates hold up, and they should be close to actual numbers reported by MSHA later this month, this will be the worst quarter of production in over 20 years (for Wyoming) and only the second time since the 1990s that PRB production has been below 60 million tons for a quarter.”

The first time was the second quarter of 2016 when 57.6 million tons were produced in Wyoming. That also was the first quarter after hundreds of mine layoffs and several coal company bankruptcies.

A mild winter and spring, along with the ongoing COVID-19 pandemic, continues to squeeze an already floundering industry, Godby said.

“The first quarter was a rough start to the new year,” he said. “This year, natural gas prices stayed at close to record lows all winter and worse, electricity demand turned downward as the COVID-19 pandemic began to affect the U.S. economy.”

That means the rest of 2020 is likely to be more of the same for Wyoming coal, Godby said.

“Looking forward, I expect that electricity demand will only worsen in what is traditionally the softest season for coal demand,” he said. “If this year we fall below or only match Q2’s delivery data last year, that will be another indication of just how difficult the coal market conditions have become.”