Whitesburg KY

Rhino says layoffs are coming

A company with operations in the Deane area of Letcher County says it is temporarily idling most of its mines in central Appalachia.

Rhino Resource Partners says it gave 60-day notices to 192 employees that they may be laid off.

Company President Joe Funk says it’s happening because of “persistent weakness in the coal markets.”

A statement from the company did not say what mines would be idled. The company has two to three surface mines and one underground mine at the Tug River, Rob Fork and Deane mining complexes in eastern Kentucky and West Virginia. The three mines have about 80 million tons of reserves including the historic Elk Horn Coal Company reserves in Letcher County.

The company says the final number of employees that will be affected will be based on future market conditions in central Appalachia.

“We are taking difficult actions that are necessary due to the persistent weakness in the coal markets,” Funk said in the statement. “Demand for Central Appalachia steam coal has fallen to unprecedented levels as utilities choose low-priced natural gas for electricity generation and other coal-fired capacity is shuttered due to governmental regulations. Met coal prices remain at depressed levels due to persistent worldwide oversupply and weak demand from China.”

“Future market conditions will determine the duration that our Central Appalachia operations remain idle,” Funk said.

In 2011, Rhino acquired Elk Horn Coal Company for approximately $120 million in cash with no assumption of debt.

Elk Horn, which has a long history in Letcher County, is a coal leasing company with approximately 156,000 acres of mineral owned in eastern Kentucky, some of it in the Neon area. Elk Horn Coal was incorporated in 1915, and coal has been mined from its properties for almost 100 years. The company built the Letcher County towns of Fleming, Hemphill and Haymond where it operated large underground mines in the Elkhorn No. 3 seam.

At the time of the acquisition, Rhino said the purchase of Elk Horn would broaden its sources of income by providing a stream of royalty income without the assumption of additional operating risk.

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