ST. LOUIS (AP) — Peabody Energy Corp. has announced plans to cut 250 corporate and regional employees and close two offices, saving the coal miner as much as $45 million per year as the industry grapples with lower prices and competition from natural gas.
St. Louis-based Peabody, the world's biggest private-sector coal producer, said Monday the layoffs largely to be carried out by the end of June amount to about one-quarter of its corporate and regional support jobs. Fifty of the positions will be eliminated at Peabody's headquarters, where the company has 425 employees.
Offices on the chopping black are in Evansville, Indiana, and Gillette, Wyoming.
Glenn Kellow, Peabody's president and chief executive, said that while the company regrets the impact of the cuts on employees, their families and the communities, the move "represents another necessary step to drive the company lower on the cost curve" and become leaner.
Peabody, which sells coal used in making steel and generating electricity to customers in more than 25 countries on six continents, also said it is assessing work shifts, scheduling and mine planning at its sites in Australia "to determine optimal production levels."
The cutbacks reflect prolonged struggles by Peabody and other major coal producers. When it announced in April that its first-quarter loss of $176.6 million was bigger than what Wall Street expected and its revenue fell short of analyst estimates, Peabody said it was cutting its annual sales estimate by 10 million tons of coal because it expects lower sales in the U.S.
Demand and prices for coal have fallen over the past few years because the low price of natural gas has caused more and more power companies to use natural gas as their energy source instead. The U.S. government is looking to cut carbon dioxide emissions, which hurt the domestic outlook for coal, and some coal-exporting countries have ramped up production, leading to fewer exports from the U.S.
Peabody expects to sell 180 million to 190 million tons of coal in the U.S. this year, and 235 million to 255 million tons overall. Both are 10 million tons below its previous estimates.
Shares of Peabody were up 21 cents, or nearly 7 percent, to $3.27 in late-morning trading Tuesday.
Information from: St. Louis Post-Dispatch, http://www.stltoday.com