SunCoke Energy To Scale Back Its Coal Mining Business, To Cut 175 Jobs

(RTTNews) - SunCoke Energy, Inc. (SXC) Monday said it is executing a phased plan to scale back its Coal Mining business.

The initial actions include immediately idling some mines to reduce coal production from 1.1 million annual tons to about 500 thousand annual tons of mid-vol coal and eliminating around 175 positions.

In the short term, the firm expects to continue to mine about 500 thousand annual tons as it pursues a sale or explores other alternatives. The firm also plans to reduce operations at its coal preparation plant by 50 percent to further reduce costs.

If the firm is ultimately unsuccessful in selling the Coal Mining business and mining mid-vol coal becomes less economic than procuring from third-party sources, it may decide to idle the remaining mines, demolish the preparation plant and purchase all Jewell Coke coal requirements from third-parties.

The anticipated impact to Jewell Coke of purchasing 100 percent third-party coal is estimated to be around $20 million annually, primarily due to incremental coal transportation and material handling costs. This is about $20 million favorable to the anticipated cash loss of continuing to operate the Coal Mining business absent any wind down actions.

The company expects to incur one-time cash costs of $25 million to $35 million related to the plans to downsize the coal operations.

Unrelated to the coal downsizing plans, the firm now estimates that due to anticipated changes in discount rates and claim approval rates its incremental black lung charge in the fourth quarter will be about $15 million, compared to the original estimate of $8 million.