Feeling the pressures of a depressed industry, the King II coal mine in Hesperus has restructured, resulting in the lay-off of seven full-time employees.
Since the beginning of the year, King II’s workforce has reduced by nearly 30 percent. GCC Energy, which owns the mine, has not filled vacant positions, and through attrition, the labor pool shrank from 128 to 102 over the year. On Wednesday, GCC laid off seven full-time miners, four temporary workers and one interagency transfer, bringing the employee count down to 90.
Wednesday’s layoffs were part of the company’s first reorganization, said Gina Nance, GCC vice president of environment and energy.
“We’ve overcome huge hurdles in the past year,” she said. “This is a fine-tuning of our business plan, meaning we’re matching our sales to our workforce.”
Nance could not provide figures on the company’s annual income but said GCC is down about 200,000 tons’ worth of sales.
“The whole industry, it’s depressed,” Nance said. “When you’re competing with other energy sources, it’s going to be hard to compete a little bit.”
In June, the mine received a Class II land-use permit from La Plata County, a feat that took years of negotiating and came with the stipulation that GCC would pay millions of dollars to improve County Road 120, which carries the full load of mine traffic to the dismay of its residents.
Nance said the road improvements are part of, but not the sole contributor, to the company’s struggles.
“The combination of low natural gas prices and the Federal Clean Power Plan have created instability in the coal industry across the country. The moratorium on Federal Coal leases created some uncertainty, and the recent limitations put on truck traffic on County Road 120 (until a $6 million upgrade can be made) have also impacted us,” according to a prepared statement provided by GCC. “These factors, coupled with adverse conditions in the construction industry, led us to realign our cost structure to match our forecasted production.”
Coal companies across the nation are seeing the impacts of federal coal reform in the shape of layoffs, revenue loss and bankruptcy.
King II qualified for an exemption from the moratorium because of its dwindling reserves and received a license from the Bureau of Land Management this summer to drill up to 23 exploratory holes.
Nance said the recent restructuring has stabilized mine operations, and the company is optimistic about the future.
“We’re trying to get sales now, and we think it will turn around for us,” she said. “It takes as little as one contract to turn it around, and we have offered everyone severance and outplacement support to help them land on their feet.”
Nance added that the laid off employees are all eligible for rehire.
jpace@durangoherald.com
