NEW YORK—Union-represented workers went on strike at three Foundation Coal Holdings Inc. mines in Pennsylvania and Illinois Wednesday in the first major strike against the coal mining industry in 13 years.
The company immediately responded by announcing it would permanently shut one of the mines—Wabash, in southern Illinois—but left open the possibility of talks with the union over the mine's future.
However, no new talks were scheduled for Wednesday to try and resolve the dispute over new labor contracts at the three affected mines, which employ roughly 1,250 union workers.
Meanwhile, analysts said that unless the strike was protracted, it was unlikely to have a big short-term effect on shipments to power plants. But, if it lasted more than few days, it could boost coal prices.
Wall Street appeared unconcerned and Foundation Coal stock rose 80 cents, or 2.35 percent, to $34.84 in afternoon trading on the New York Stock Exchange.
Negotiators from Foundation Coal and the United Mine Workers of America had met at a secret location in Pennsylvania Tuesday but failed to make a breakthrough by the midnight strike deadline.
"We went on strike on 12:01 (EDT) this morning," UMWA spokesman Phil Smith told Reuters. "We're prepared to go as long as it takes."
Smith said the union remained willing to negotiate, adding it has a $16 million strike fund to compensate members.
The work stoppage, the first major strike at a U.S. coal mine since 1994, hit the Cumberland and Emerald mines in Waynesburg, Pennsylvania and Wabash in Keensburg, Illinois, which together sold 15.4 million tons of coal in 2005.
Wabash Is Sticking Point
The sticking point in talks has been Wabash, which lost $26 million last year. The company has said the three mines must be treated as separate units with separate contracts, while the UMWA wants the three mines to sign an umbrella contract under its national agreement.
"Collective bargaining...has not resulted in a mutually acceptable new labor contract," said Linthicum Heights, Maryland-based Foundation, which operates 14 mines and produces approximately 72 million tons of coal per year.
It said it would shut Wabash down and remove most underground mining machinery and other equipment. After that, the open slopes and shafts will be sealed, water pumping and ventilation will be discontinued, and all active and inactive areas of the underground works will be abandoned.
"The decision to close a mine, particularly one as long-lived as Wabash, is never easy," said Jeffrey Kukura, president of the subsidiary that operates the mine.
"Wabash remains willing to negotiate with the UMWA on the effects of the mine's closure on the hourly work force."
Analysts said the strike was likely to have little immediate effect on coal supplies, but it could give a boost to coal prices if it is prolonged.
"The markets should react positively to the strike, especially in Northern Appalachia, where Emerald and Cumberland represent roughly 10 percent of all production," said Ian Synnott, an analyst with Natexis Bleichroeder.
He noted that Foundation has enough inventories at its mines to continue shipping in the short-term.
"Thus, a strike would have to last for more than a few days to have a meaningful impact on Northern Appalachian prices for utility buyers," Synnott wrote in a note.
"It would appear that an immediate, profound impact on shipments is unlikely," said Jim Thompson, editor of Coal & Energy Price Report, an industry newsletter.
With mining companies cutting some production because of spiraling costs and power plant operators allowing stockpiles to decline somewhat, coal prices have started to climb again.
According to Coal & Energy Price Report, a ton of eastern coal that sold for $39.42 in January, is now going for $42.68. By comparison, it was selling for nearly $60 a ton a year ago.
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