Once the operator of several steam coal surface mines in Alabama, Centennial has seen demand decrease with the implementation earlier this year of the Environmental Protection Agency’s (EPA) new Mercury and Air Toxics Standards (MATS) rule.
“These factors, along with further deterioration of coal prices and declining demand, would have led to more substantial cash loss expectations than previously anticipated had Centennial continued to operate,” NACCO said in its second-quarter earnings report. “As a result, management recommended and the board of directors approved permanently discontinuing operations at Centennial by the end of 2015.”
NACCO expects to incur estimated pre-tax charges of $500,000 to $1 million for severance and other employee benefit costs during the second half of this year as it substantially reduces employment levels at Centennial during the remainder of 2015. The company also expects to recognize up to $15 million for administrative and other costs associated with mine reclamation that otherwise would have been delayed until the future had the company continued to produce coal at Centennial. Most of these charges are expected to be recognized before the end of September.
In the first half of 2015, Centennial’s Poplar Springs and Fishtrap mines were its largest producers in Alabama, together accounting for more than 270,000 tons of output.