“The decision to close the Whitetail mine, an adjacent coal preparation plant and other ancillary facilities resulted from adverse geological conditions and regulatory requirements that rendered the coal seam unmineable at this location,” company officials said on Wednesday.

“The adverse conditions include deteriorating roof conditions despite Kingwood's deployment of all feasible roof support systems.”

The company expects the mine will produce a total 1.1Mt of coal this year, compared with 1.5Mt in 2007.

Its 329 employees have been given 60-day notices under the Worker Adjustment and Retraining Notification Act, or WARN, and management will pay workers their regular rate of pay in lieu of work through to February 9 next year if work is not available and if individuals do not accept other employment.

The mine has been under heavy watch for some time, particularly after a methane ignition in early November and a roof fall just one week later.

Two of the four production sections at the operation had been under closure orders by the US Mine Safety and Health Administration as well as the West Virginia Office of Miners' Health Safety.

Kingwood Mining president Frank Matras said the company will do whatever it can to “look after our people” that have served the company well throughout such adverse conditions.

"To express our gratitude, we're voluntarily giving all employees a severance pay package on top of the benefits, bonuses and other payments they're due."

Matras added that everyone on the payroll will be considered for openings at any of Alpha’s other 60 operations and 10 preparation plants.

"In addition, state employment officials will assist our people with finding work and we'll do our best to identify employment opportunities with other coal producers in the area," he said.

Alpha president Kevin Crutchfield concurred: "It's been an incredibly difficult decision for all involved, and we exhausted all viable options to keep the mine going, but regrettably Kingwood is being forced to close due to conditions outside of its control."

Alpha adjusts outlook

In related news, the master limited partnership said it has updated its production and financial guidance for the full year in the face of several factors, but particularly a deteriorating steel market.

“Recent efforts by steel producers to match production capacity to declining demand for steel products have prompted them to reduce their raw material requirements,” officials said on Wednesday.

This has resulted in those customers seeking delays in their coal deliveries. Because of that, Alpha said it estimated fourth-quarter met coal shipments will drop by about 500,000 tons.

“The overall deterioration of the steel markets has in one instance led a customer to seek to reopen 2009 contract negotiations,” the company added.

“Alpha believes the outlook for metallurgical coal sales shipments and pricing will remain uncertain until such time as the financial markets begin improving and economic activity shows tangible signs of recovery.”

ANR said it expects to be significantly impacted by the Whitetail Kittanning closure, which will result in an estimated $US35 million pre-tax charge, not including lost production.

Additionally, about $60 million in net proceeds will be impacted due to the November termination of its merger with Cliffs Natural Resources.

An initial estimate in late July for produced and processed production was 24.5-25Mt.

Purchased coal tons has also dropped primarily due to the mine closure, and is now 4.6-4.9Mt versus an initial estimate of 5-5.5Mt.

The company also said its revenues and net income will see bruising, with revenues now anticipated at $2.2-2.4 billion compared to $2-2.6 billion.

Net income, previously estimated to be $230-270 million, is now expected to be $175-185 million.

"Companies that maintain strong balance sheets and use a disciplined approach to capital investments will find opportunities in this environment," Alpha chief executive officer Mike Quillen said.

"Over the last 30 years we've all seen what effect overproducing has on an industry in a downturn, particularly when end customers are rationalizing their own production.

“In this type of environment it's an advantage to be able to respond quickly and decisively to evolving conditions [and] our primary focus, as always, will be to sustain our margins and preserve positive cash flow."