Negotiators for Foundation Coal Holdings and the mine workers' union held talks on Tuesday in an attempt to head off a strike at three Foundation mines set for Wednesday. "Negotiations are continuing," said Phil Smith, spokesman for the United Mine Workers of America. He declined to characterise the discussions or predict their outcome.
There was no immediate comment from Foundation Coal on the discussions to reach new labour contracts at the three mines. The strike, at the company's Cumberland and Emerald mines in Waynesburg, Pennsylvania and the Wabash mine in Keensburg, Illinois, is set to start early on Wednesday morning. It would be the first major strike of US coal mines since 1994.
The sticking point is Wabash, a mine that lost $26 million last year. The company insists all three mines should be treated as separate entities with their own collective bargaining agreements with the UNWA. The union, meanwhile, wants to sign deals with all three mines under its umbrella National Agreement.
In another development on Tuesday, Matrix Investment Research lowered its investment rating for Foundation Coal from "buy" to "sell," saying the coal producer is being hurt by increasing costs related to labour, equipment repairs, contractor services and materials.
Increasing costs and lower average selling prices for coal are reducing margins for the company, Matrix said in a research note. The downgrade follows similar moves by two investment houses last month, after Foundation reported a fourth-quarter net loss.
Raymond James cut the company's rating to "market perform" from "outperform" and Credit Suisse cut Foundation Coal's share price target to $35 from $42. In afternoon trading on the New York Stock Exchange, Foundation's stock was down 42 cents, or 1.22 percent, at $34.07.
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