Major Layoffs at Oxbow Coal Mine

Oct 16, 2013

Elk Creek Mine in Somerset, Colorado
Credit Elise Thatcher/Aspen Public Radio

Two weeks ago, the coal mine near Paonia owned by billionaire Bill Koch laid off more than half of its employees. The Koch owned Oxbow Mining company hopes to expand operations again in the future and rehire some of the workers.  In the meantime the layoffs are creating hardships for a number of communities.

“It’s very sad time around the mine, you know to lose your income and lose your job is real traumatic, so it’s very painful decision for us," says Mike Ludlow, the Executive Vice President of Oxbow’s mining operations.

Ludlow was on the management team that laid off a hundred and fifty workers earlier this month. Today he is giving a tour of operations in the Elk Creek mine that are still running.  The mine is in the tiny town of Somerset and many of the workers travel from other communities.  The layoffs hit this coal country hard.  And they come less than two years after the mine owner, Oxbow Mining, was granted permission to expand the Elk Mine operations.  Still, Ludlow says says miners were laid off because of dangerous working conditions. Part of the mine caught fire twice in the last year and efforts to make it safer were unsuccessful. 

“With three mines there’s about a thousand people employed, and it’s real common to have one person working here," says Ludlow, "and another brother at another mine, or a father that had worked here—or still works here and a son. So it’s a very close knit community.”

And now dozens of miners are looking for work.  They will be hard pressed to find jobs that pay as well as Oxbow does. 

"The coal mining are wage incomes in Delta County that literally can’t be replaced," says Doug Atchley, a Delta County Commissioner. "Based on the other industries that we have.”

According to Atchley mining incomes can range seventy thousand dollars a year, or more.  When the mine announced the layoffs some workers took to a community Facebook page searching for jobs. Some posted they had found work.

“Which probably will necessitate a move, which puts pressure on the real estate market," Atchley says. "It’s a ripple effect, so we’re very concerned about that.”

The miners received severance checks, a move Oxbow officials say is rare.  Indeed the entire the coal mining sector is facing a number of challenges. Among these industry strains, according to the Colorado Mining Association, are new environmental regulations and high transportation costs for moving Colorado coal to international markets. Aspen Public Radio talked with Brad Goldstein, a spokesman for Oxbow Corporation about the industry as a whole.  He says higher costs and tighter government pollution rules did not play a role in letting go of half its workforce at Elk Creek.

“Fortunately for us that mine produces coal which is low in mercury and low in sulfur. Which is highly sought after," says Golstein.

And that, says at least one coal analyst, bodes well for mines in the near term and beyond. Andrew Moore is an editor of the energy news service, Platts.

“The long view actually is bullish, both for domestic coal consumption and for overseas coal consumption," Moore says.

The combination of high quality coal and increasing demand will likely steer Oxbow’s plans for the Elk Creek Mine.  It will take a sizeable investment to continue mining profitably. Since the fires, costly mining equipment is sealed deep below the ground and laying idle.  Estimates are that it would be as much as eighty million dollars to replace it. Still, despite the layoffs, parts of the mine are operating.

Mike Ludlow is hopeful.

“Optimistically I’d like to think that some of the employees that had been laid off would have opportunities to come back in the near future," he says.

Given the time it takes to build new machinery... and open up more sections to mining, any rehiring is likely more than a year off.

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