FOUNDATION Coal and its affiliates in Central Appalachia will slash production levels and cut 60 jobs.

A Foundation Coal longwall. Courtesy Foundation Coal Holdings.

Foundation’s Kingston Resources complex is “moderating planned production” at its mines to match output with reduced coal demand and a lower level of shipments.

The company’s affiliated surface operations will also reduce production in the face of slower demand.

In eastern US, the producer operates the Paynter Branch and Pax mines under the Pioneer Mines division.

While 60 employees will receive pink slips, the company did not indicate when the workers’ last days will be, or if the layoffs will be permanent.

"We regret the need to take these actions and the resulting impacts upon the affected employees and their families,” Foundation chairman James Roberts said.

“Unfortunately, we must recognize the current imbalance between demand and supply and take appropriate measures.”

Foundation also did not reveal how much tonnage would be cut, but Roberts did say the company was “within the range anticipated in the revised shipment guidance provided on our first-quarter earnings call and do not change our expectations for full-year 2009 shipments".

Earlier this month, the third-largest US coal producer was created with the announcement that master limited partnership Alpha Natural Resources would purchase Foundation in a $US1.4 billion deal.

The all-stock transaction will give the merged company a total of 59 coal mines, 14 preparation plants and 2008 pro forma revenues of $4.2 billion.

It will retain the Alpha name and be headquartered in Abingdon, Virginia, and will be the third-largest producer in the US behind Arch Coal and Peabody Energy.

Alpha president Kevin Crutchfield said at the time that he was “very pleased” to have Foundation as a merger partner.

"It's particularly gratifying to execute on our previously stated intention to pursue transformational growth opportunities,” he said.

“I look forward not only to bringing our two organizations together through a seamless integration process, but also to pursuing additional growth opportunities."

The transaction is expected to close later this year, subject to shareholder approval. Both boards unanimously approved the terms of the definitive merger agreement.