CHARLESTON, W. Va. -- Anemic spending has begun spreading to the usually recession-resistant coal industry.

Producers have slashed production, idled mines and cut jobs less than a year after soaring coal prices left the industry struggling to find enough workers.

Two more big U.S. producers -- Arch Coal Inc. and Foundation Coal Holdings -- announced cutbacks Friday.

Already, major producers such as Tulsa-based Alliance Resource Partners, Peabody Energy, Consol Energy, Alpha Natural Resources and Patriot Coal have begun to retrench.

At least 1,310 jobs have been trimmed at various Appalachian mines. Arch says it does not expect any layoffs, though it has trimmed up to 14 million tons of planned production in 2009.

Plummeting demand for steel from automakers, the construction industry and others has slashed demand and prices for metallurgical- grade coal used to fire blast furnaces. Now mine operators have begun scaling back steam coal production in response to ebbing demand from electric utilities.

Arch CEO Steven Leer cited the fourth-quarter freeze in the metallurgical markets. Steam coal may decline perhaps 1 percent based on previous recessions, he said.

"It's not necessarily recession-proof, but it is recession- resistant," Leer said. "People still heat their homes."

Production could come in 30 million to 40 million tons above demand, coal executives say.

"I think we'll see a major reduction in overall global and domestic production as a result," Leer said.

Arch officials are projecting the St. Louis-based company will cut production to a range of 120 million to 127 million tons this year, compared with 134 million tons in 2008. Consol announced plans Thursday to keep 2009 production flat at 65 million tons. Among other things, it's idling a Pennsylvania metallurgical-coal mine and slowing production at a Virginia mine.

St. Louis-based Peabody, the world's largest private-sector coal producer, recently lowered its 2009 production outlook to a range of 190 million to 195 million tons in the U.S., and 22 million to 24 million tons in Australia.

"From Arch and other companies, we get the view that the market will be flat this year," National Mining Association spokesman Luke Popovich said. "Pricing power for companies without contracts will clearly be weaker, but nobody sees a big drop similar to the metals side of our industry."

Metals mine operators have slashed tens of thousands of jobs across the world, postponed and canceled projects and shuttered mines as consumers have cut spending on cars, jewelry and housing. Still, contracts signed before prices fell will certainly provide some cushion for producers and major U.S. coal operators have largely predicted stronger profits this year.

Consol sold 95 percent of planned 2009 production at an average of $61.56 a ton and expects its per ton margin to widen to $20, from $17.41 last year.

Alliance Resource Partners, likewise, has sold more than 90 percent of its planned production for the year at prices that allow the company to predict revenue will rise between 22 percent and 30 percent.

"They're keeping cash -- managing this downturn, not panicked by it," Popovich said. SUBHEAD: Coal industry trims production as manufacturing slumps.

Originally published by TIM HUBER Associated Press.

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