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Almost half of the Dugout Canyon coal mine's workforce was laid off Thursday, when Arch Coal Inc.'s Utah subsidiary announced it was reducing production at the mine outside of Wellington in Carbon County.

The subsidiary, Canyon Fuel Co., said 114 jobs were being eliminated because of "continuing weakness in coal demand in the region." The company plans to halt Dugout Canyon's longwall mining operations, the main source of its coal production, in the first half of 2012 when the voracious machine completes excavating the section of Book Cliffs seam where it is now working.

"We regret the need to take this difficult action," said Paul Lang, CanyonFuel's executive vice president of operations, calling it a market-driven decision. "We hope to retain most, if not all, of these valued members of the Canyon Fuel team — and plan to offer positions to the affected employees at operations within Arch's national network of mines."

Laid-off employees will receive 60 days of wages and benefits in addition to a severance package, he said, adding that relocation assistance will be provided to Dugout Canyon employees who fill open positions at company operations in other states.

According to federal Mine Safety and Health Administration records, Canyon Fuel is the state's largest coal operator. Between its Dugout Canyon, Sufco and Skyline mines, it produced 11.7 million tons of coal in 2010 and employed, on average, about 900 Utahns.

Dugout Canyon was the smallest of the company's three mines. At the end of September, MSHA data showed that Dugout Canyon had 230 employees, 196 of whom worked underground. Its production had slipped from 3.3 million tons in 2009 to 2.2 million tons last year, but the mine was on track to yield about 2.6 million tons this year.

"Although we are reducing production at Dugout Canyon at this time, we believe there may be additional opportunities for Utah coal in the future — both here at home and in the global marketplace," said Lang. "The next potential longwall panel at Dugout Canyon has been developed and any decision on future production will be based on what market conditions allow."

St. Louis-based Arch Coal is one of the world's largest coal producers, selling 179 million tons in 2010 — 17.9 million from its Western bituminous region that includes Utah and Colorado. It is a major operator in Wyoming's prodigious Powder River Basin open-pit mining complex and is looking to help develop a West Coast port to export its Western coal to Asia.

mikeg@sltrib.comTwitter: @sltribmikeg

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