Coal Jobs Get a Boost—From Exports

Via The Wall Street Journal:

Miners in Indiana and other states are getting a small lift from global markets: American companies are shipping more coal to Europe and Asia, helping to stop the yearslong drop in the number of U.S. mining jobs.

The latest job increase runs counter to the long-term decline in coal used to generate electricity in the U.S., as coal-fired power plants are closed in favor of plants that burn cheap, abundant and cleaner natural gas.

Exports of U.S. thermal coal used by utilities rose 117% to 42 million tons last year. That more than offset the 11-million-ton decline in coal used at U.S. power plants, which fell to 667.5 million tons last year, from 678.6 million tons in 2016. Coal accounted for 30% of U.S. electricity generation in 2016, compared with nearly 34% for natural gas.

The stronger export market is translating into a bump in coal-mining jobs. Last year, coal companies added about 1,200 jobs, a trickle compared with the 60,000 workers who lost mining jobs between 2011 and 2016.

Coal producer Alliance Resource Partners LPplans to reopen an underground mine in rural Gibson County, Ind. that the company shut in 2015. The mine employed 417 workers in late 2014.

“We are seeing actual coal-fired generation power plants being built in other countries,” Alliance’s CEO Joe Craft told analysts recently. “So we’re expanding.”

The export opportunities come from a tightening of global supply, attractive pricing in Western Europe and greater coal use in developing countries like India, where imports of U.S. thermal coal jumped to 6.8 million metric tons last year, from 2.4 million metric tons a year earlier.

By contrast, the loosening of environmental rules by the Trump administration, while welcomed by the coal industry for boosting confidence, has had little direct effect on domestic coal usage or exports, industry experts say.

Mines in the Illinois coal basin, which includes parts of Illinois, Indiana and western Kentucky, are so far benefiting the most for several reasons. The mines there tend to be lower-cost operations than in more heavily mined areas in Appalachia.

Mining companies in the Midwest also can ship coal by river and export it through the Gulf of Mexico, while ports on the East Coast are often congested and politicians and environmental groups have blocked coal shipments from the West Coast.

One major greenfield coal project—the Poplar Grove mine—is under construction in western Kentucky and expected to begin shipping coal in the fall.

Kelly Thurman, judge executive of McLean County, Ky., said he is looking forward to the jobs as well as added coal severance tax revenue based on the value of coal that is mined. The county used revenue from another coal mine that opened within the past two years to pay for a new $120,000 ambulance and to pay for part of a new fire station and a new water system.

“We’re one of the few spots that is really experiencing any growth,” Mr. Thurman said. “It has tremendous potential for us as a county government.”

The Poplar Grove mine will ship just under half of its production to a Kentucky power plant, but Paringa Resources Ltd.’s CEO, Grant Quasha, said the company will look at export opportunities. “It has been very positive to have that increase in demand from the international markets,” he said.

Other companies say they also expect exports for thermal coal to remain strong in 2018. Exports of metallurgical coal used to make steel were up 35% last year, buoyed by an improving global economy.

“Both in thermal and metallurgical, the export market is really the most interesting and really the only game in town where there’s any obvious growth,” said Paul Forward, an analyst with Stifel.

The number of coal miners rose to 83,840 last year, from 81,879 a year earlier, according to the Mine Safety and Health Administration. The figures include contract miners as well as direct employees at companies.

The latest mine openings are likely to be partly offset by the expected closure of a few mines this year, including an underground coal mine employing 370 miners in Greene County, Pa., south of Pittsburgh.

Murray Energy, the largest underground coal-mining company in the U.S., said it would export more coal this year, about 22.5 million tons, compared with 15 million tons last year.

“The world needs the coal, and we have seen the growth,” said Chief Executive Robert Murray, a vocal supporter and financial backer of President Donald Trump. “It’s not just a matter of hiring people. It’s a matter of keeping our mines alive right now.”

See the article here.