Not Fake News: New Coal Mines Opening in U.S., Just Not Very Big Ones

Researched by Industrial Info Resources (Sugar Land, Texas)--News media outlets in Pennsylvania have been speculating whether President Donald Trump will find the time to attend the grand opening this week of Corsa Coal Corporation's (Canon, Pennsylvania) new Acosta Deep Mine in Somerset County. During his announcement on Thursday that the U.S. will withdraw from the Paris Climate Accord, Trump said he was asked to go to a "big opening of a brand new mine."

While Trump did not specify the mine, metallurgical coal producer Corsa Corporation confirmed it asked the president to attend its June 8 opening of the Acosta mine, according to CNNMoney.

In blasting the Paris Climate Accord, Trump said that according to one study, compliance with the climate agreement would cut U.S. coal production 86% by 2040. He added: "And I happen to love the coal miners..."

Trump went on to say the climate agreement effectively blocks the development of "clean coal" in America, adding that new mines were opening up in Pennsylvania, Ohio and West Virginia.

"A big opening of a brand new mine. It's unheard of. For many, many years that hasn't happened. They asked me if I'd go. I'm going to try," Trump said.

With a total estimated investment value of $11 million, the underground Acosta mine is estimated to be able to produce 375,000 tons per year of metallurgical coal once operations fully ramp up by the end of this year. It will employ an estimated 70 to 100 workers, according to news media reports. For more information, see Industrial Info's project report.

The project received help from the state of Pennsylvania. In September 2016, Corsa was notified that it was awarded $3 million under the Pennsylvania Redevelopment Assistance Capital Program to develop the mine.

As a producer of metallurgical coal (which is used to make coke used by steel producers), versus thermal coal (which is used primarily by power plants), Corsa said that it has benefited from current market conditions. Metallurgical coal sales volumes increased 22% in the first quarter of 2017 as compared to the fourth quarter of 2016, and 176% compared with the first quarter of 2016, the company reported, marking the fourth consecutive quarter of 20% or greater growth in metallurgical coal sales volumes. The company expects 2017 metallurgical sales volumes to grow by more than 100% compared with 2016 levels.

Competing Chinese coal producers are likely to reduce coal production in order to sustain prices, Corsa said in its earnings release. Also, the effects of Cyclone Debbie, which hammered Australia (a major metallurgical coal producer) in March, pushed spot prices up by over 200% at highpoints in the first quarter and early parts of the second quarter, the company said. Finally, strong year-over-year growth in global steel production, a significant change from 2015 and 2016 steel production levels, has increased coking coal demand and also has supported coal prices. For related information, see May 26, 2017, article - Steel Manufacturers Increase Capital Spending in 2017.

In January, Corsa Chief Executive Officer George Dethlefsen said, "As metallurgical coal prices have surged over the past six months, we have positioned the company to significantly increase metallurgical coals sales volumes. This increase will come from the development of the Acosta Deep Mine, increased work hours at our Casselman and Quecreek mines, and increased purchased coal activities. Additionally, we are evaluating other permitted mines within our portfolio as we look to increase capacity utilization at our preparation plants."

Industrial Info is tracking six active Corsa Coal projects worth $102 million, all but one of them in Pennsylvania. This includes a $10 million coal preparation plant restart project at Central City, Pennsylvania, which kicked off in January, 2017, with completion at the end of May. The 425,000-ton-per-hour plant was shuttered in September, 2015. For more information, see Industrial Info's project report.

Industrial Info is tracking other new mine developments that are scheduled for completion this year across the U.S., including RAMACO Resources Incorporated's (NASDAQ:METC) (Lexington, Kentucky) $70 million Elk Creek mine restart and expansion and preparation plant addition in Emmet, West Virginia. For more information, see Industrial Info's project report.

But these developments do not herald a new golden age for the U.S. Coal Industry, according to Joseph Govreau, vice president Metals & Minerals Industry for Industrial Info.

"The few mines currently under construction in the U.S. does not indicate that coal is making some huge comeback," Govreau said. "These are small projects which have been in the works for years to replace or take advantage of niche markets in some of the regions most devastated by the decline in coal demand in recent years. "

Trump has promised to restore coal industry jobs in the U.S., but just last week, the Energy Information Administration (EIA) noted that the U.S. electric power sector consumed 677 million short tons of coal in 2016, the lowest amount since 1984. Electric power sector coal consumption accounted for more than 93% of all coal consumed in the U.S. Electric power sector coal consumption in 2016 was 35% lower than in 2008, when U.S. coal production reached its highest level.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.