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Released October 24, 2019 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Companies owning or leasing five coal mines and three preparation plants this month announced those facilities would close due to unfavorable economic conditions. Those moves are expected to result in the loss of at least 567 jobs. They follow earlier, and more surprising, job losses in Wyoming as a major operator in the low-cost Powder River Basin said it would close two mines, putting an estimated 600 workers on the unemployment line.
These are the latest data points for an industry long in decline in the U.S. Although coal-miner employment increased slightly from its nadir of 48,700 in July 2016 to 53,400 in September 2019, according to data compiled by the St. Louis Federal Reserve Bank (St. Louis, Missouri), that upward blip follows decades of sharply falling coal mining employment.
Click on the image at right to see coal miner employment from 1985 to the present day, as tracked by the St. Louis Federal Reserve Bank.
Between 2011 and 2018, the number of coal mines in the U.S. plummeted about 49%, from 1,325 to 679, according to the U.S. Energy Information Administration (EIA) (Washington, D.C.).
Click on the image at right to see the declining number of U.S. coal mines.
King Coal and its supporters frequently blame the black rock's declining fortunes on President Barack Obama's energy rulemakings like the Clean Power Plan or subsidized renewable energy. Low-cost natural gas also is cited among the litany of headwinds buffeting coal.
Rarely mentioned is the role automation has played in transforming the business, where machines have replaced workers. But the powerful effect of automation on the industry is seen in data collected by the EIA showing the tonnage of coal mined per employee has risen dramatically over the last seven decades. In 2018, roughly 6.24 tons of coal were mined per U.S. employee-hour (including coal miners and administrative employees), a dramatic gain over the 0.72 tons mined per employee-hour in 1949.
Click on the image to see how coal mine productivity has soared since records started being kept in 1949.
"Coal mining and coal miners are part of a proud tradition where hard work was rewarded with good pay and good benefits," commented Joe Govreau, Industrial Info's vice president of research for the Metals & Minerals Industry. "Traditionally, being a coal miner was physically punishing and extremely dangerous. But as more coal is mined via machinery that can be controlled from remote locations, backbreaking labor is becoming less common. But automation is a two-edged sword, as companies increasingly are deploying machinery, not men, to mine coal, resulting in improved safety performance as well as sharp efficiency gains."
Market forces such as supply, demand, and price of competing fuels, also play a critical role in shaping coal's place in the market.
This month, Peabody Energy Corporation (NYSE:BTU) (St. Louis, Missouri) said "uneconomic mining conditions" forced it to close southern Illinois' Wildcat Hills Mine and Willow Lake Preparation Plant, resulting in the loss of about 225 jobs. The facilities, which produced about 1.4 million short tons of coal in 2018, will stop production on December 14. The company said it would try to place furloughed workers in other Midwest coal mines. In announcing the closures, Peabody said it "continues to navigate through changing U.S. conditions driven by competition with natural gas and subsidized renewables."
The week prior to the Peabody announcement, Blackhawk Mining LLC (Charlestown, West Virginia) said it would idle three coal mines and two processing facilities in West Virginia. The affected facilities include: the Washington Underground Mine; Muddy Bridge Underground Mine; Buffalo Underground Mine; Fanco Preparation Plant and Loadout; and Mingo 1 Preparation Plant and Mingo 2 Scaggs Loadout. An estimated 342 workers are slated to lose their jobs when the facilities close in early December, the company said.
The southern Illinois mines Peabody is closing produce steam coal for use by power generators. Blackhawk's mines, on the other hand, produce metallurgical coal (met coal), which is used in steelmaking. The mines Blackhawk is closing produced about 1.3 million short tons of met coal in 2018, the company said, adding "recent weakness in global coal markets, and the corresponding drop in prices to three-year lows, is the reason" for the closure of those facilities. Export prices of premium coking coal from the East Coast fell over 20% to an average of about $158 per metric ton during the third quarter of 2019, from roughly $200 per metric ton for the first half of the year, according to a report in The Wall Street Journal.
Blackhawk also is idling operations at the No. 8 Underground Mine, a contract mine in Mingo County, West Virginia.
Bill Raney, president of the West Virginia Coal Association, told a West Virginia news outlet, "When the price of the product doesn't meet what it costs to produce, then you just can't keep producing it."
Steam coal's share of the electric market had fallen from about 48% in 2008 to about 28% last year, and coal's share is projected to further decline to 25% in 2019 and 22% in 2020, the EIA said it its October Short-Term Energy Outlook. For more on the challenges facing the coal-mining and coal-fired power industries, see September 9, 2019, article - Coal and Coal-Fired Generation: From Bad to Worse.
When Blackjewel LLC (Milton, West Virginia) filed for bankruptcy this summer, it announced plans to close two Powder River Basin coal mines in Wyoming plus mines in Virginia, West Virginia and Kentucky. All told, about 1,700 workers are slated to lose their jobs. Smaller mining concerns in Indiana, Illinois and Kentucky also announced closure decisions this summer.
On October 18, Blackjewel closed on the sale of its two Powder River Basin mines, Eagle Butte and Belle Ayr, to a unit of FM Coal LLC (Jasper, Alabama), a little-known company that is an affiliate of Eagle Specialty Materials. A Blackjewel executive said the transaction would result in the reopening of the two mines. Belle Ayr and Eagle Butte reportedly are among the nation's most-productive coal mines.
In August, Arizona's Kayenta Mine shipped its last trainload of coal to the Navajo Generation Station (NGS), its only customer. NGS, the largest coal-fired power plant west of the Mississippi River with 2,250 megawatts (MW) of generating capacity, plans to close by the end of this year. Despite several years of trying to find buyers for both the power plant and the mine, none of the prospective offers penciled out. Salt River Project (SRP) (Tempe, Arizona), the plant's operator, said the closure decision was driven by low-cost gas-fired generation and renewables.
The mine closure cost an estimated 300 people their jobs. Another 450 or so are expected to lose their jobs when the power plant stops operating later this year, though SRP is trying to find jobs for workers scheduled to be displaced. The mine is owned by the Navajo Nation but operated by a unit of Peabody.
U.S. power companies retired more than 546 coal-fired power units totaling nearly 102,000 MW of generating capacity between 2010 and the first quarter of 2019, according to the EIA. By 2025, plant operators expect to retire another 17,000 MW of coal-fired capacity, shrinking the market for steam coal and putting further pressure on coal mines.
"The bottom line is that U.S. coal production is unlikely to again rise from the ashes," Howard Gruenspecht, a senior energy economist at the Massachusetts Institute of Technology Energy Initiative, wrote in The U.S. Coal Sector: Recent and continuing challenges, published in early 2019 by The Brookings Institute (Washington, D.C.). Gruenspecht, the EIA's deputy administrator from 2003-2017, added: "This outlook reflects the combined effects of stagnant domestic electricity demand growth, advances in competing generation technologies offering low or no fuel costs and attractive capital costs, the risk of future emissions mitigation as a threat to existing coal-fired generation and new investment in coal and other emissions-intensive technologies, and unfavorable export market conditions."
He added, "Productivity trends are also a key employment driver in the coal industry. Coal mine employment, which was just over 250,000 in 1979, declined throughout the 1980s and 1990s as growth in the market share of surface-mined coal and increases in mining productivity more than offset growth in coal production."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 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.
These are the latest data points for an industry long in decline in the U.S. Although coal-miner employment increased slightly from its nadir of 48,700 in July 2016 to 53,400 in September 2019, according to data compiled by the St. Louis Federal Reserve Bank (St. Louis, Missouri), that upward blip follows decades of sharply falling coal mining employment.
Click on the image at right to see coal miner employment from 1985 to the present day, as tracked by the St. Louis Federal Reserve Bank.Between 2011 and 2018, the number of coal mines in the U.S. plummeted about 49%, from 1,325 to 679, according to the U.S. Energy Information Administration (EIA) (Washington, D.C.).
Click on the image at right to see the declining number of U.S. coal mines.King Coal and its supporters frequently blame the black rock's declining fortunes on President Barack Obama's energy rulemakings like the Clean Power Plan or subsidized renewable energy. Low-cost natural gas also is cited among the litany of headwinds buffeting coal.
Rarely mentioned is the role automation has played in transforming the business, where machines have replaced workers. But the powerful effect of automation on the industry is seen in data collected by the EIA showing the tonnage of coal mined per employee has risen dramatically over the last seven decades. In 2018, roughly 6.24 tons of coal were mined per U.S. employee-hour (including coal miners and administrative employees), a dramatic gain over the 0.72 tons mined per employee-hour in 1949.
Click on the image to see how coal mine productivity has soared since records started being kept in 1949."Coal mining and coal miners are part of a proud tradition where hard work was rewarded with good pay and good benefits," commented Joe Govreau, Industrial Info's vice president of research for the Metals & Minerals Industry. "Traditionally, being a coal miner was physically punishing and extremely dangerous. But as more coal is mined via machinery that can be controlled from remote locations, backbreaking labor is becoming less common. But automation is a two-edged sword, as companies increasingly are deploying machinery, not men, to mine coal, resulting in improved safety performance as well as sharp efficiency gains."
Market forces such as supply, demand, and price of competing fuels, also play a critical role in shaping coal's place in the market.
This month, Peabody Energy Corporation (NYSE:BTU) (St. Louis, Missouri) said "uneconomic mining conditions" forced it to close southern Illinois' Wildcat Hills Mine and Willow Lake Preparation Plant, resulting in the loss of about 225 jobs. The facilities, which produced about 1.4 million short tons of coal in 2018, will stop production on December 14. The company said it would try to place furloughed workers in other Midwest coal mines. In announcing the closures, Peabody said it "continues to navigate through changing U.S. conditions driven by competition with natural gas and subsidized renewables."
The week prior to the Peabody announcement, Blackhawk Mining LLC (Charlestown, West Virginia) said it would idle three coal mines and two processing facilities in West Virginia. The affected facilities include: the Washington Underground Mine; Muddy Bridge Underground Mine; Buffalo Underground Mine; Fanco Preparation Plant and Loadout; and Mingo 1 Preparation Plant and Mingo 2 Scaggs Loadout. An estimated 342 workers are slated to lose their jobs when the facilities close in early December, the company said.
The southern Illinois mines Peabody is closing produce steam coal for use by power generators. Blackhawk's mines, on the other hand, produce metallurgical coal (met coal), which is used in steelmaking. The mines Blackhawk is closing produced about 1.3 million short tons of met coal in 2018, the company said, adding "recent weakness in global coal markets, and the corresponding drop in prices to three-year lows, is the reason" for the closure of those facilities. Export prices of premium coking coal from the East Coast fell over 20% to an average of about $158 per metric ton during the third quarter of 2019, from roughly $200 per metric ton for the first half of the year, according to a report in The Wall Street Journal.
Blackhawk also is idling operations at the No. 8 Underground Mine, a contract mine in Mingo County, West Virginia.
Bill Raney, president of the West Virginia Coal Association, told a West Virginia news outlet, "When the price of the product doesn't meet what it costs to produce, then you just can't keep producing it."
Steam coal's share of the electric market had fallen from about 48% in 2008 to about 28% last year, and coal's share is projected to further decline to 25% in 2019 and 22% in 2020, the EIA said it its October Short-Term Energy Outlook. For more on the challenges facing the coal-mining and coal-fired power industries, see September 9, 2019, article - Coal and Coal-Fired Generation: From Bad to Worse.
When Blackjewel LLC (Milton, West Virginia) filed for bankruptcy this summer, it announced plans to close two Powder River Basin coal mines in Wyoming plus mines in Virginia, West Virginia and Kentucky. All told, about 1,700 workers are slated to lose their jobs. Smaller mining concerns in Indiana, Illinois and Kentucky also announced closure decisions this summer.
On October 18, Blackjewel closed on the sale of its two Powder River Basin mines, Eagle Butte and Belle Ayr, to a unit of FM Coal LLC (Jasper, Alabama), a little-known company that is an affiliate of Eagle Specialty Materials. A Blackjewel executive said the transaction would result in the reopening of the two mines. Belle Ayr and Eagle Butte reportedly are among the nation's most-productive coal mines.
In August, Arizona's Kayenta Mine shipped its last trainload of coal to the Navajo Generation Station (NGS), its only customer. NGS, the largest coal-fired power plant west of the Mississippi River with 2,250 megawatts (MW) of generating capacity, plans to close by the end of this year. Despite several years of trying to find buyers for both the power plant and the mine, none of the prospective offers penciled out. Salt River Project (SRP) (Tempe, Arizona), the plant's operator, said the closure decision was driven by low-cost gas-fired generation and renewables.
The mine closure cost an estimated 300 people their jobs. Another 450 or so are expected to lose their jobs when the power plant stops operating later this year, though SRP is trying to find jobs for workers scheduled to be displaced. The mine is owned by the Navajo Nation but operated by a unit of Peabody.
U.S. power companies retired more than 546 coal-fired power units totaling nearly 102,000 MW of generating capacity between 2010 and the first quarter of 2019, according to the EIA. By 2025, plant operators expect to retire another 17,000 MW of coal-fired capacity, shrinking the market for steam coal and putting further pressure on coal mines.
"The bottom line is that U.S. coal production is unlikely to again rise from the ashes," Howard Gruenspecht, a senior energy economist at the Massachusetts Institute of Technology Energy Initiative, wrote in The U.S. Coal Sector: Recent and continuing challenges, published in early 2019 by The Brookings Institute (Washington, D.C.). Gruenspecht, the EIA's deputy administrator from 2003-2017, added: "This outlook reflects the combined effects of stagnant domestic electricity demand growth, advances in competing generation technologies offering low or no fuel costs and attractive capital costs, the risk of future emissions mitigation as a threat to existing coal-fired generation and new investment in coal and other emissions-intensive technologies, and unfavorable export market conditions."
He added, "Productivity trends are also a key employment driver in the coal industry. Coal mine employment, which was just over 250,000 in 1979, declined throughout the 1980s and 1990s as growth in the market share of surface-mined coal and increases in mining productivity more than offset growth in coal production."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 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.
