Coal Mine Closures & Layoffs Hitting Kentucky Hard

Unprecedented pressures on the U.S. coal industry in Central Appalachian coalfields are seriously hurting counties in eastern Kentucky.  While the coal industry overall is losing market share to abundant natural gas, mines in Central Appalachia have become increasingly uneconomical. Natural gas is cheaper, and so is coal mined in two other big coal basins centered in Wyoming and Illinois.

 

A Wall Street Journal analysis of Mine Safety and Health Administration (MSHA) data reveals that the picture is bleakest across a swath of 26 counties in Kentucky's eastern coalfields.  The number of coal-mining and related jobs in the region remained fairly steady between 2000 through 2011. Since 2011, the area has seen an unrelenting decline and state officials say there are now fewer miners working in Kentucky than any other time in records dating to the 1920s.

 

 

The state's eastern coalfields had 161 active mines in the second quarter of this year, down from an average of 256 active mines for the four quarters of 2011. There were 22 mines with coal production in the second quarter of this year, down from 44 at the beginning of 2011, according to the MSHA data.

 

At the same time, competition among mines has heated up. It costs utilities about 40% more to generate the same amount of electricity using the region's coal compared with coal from Wyoming. Coal from Wyoming doesn't generate as much electricity per ton and costs more to transport. Still, it is a better deal for utilities because the costs to mine coal from seams 60-feet thick are far less.

 

In Central Appalachia, the region's coal seams are thinner, and so are mining companies' profit margins. It typically costs $60 to $70 to extract a ton of coal there, while the current price for coal from the region used by utilities, known as thermal coal, is under $65 a ton.

 

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Even West Virginia and Virginia have some advantages over eastern Kentucky. They possess higher grades of coal, including more reserves of metallurgical coal used in steelmaking that currently sell for about $150 a ton.

 

Since January, the Eastern Kentucky Concentrated Employment Program, the 23-county agency, has used funds from a two-year $5.2 million grant from the U.S. Labor Department to retrain 407 unemployed miners. The program has so far helped another 430 find new jobs in manufacturing, construction and health care.

Many unemployed miners blame President Obama and the Environmental Protection Agency for their plight. They cited a series of regulations to tighten emissions rules for coal-burning power plants, which they believe amounts to what has popularly been called a "war on coal."

Most coal industry executives believe the stepped-up regulations have exacerbated a market depression brought about by new fracking technologies that have revolutionized natural gas drilling and made it possible to tap massive reservoirs of gas from deep shale layers.

Coal accounted for 39% of U.S. electricity generation through August of this year, compared to 27% for natural gas. In 2003, coal powered 51% of generation, compared to 17% for natural gas.

Utilities have frequently cited new emissions standards among reasons for closing aging coal-fired power plants. Roughly 9% of coal-fired capacity is slated for closure between 2013 and 2018, according to the EIA.

Alpha, the nation's third-largest coal operator by production and the biggest in Central Appalachia, has laid off 594 workers at Kentucky mines and related coal facilities since January 2012. It now operates 10 underground mines in the state, down from 23 underground and six surface mines in 2011. It also shut four facilities that process coal.  (WSJ, 11/26/2013)