Coal Report September 17, 2012

Coal Report 09-17-12   A West Virginia miner has died, reports the Charleston Gazette. 61-year old William Edward Mock died in a roof fall at Consol’s Blacksville No. 2 mine in Monongalia County. He is the fifth West Virginia miner to doe this year, and the fifteenth nationally. The Gazette reports the Blacksville mine was cited in a recent inspection fore 10 roof-control violations, 8 of them considered serious.

A massive coal plant in Massachusetts is up for sale with few prospects, reports the Associated Press. The Brayton Point plant in Somerset supplies electricity to as many as 1.5 million people, but it’s losing money as cheaper power from gas plants floods into the market. In Massachusetts, the electricity market is less regulated and more competitive than in many states, so if a plant loses money it’s hard to just pass that cost on to the ratepayers. The owner, Dominion, says it is selling Brayton Point to focus on states where it can make more money.

In what might signal a turnaround in the coal market, electric utilities are expected to increase their use of coal next year. Reuters news service reports that the US Energy Information Agency predicts coal-fired power generation will rise over 9% in 2013. It all has to do with price: natural gas prices have risen recently and utilities with plants that can go either way are looking to get back to coal. While the forecast covers the next year, it doesn’t necessarily mean the long-term trend towards gas is shifting. The EIA predicts that over 8% of the coal-fired capacity that existed a year ago will “go dark” by the end of 2016.

Arch Coal is idling its Wolf Run mining operation in Upshur County, West Virginia. According to Platts news service, the move is driven by lack of demand for the metallurgical coal the mine produces. There will be no layoffs; Arch said its employees would be moved to the new Leer mine in Taylor County. Both operations are deep mines; Leer is a more modern, cost-effective operation. A source in the export coal market told Platts that this sort of move will be frequent in the near future, “fasten your seatbelt, there’s gonna be a whole lot more of that happening in the coming months.”

UMWA members and retirees rallied in Charleston last week over what seems like an obscure bit of legal procedure. Patriot Coal has filed for bankruptcy and the company wants its case handled by a court in New York. Patriot has 20,000 union miners, retirees, and dependents, and they want the case heard in West Virginia, near where most of them live. The retirees fear that in bankruptcy, the company could get court permission to cut off their workers’ compensation, pensions, and medical benefits. Patriot was created when Peabody and Arch spun off their union operations into a new company; the UMWA argues that Patriot was designed to fail. They feel more confident that their concerns would be heard in West Virginia. The case is now in New York; US bankruptcy judge Shelly Chapman is expected to rule by October 5 where the case will be heard. Over the weekend, US Senator Jay Rockefeller said that any effort to take away benefits from employees and retirees would be “severely unjust.”

Coal jobs will continue to decline for a while but may rise substantially in a few years. That’s the prediction of a new West Virginia study reported in the Charleston Gazette. The reason, paradoxically, would be falling productivity. As the saying goes, the easy coal is gone; what’s left is harder to get and takes more labor per ton. If we’re talking about thermal or steam coal, the news isn’t good: buyers will just buy from more productive mines elsewhere. But when it comes to metallurgical coal, the idea is that Appalachian coal is not readily replaceable, so it will keep selling even though more and more miners are needed to produce it. Using government data, the West Virginia Center for Budget and Policy calculates that there might be 10,000 more mining jobs in Central Appalachia in 2035 than there were in 2010, even though Central Appalachian mines would produce 100 million tons less.

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