Coal Report October 1, 2012

Coal Report 10-01-12 A Kentucky miner has died in a Tennessee mine, reports WBIR-TV in Knoxville. Jeremy Perkins of Harlan County reportedly died last week in a roof fall at a KopperGlo mine near Clairfield in Claiborne County.

The new coal plant at Virginia City in Wise County was officially dedicated last week. The Coalfield Progress reports that speakers at the event gave credit to a spirit of cooperation among local and state officials. The facility—officially called the Virginia City Hybrid Energy Center—has been producing power since July. Virginia Governor Bob McDonnell noted the facility will employ 85 workers as well as affecting 350 jobs in mining. Board of Supervisors chairman Bob Adkins noted the company will pay $6 million in property tax to Wise County and the town of St. Paul. Speakers also praised the plant for being clean, both in terms of its combustion technology and for being able to burn coal wastes that now leach pollutants into the streams.

A proposed plant that would turn coal into gas highlights the tough economics facing coal these days. Six years ago, the state of Indiana agreed to buy coal gas from a new plant that is to be built in southern Indiana. The Indianapolis Star reports it looked like a good deal at the time: $6.60 per million BTUs, at a time when natural gas cost $10 for the same energy. Today gas is going for $3 per million BTU and the coal plan is drawing a lot of criticism. Opponents say the plant would end up costing ratepayers a billion dollars extra. Supporters say the price of natural gas will rise, making the coal plant competitive, and anyway the plant will create coal jobs. Indiana’s governor, the popular Mitch Daniels, is strongly behind the plant. But he’s leaving office and neither of the two men running to succeed him has taken a stand on the issue.

“China sneezes, Appalachian coal miners get the flu.” That’s how the Wall Street Journal put it in reporting a big slowdown in Chinese steelmaking. Coal producers like Alpha Natural Resources have looked to metallurgical coal as the sector that would keep the industry afloat while natural gas is wrecking the market for steam coal. But Chinese steel production is way down and many say it will be a long time coming back. European steel production is off as well. As a result of lower demand, the price of met coal has slipped by a third, to less than $200 a ton, according to the internet financial site Motley Fool. The financial website Seeking Alpha expressed the same concern for met coal producers. The site is recommending investors stay away from coal stocks like Alpha Natural Resources and Walter Energy because these companies are betting the farm on met coal. The Seeking Alpha people predict that natural gas prices will eventually rise and steam coal will once again be viable; but they say this will take a while to play out..

A 60-year old coal plant in Alexandria, Virginia, will close soon, according to the Washington Post. The GenOn plant was built in 1949 and has drawn complaints from local residents for many years. In the Carolinas, Duke Energy is closing two coal plants, reports the Associated Press.  The Robinson Unit 1 plant in South Carolina dates to 1960; the Cape Fear plant in North Carolina has been operating since 1923.

Operators of the Crandall Canyon mine in Utah will pay over a million dollars in a settlement of safety citations from the government, reports the Salt Lake Tribune. A cave-in at the mine claimed six lives in 2007; two days later three rescuers were killed in a further collapse. The mine owner, Bob Murray of Murray Energy, insisted that an earthquake had caused the tragedy, but government investigators instead blamed it on faulty roof control and retreat mining. The company agreed to pay the fine without admitting that its violations caused the tragedy. This angered some survivors of the dead miners. The newspaper reports they are critical of the company for violating safety laws and of MSHA, for letting the company get away with it until it was too late.

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