WV Coal Association: Hard times are here for Appalachian coal - Business, Government Legal News from throughout WV

WV Coal Association: Hard times are here for Appalachian coal industry

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In West Virginia coalfields, job layoffs were announced by the hundreds in the past few days.

Chris Hamilton, vice president of the West Virginia Coal Association, said about 2,000 jobs have been shed in the past two months. The reason, he says, is primarily a weak market and regulatory hurdles, but geologic challenges and competition from other sources of coal also are hurting the state's production.

Consol announced more than 300 layoffs June 29. That announcement came on the heels of announcements by Arch Coal and Alpha Natural Resources in the past 10 days that the two companies were shutting down other mines in West Virginia. Each of those announcements involved approximately 100 jobs.

"There has been a number of layoffs around the valley, around the state, probably on the order of magnitude, all told, over 2,000 mining jobs that have been removed from the economy and from our industry," Hamilton said. "It's hit a number of companies, there's been nobody saved from the situation we find ourselves in with a depressed market and continued lower pricing, as well as environmental regulation taking hold at the same time."

Hamilton said the Coal Association is taking a closer look at the types of mines that are being closed. He said layoffs predominantly are happening at mines producing steam coal. Metallurgical coal producers are facing fewer market challenges.

Coal suffers from a number of problems. One of the most difficult for the industry to face is a market that is increasingly favoring cheap and abundant natural gas for power production.

"We have a depressed market," Hamilton said. "We just came out of an unseasonably mild winter, so there's a lot of coal underground. We're also facing fierce competition with the limited markets of today. Coupled with that, we just have a whole barrage of environmental regulations that is becoming more and more mature and impacting operations on the ground."

Regulatory challenges for the coal industry also are multi-faceted. Utility-level regulations that affect limitations on coal burning, Hamilton said, are likely to have longer effects.

Utility companies, he said, are looking at the burden regulatory agencies are putting on burning coal and using that information in deciding what's best for their own companies. A lot of them are switching fuels.

"Some of those decisions may not be so easily turned around once the economy picks back up or with the change of the current administration," Hamilton said.

Then there's the problem with even getting coal out of the ground. Hamilton said between 1,500 and 2,000 mining permits are hanging in the balance while the administration conducts an essential "permit moratorium."

"When you have that situation you can move as sequentially as you ordinarily would to acquire the degree of proficiency and productivity from your operations," Hamilton said. "Your mining costs go up substantially, and you find yourself mining in areas or doing work in areas that you ordinarily wouldn't be, and you can't benefit from the economy of scales there."

Hamilton said the regulations, particularly on top of current energy markets will likely create a "significant downsizing" of the industry as a whole.

"Killing the industry is probably a little strong, but it will shape and cause this industry to reconfigure itself dramatically," Hamilton said. "There's no question about that."

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