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BLUEFIELD — Despite the national and global economic forces that are having a huge impact on the nation, some coal industry experts who have followed coal’s fortunes through several boom and bust cycles, feel that well-managed coal companies will weather the economic storms on the near and long-term horizons.

“The challenges ahead are pretty vivid, and it will be difficult to sustain the level of 150 million tons of coal production next year, but it’s important that we focus our research on coal extraction as well as coal use in the near-term,” Bill Raney, president of the West Virginia Coal Association said.

“The state of West Virginia is ground zero in terms of coal extraction, and while the coal reserves are more challenging to get to, we have the best coal miners, and the best-run coal companies in the world,” Raney said. “The companies like Alpha Natural Resources, Patriot Coal, Consol and others have mature management personnel with 30-40 years of experience in surviving the boom and bust coal industry cycles. They are going to do everything they can to sustain the coal industry through this time.”

Raney said that the state’s coal industry isn’t looking for a bailout like Congress gave to the financial markets and automobile industry. “Look at what has happened in the last two months,” Raney said. “The coal industry isn’t asking for anything. Back during the Carter Administration, there was a lot of talk about energy dependence, but the new term that has emerged is energy security,” Raney said.

“With more than 50 percent of the energy used in the nation coming from coal, you would think that everyone would pull together,” Raney said. “If we have a problem, let’s sit down together, resolve it and move forward. We have a group of the most professional, most highly-trained, skilled coal miners in the world,” Raney said.

Raney said the industry is facing multi-faceted challenges including the erosion of some international steel-making customers, people using less energy due to economic uncertainties and diversion of some metallurgical coal to steam coal markets. “West Virginia is one of only six states in the nation that is operating from a budget surplus at the start of the year,” Raney said, adding that the state’s coal industry has contributed to that strength.

Much of southern West Virginia and southwestern Virginia’s coal is metallurgical coal that is used in the steel-making process, and coal produced from area mines has been sold on the export market for 100 years or more. As a result, the coal industry has a long history of international ups and downs.

“The cold winds of the recession have begun to reach toward the coal industry,” Bill Reid, managing editor/publisher of “Coal News” wrote in an editorial in his publication’s January edition. “The market for metallurgical coal has softened considerably, while the market for steam coal is more difficult to predict.”

During a telephone interview from his Bluefield office, Reid said that some economic research firms are predicting that metallurgical coal prices “may drop to about half-way of where they have been,” and said that steel production could be off “more than 4 percent.” However, like Raney, Reid said the management of the region’s coal companies has taken steps to address the challenges.

“Companies like Alpha have geared up to meet the challenges,” Reid said. “Most of the senior executives of our local companies have been through this kind of situation before. Certainly, coal is less effected by the recession than some other industries. With projects like the coal to liquids plant in Mingo County and the carbon sequestration project in Southwest Virginia, I think the coal industry will, again, survive,” Reid said.

 

Bluefield Daily Telegraph - Saturday, January 3, 2009


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