Demand for coal is down

Jul 9 - McClatchy-Tribune Regional News - Allie Robinson Bristol Herald Courier, Va.

Surface miner James Sparks has been in the business for 35 years.

But he still gets a nagging feeling when he heads out to work, never knowing whether that day is the one he'll be told not to come back for a few weeks -- or ever.

"I go to work every day thinking it could be my last day," he said. "It's always been that way on the downside of the industry. It's always been one where you just never know."

Not that he hasn't been laid off before. As is the case with many who have made mining a career, Sparks has been out of work. The longest stretch was about three weeks. But even during dry spells, he found work as a highway flagger or coal truck driver.

"I always found a job," he said. "But now you can't do that. If I was to get laid off I have no clue what I would do."

That seems to be the dilemma facing many miners today, after rounds of industry-wide layoffs started last fall. In Southwest Virginia, as many as 250 miners have been laid off and another 600 or more temporarily furloughed. More still have been affected as the mines where they work have been temporarily idled since September. Some of those mines have yet to reopen.

The coal companies have often cited a decline in the market as a reason for these layoffs and idlings. The demand for coal is down and so is production. The cheap price of natural gas and governmental regulations on coal-fired power plants have also proved to be a challenge to the industry.

"Demand and pricing for central Appalachia coal have not improved appreciably since that time [September] and actually may have deteriorated more," said Ted Pile, spokesman for Bristol-based Alpha Natural Resources. "The current going domestic price for standard central Appalachian ... coal is well below the cost of production of many mines across the region, and not just Alpha subsidiary mines."

And the up-and-down nature of the industry is not new.

"It's always boom or bust," said Barbara Altizer, executive director of the Eastern Coal Council. "And every time they say it's not going to be that way next time."

"War on coal?"

Governmental regulations -- like those suggested last month in President Barack Obama's energy speech on carbon dioxide emissions from coal-fired power plants -- are a source of frustration for some miners, who think they could do their jobs more effectively if they felt the government supported them.

"I'm scared for the coal industry," Sparks said. "No politician can come in and tell me, 'This is how we're going to compensate for not having coal.' I don't think it [coal production] is going to pick up under the administration right now."

In local appearances, news releases and campaign ads, Republicans seeking state office, including the gubernatorial race, quickly labeled the climate proposals as a continuation of the administration's "war on coal."

Altizer said she thinks the government isn't giving the industry a chance to come up with new clean technology before it hands down another set of stricter regulations.

"They're really just trying to push us," she said. "When you get the obstacle they've set they say, 'Oh, we've got one more for you and one more.'"

Altizer said she believes most elected officials in Washington, D.C., don't understand or appreciate the coal business.

"The coal industry has always been the work horse," she said. "It's not the beautiful sleek horse but the one who gets the job done."

Coal remains the dominant source of U.S. energy, filling 37 percent of the demand, according to the U.S. Energy Information Administration. Its major competitor, natural gas, makes up 30 percent of the market.

"Coal has to be used to generate the amount of electricity used today," Altizer said.

And to generate electricity, lots of people must be put to work.

Employees in the coal industry in Virginia have declined from more than 10,600 in 1990, when a historical peak coal production of 46.6 million tons was produced, to 4,700 workers in 2012, according to statistics from the Virginia Department of Mines, Minerals and Energy. The number of mines has been cut nearly in half, from 491 in 1990 to 250 last year in Virginia.

In September, CONSOL Energy idled two mines in Buchanan County and furloughed some 600 miners. Most have returned to work, according to company officials.

That same month, Alpha Natural Resources closed two mines in Wise County and one in Buchanan County, which idled 70 workers. Company-wide, about 1,200 workers were laid off between September and this spring and 400 positions were cut.

In February, SunCoke idled a facility in Jewell Ridge, Va., which put 51 miners and 39 underground contract workers out of work. In June, Arch Coal cut about 110 jobs from mines on the Virginia/Kentucky line.

"People who are laid off -- they'll go back a time or two, but if you've got a family, you can't do it," Altizer said. "Finally, you just have to say you can't do that."

Sparks knows several who were cut from his division in February. He said many are still out of work. Some have moved away to work at other mines or leave the industry altogether.

"You'd have to move, point blank," Steven Sturgill, an underground mine mechanic, said of what he would do if he lost his job. "To have close to the same income, you aren't going to make it around here."

Future miners

Miners who have made a career out of it -- putting in 20, 30 years -- said that the younger miners are often laid off first due to their rookie status. Consequently, their future is uncertain.

"It is a career option for them as long as the job's still there," Sturgill said.

Sparks and Sturgill both come from a long line of coal miners, and went into the business shortly after graduating from high school. But none of their children plan to pursue the career.

"We don't want our babies in it, but it is a good career," said Steven Sturgill's wife, Dana.

Her daughter, Allison, is in her second year of college and plans to pursue the medical field.

Allison Sturgill said she isn't sure even that will keep her in the county.

"I want to stay in Wise and stay in the medical field, but in the end, I know what I do will be a job that's universal," she said. "There are not many options. For me to do what I want to do, I'll have to leave."

Sparks said he has pushed his son, who is 19, to pursue something other than coal.

"Ten years ago, I'd have told him to go into coal," Sparks said. "That wouldn't be my advice to him today. I tell him to do not only something he can do in Southwest Virginia but something you can go anywhere else and do. I just don't have good hopes for the coal industry now."

The community

The most visible reminders of the industry's downturn for Sturgill are the empty houses in his neighborhood.

"Lots of people are moving away and selling their houses," he said. "They're moving away from here trying to find jobs. Not because they want to; because they have to."

He said there are only a handful of jobs for the laid-off miners to apply for.

"What are people going to do?" he asked. "They can't pay for their houses. You can't take ... people and put them in jobs they've never done."

The loss of coal severance tax revenue is the biggest hit to local governments when the mines close, said David Moore, county administrator for Dickenson County. He said those numbers have declined from the highs of five and 10 years ago.

"We realize that the industry as a whole is suffering and continually monitor the work and layoff statuses of our primary employers in this area," Moore said. "Dickenson County is by no means thriving, but we are surviving and are hopeful of a return of better days for the coal industry as it is one of the primary resources which we do have."

Wise County Administrator Shannon Scott said the loss of coal revenue worries everyone.

"There's a cloud of uncertainty that hangs over us," he said. "We need investors to be able to attract individuals to replace the coal, gas and timber industries that are falling away."

He said a diversified economy is the only thing that's going to save the coalfield counties, so citizens don't ride the waves of booms and busts quite so hard.

"What we're going to need to do is convert some of the assets linked to coal to assets with other groups," he said. "We're going to have to think really, really hard about what our options are going to include. We'll have to throw it out and see what sticks to the wall."

What's next?

One hope is in shipping more coal overseas, said Jack Richardson, CONSOL Energy's vice president of Central Appalachia coal operations.

"In April, we announced the potential for new customers in India, which we continue to work with and in China, we continue to expand our Buchanan [Mine] customer base as we are able to be competitive with both Chinese and Russian coals," he said. "Buchanan also continues to ship its contracted European customers and domestically, contracted shipments of Buchanan coal have also remained steady."

Sturgill is also optimistic about the future of the industry. He points to the supply of metallurgical coal, which is mined underground and used to make steel, as redemption for the industry.

"I look for it to come back," he said. "When? I hope it's soon. But you don't know."

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