Coal is Back… For Now

Coal is hot.

Even as the United States and many countries around the world pledge to reduce carbon emissions to slow climate change, the demand for coal has increased significantly.

The Wall Street Journal reported recently, “Coal use is surging in some of the world’s largest economies as electricity demand rebounds from the pandemic, illustrating the challenges to countries looking to wean themselves off the dirty but reliable fossil fuel.”

In an ironic twist, the contraction of the coal industry in this county is one of the primary reasons why coal is now booming.  Demand for both thermal and metallurgical coal is outstripping supply, driving up prices to levels not seen in several years.

Appalachian thermal coal is averaging about $60 a ton, its highest point in two years.  Met coal, which is used in making steel, is averaging $180 a ton at the mine, a three year high.

“The pricing is very high right now,” said West Virginia Coal Association President Chris Hamilton.  “It is a tremendous boost for the industry.”

Coal has been rocked by the pandemic, competition from natural gas and alternatives, and growing pressure from governments, investors and politicians to reduce carbon emissions.   However, as global economies heat up and the demand for electricity and steel increase, coal is back on the front burner.

“It’s difficult to get off coal because of security of supply,” Kathryn Porter, founder of energy consulting firm Watt-Logic, told the Wall Street Journal.  “At the end of the day, you need to keep the lights on.”

Hamilton said this is the best news the coal industry in the state has had in a long time.  Production has increased by about 20 percent over last year. “For those miners and mining operations, it’s a real positive situation,” Hamilton said.

About sixty percent of the coal produced in West Virginia is steam coal, transported primarily to domestic power plants to generate electricity. The remaining forty percent is metallurgical coal. About two-thirds of that is exported for steel production.

The question, however, is how long the boom will last.  “We hope that this is sustained,” Hamilton said.

That is unlikely in the long term given multiple factors that put downward pressure on the industry.  However, for now, it is good to be in the coal business.


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