Trump May Help Revive U.S. Coal Output, Jobs Are Another Story

Bloomberg

If Donald Trump wants to bring America’s coal industry back, he sure picked a good year to become president.

Natural gas prices are higher than a year ago, making coal more competitive in the power sector. China’s trimming its own production, boosting prices for metallurgical coal used in steelmaking. And America’s output is up 15 percent from 2016, suggesting this bruised and battered industry may be on the mend.

Bringing jobs back to levels anywhere near the sector’s heyday, however, may be a vow impossible to meet. Trump can free coal companies from the burden of environmental regulations. He can open federal lands for mining. But stoking fresh demand for the fossil fuel in an era of cheap, bountiful shale gas will be key, analysts at the CERAWeek by IHS Markit energy conference said in a Thursday panel. Even if that were to happen, the link between U.S. coal production and jobs started fraying decades ago when companies developed technologies to mine more tons with fewer workers.

“The largest coal employment losses have been concentrated in the production areas of the U.S. that are the least efficient,” said Robert Godby, a professor of energy economics at the University of Wyoming. “We could see an increase of coal production and still see a decrease in coal jobs.”

Total U.S. coal jobs plunged to 53,000 last year, the lowest in data going back to 1978, according to the Mine Safety and Health Administration. Back in the 1940s, when some workers still carried picks and shovels into the pits, West Virginia alone was home to 126,000 miners.

That began to change after World War II with the adoption of the “continuous miner” machine, which uses a large rotating drum and teeth to scrape coal from underground seams much faster than humans can. It transformed coal mining into more of a factory job with defined tasks and greater supervision. Productivity soared. Coal jobs plummeted.

Long Walls

Then “long-wall mining” technology came along. Slicing back and forth along the underground seams, these huge and heavily automated devices shear off thousands of tons per shift, dropping the coal onto conveyor belts that can run miles up to the surface.

“Unfortunately,” Ronald Lewis, professor of history at West Virginia University, wrote as far back as 1992, “the rising productivity which was so beneficial to the industry was not so salubrious for the state’s miners.”

The result: West Virginia had just 12,600 miners last year, the lowest since 1890.

On the campaign trail, Trump vowed repeatedly to get more coal mines opened. There were 1,028 U.S. coal mines and facilities reporting employment in the fourth quarter of 2016, one-seventh of the total in 1978, according to the MSHA.

For more on the future of coal power and Trump’s promises, read this QuickTake.

There has been progress on that front, with a handful of Appalachian mines opening thanks to the rising price of metallurgical coal. Ramaco Resources Inc. opened its Elk Creek mine in West Virginia in December and plans to open two more this year. Corsa Coal Corp.’s starting a new operation in Pennsylvania as early as May.

“Just like any administration, President Trump will take credit for that,” said Matt Preston, a research director at the consulting firm Wood Mackenzie Ltd. “But how long that lasts probably has more to do with what China wants to do than what we do here.”

Exacerbating job losses is the emergence of the Powder River Basin play of Wyoming and Montana, where production of cheap, low-sulfur coal began booming because of the Clean Air Act and cheaper shipping rates. Coal there comes in giant seams, as high as 60 feet (18 meters), near the surface. Electric shovels can claw 400 tons — the equivalent of 30 school buses — at a time in the open pits, again with few workers involved.

“If you really wanted to stop coal-mining employment losses, you’d increase coal production in Appalachia, but that just doesn’t happen for economic reasons,’’ Godby said. “Expansion will occur in the most automated areas where costs are lowest. And the Powder River Basin has always been very automated.’’

Coal jobs have continued to disappear as competition from natural gas and renewables expands across the worldwide stage, piggybacking on its low costs and international political concerns about global warming. As a result, America’s coal demand may fall by 40 percent by 2040 while consumption worldwide’s set to “stall and plateau,” according to the International Energy Agency.

“Trump has been successful in getting rid of regulation that would have hurt coal down the road,” Ted O’Brien, senior director of capital markets and marketing at XCoal Energy & Resources LLC, said in an interview at the CERAWeek conference.

And yet, Trump “hasn’t done anything that’s going to bring demand up to a point that you’re going to have an effort to bring coal jobs back into the U.S.,” O’Brien said.

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