Coal Tattoo

Friday roundup, Aug. 3, 2012

Zeo Blake, 18 months, daughter of Justin and Geneva Blake, wearis a T-shirt of her grandfather, mining victim Rex Mullins, during the unveiling of the 48-foot-long granite Upper Big Branch Miners monument Friday, July 27, 2012 in Whitesville, W.Va. (AP Photo/The Register-Herald, Rick Barbero)

This week, Bill Estep at the Herald-Leader had a piece about what’s going on in Kentucky’s coal industry, reporting:

The impact of an estimated 2,000 mining layoffs this year is hitting home across the mountainous coal counties of Eastern Kentucky.

Gary Hall of Pike County, whose job at a coal-washing plant is scheduled to last a few more weeks, might have to tap his retirement nest egg if he doesn’t find mining work.

Kyle Thacker, laid off from his job as a utility worker at an underground mine, has thought about going back to school to become a welder, but said he might have to move from Knott County for work.

Jeremy Slone moved to Lexington with his wife, Marcie, and their 2-year-old son Braxton after he lost his job driving a giant dump truck at a Perry County surface mine in April. He’s trying to get on at Toyota in Georgetown.

Other laid-off miners don’t know what they will do.

The cutbacks will ricochet through the economy in an area where good-paying jobs, especially for people without college degrees, were in short supply even before hundreds evaporated.

The piece continued:

The century-old coal industry in Eastern Kentucky has always been cyclical, spiking in the 1970s and then dwindling over two decades before swinging back up for a time.

That traditionally has raised hopes for another comeback, but there are concerns employment won’t ever return to the levels of just a few years ago.

Federal analysts project Central Appalachia is at the front end of a steep, long-lasting drop in coal production.

“Some of these mines are not going to come back,” said Michael Dudas, a managing director at investment firm Sterne, Agee & Leach, Inc. who follows the coal industry.

And why is this happening?

The belief in Eastern Kentucky is that federal environmental rules are to blame for the loss of coal jobs — the “war on coal” that officials in the region decry — but several analysts said other factors led to the layoffs this year.

Most notably, they pointed to historically low prices for natural gas and the unseasonably warm winter of 2011-12, which left power plants with stockpiles of coal.

Other factors, such as the slow recovery in manufacturing and the broader economy, also have played parts in the drop in demand for coal.

“Current market forces were the prime driver” in the layoffs, said Michael Tian, an analyst with Morningstar.

What should Appalachian coal states be doing about this? Part of the answer might be in this story by the Gazette’s Dr. Paul Nyden:

States typically collect severance taxes on the production of natural resources, such as coal, natural gas, oil, limestone, gravel and salt.

In the Appalachian area, states use those taxes to fund current projects. But seven states in the West also use severance taxes to create permanent trust funds that can help state economies in the future. Many of those funds add up to billions of dollars.

“West Virginia and other mineral-rich Appalachian states would be smart to follow the lead of Western energy states that had the foresight to create a permanent severance tax trust fund, or a Future Fund,” said Ted Boettner executive director of the West Virginia Center on Budget and Policy.

“This would not only help these states meet many of their economic challenges but ensure that future generations benefit from the mineral wealth that is in their communities,” he said.


An unidentified child stands next to the casket of miner Ervey Alcalá Ramírez at a funeral home in the town of Palau, Mexico, Thursday, July 26, 2012. A total of seven miners were killed in a gas explosion Wednesday at the “El Progreso” coal mine, located about 90 miles (150 kms) southwest of the border city of Eagle Pass, Texas. (AP Photo/Hans Maximo Musielik)

 In other coal news and commentary this week:

— The Associated Press reports that:

Illinois rejected an application for a permit for a strip coal mine that opponents claimed would have threatened a tiny village’s water supply and various animals in a nearby wildlife area.

Chicago-based Capital Resources Development Co. proposed building the 600-acre surface mine in an Illinois River floodplain near the 150-resident village of Banner and the Rice Lake State Fish and Wildlife Area.

— According to Bloomberg/Business Week:

Patriot Coal Corp.’s bankruptcy judge said she plans to approve an amended version of an $802 million loan agreement that will help the coal producer fund operations while it tries to reorganize.

U.S. Bankruptcy Judge Shelley Chapman in Manhattan today reviewed last-minute changes to the agreement after Marshall Huebner, a lawyer for St. Louis-based Patriot, said talks with lenders led to an interest-rate reduction of 25 basis points, or 0.25 percentage point, for a portion of the loan.

 — Via The Seattle Times, the AP also reports:

A federal judge has dismissed a legal challenge from environmental groups that sought to block federal coal leases in Wyoming’s Powder River Basin on the grounds that burning the coal would contribute to global warming.

The Sierra Club and WildEarth Guardians had challenged the federal government’s sale of leases on 2 billion tons of coal. The leases are on U.S. Bureau of Land Management lands near Arch Coal’s Black Thunder mine and Peabody Energy’s North Antelope Rochelle mine – two of the world’s largest coal mines.

 — And also from the Herald-Leader:

Kentucky fails to make the coal industry pay enough to clean up the environmental wreckage it leaves behind, according to the U.S. Office of Surface Mining.

Though state and federal regulators are negotiating this summer in an attempt to solve the problem, Kentucky lawmakers said Thursday the criticism is another example of President Barack Obama’s “war on coal.”

Making companies pay larger reclamation bonds — as required by a 1977 federal law on surface mining — is a political move intended to destroy coal companies, the lawmakers said at a joint meeting of the Committee on Natural Resources and the Environment.

“They want to make coal mining illegal,” said Rep. Keith Hall, D-Phelps, who has various business interests in the coal industry. “I don’t want to roll over dead and play stoolie in front of the federal government, either, because I believe in states’ rights.”

“There is an assault on Kentucky, and really on our way of life,” said Rep. Jim Gooch, D-Providence, who also has business interests related to the coal industry.