Coal Tattoo


There’s an interesting piece out today from West Virginia Public Broadcasting’s Ashton Marra, reporting from the annual Bluefield Coal Symposium.  The part that jumped out at me was this, quoting Rep. Nick J. Rahall:

Rahall said economic diversification is something the state should see the federal government as a partner in doing, not as the entity that will take the lead.

“Coal is number one, make no mistake about it, has been, is, always will be, we will never turn our backs on the coal industry,” he said, “but I think [we should] diversify our economy and have other industries in place so that we can have the retraining or other places for dislocated coal miners however temporary it may be to go and work.”

It’s probably a step forward to hear Rep. Rahall say the word “diversify,” especially at a coal event in front of a coal crowd. Rep. Rahall has said before that he understands that the coal in his district is running out, but such comments seem few and far between as the Republicans and their out-of-state money continue to try to defeat his re-election bids.

Still, read this part of it again:

… But I think [we should] diversify our economy and have other industries in place so that we can have the retraining or other places for the coal miners however temporary it may be to go and work.”

What’s Rep. Rahall talking about? The forecasts from the U.S. Department of Energy certainly don’t show that the current and drastic decline in his district’s coal industry is in any real way temporary. I asked Rep. Rahall’s office for any data they have suggesting the Central Appalachian coal downturn is only temporary, and a spokesman sent me this quote — which as you can see, doesn’t really answer the question at all:

As I have made clear many times, coal is, and will continue to be, a driver of West Virginia’s economy. At the same time, I believe that broadening and diversifying the economy is important to helping to provide greater stability during the peaks and valleys of coal production and employment.


In the meantime, perhaps Rep. Rahall and his staff should read the remarks that Alpha Natural Resources Chairman Kevin Crutchfield made recently in a quarterly financial conference call with stock analysts and investors. Sure, there was some amount of talk from Mr. Crutchfield about when the markets “improve” and how, despite the 1,100 WARN notice Alpha recently issued, company officials were “hopeful that it will be possible for our companies to once again ramp-up hiring when workforce requirements are reinvigorated by more robust coal markets.” But then Mr. Crutchfield got this question from John Bridges of JP Morgan:

Well done on the cost and handling the last and all those other terrible things, just wondered we are relatively new to the coal space we have really experienced wool market and not much else, you have seen the ups and downs in the past, how would you compare this current situation with earlier downturns and to the extent which the coal companies now in particular Alpha are stronger to get through these tough markets?

Crutchfield responded this way:

Well, what a great question. Again I guess I would say historically I mean it’s been obviously a pretty cyclical business and I think what we’re going through right now in part is another cycle but I think in part what we are going through this time also is secular in that we’ve seen — what are likely to be permanent changes in the Energy mix of the United States due to the great things that have happened in natural gas and the ability to extract locked up gas molecules that we knew were there before but we couldn’t get out cost effectively now we know how to do that and it’s been exacerbated or accelerated through very aggressive, very overt regulatory environment that frankly in our view has had coal right in this cross there.

CRUTCHFIELDSo, in that regard I think what we’re experiencing is secular to a large extent and where it has been checked out I think there is still a bit of an unknown given where I mean I think we’ve begun to see now what the effects of the mercury neurotoxic standard are going to result in 20 gig or so, where in SPS on new coal fire construction, existing coal fleet is still a matter of some debate, but to give you some context, I think is 97 to 98 that large produced nearly 300 million tons of coal. It’s on-track to produce this year something what just …

… 125 with the expectation that, that’s going to continue to shrink for a while, there’s always going to be fair amount of metallurgical coal dispatched out of the basin into a 20 million ton U.S. market with 35 million to 50 million tons of exports depending on, what’s going on internationally, so the question mark as always is what happens to the rest of the thermal footprint in Central Appalachia. And based on what we’re seeing right now, if things, great relations go through but today it doesn’t look good but obviously things change overtime.

We have a big effort underway to try to push back on regulations that we frankly don’t think make a lot of sense for the United States so it’s a bit of question mark as to how that will end up I mean I think that’s one of the benefits of Alpha is having some regional diversity and product diversity because we play in domestic and international markets those thermal and met and it gives us some ability to flex based on what’s happening and we’re just at a point right now where unfortunately it’s now the perfect storm in terms of where things sit but if you wait long enough things will change and I think they will in time so our goal has been to control what we can control maintain a strong balance sheet and be ready to respond and flex into an improving marketplace when it does improve and I think in time it will. So, if you want to learn more about it, it’s probably best that we go offline because it’s a long story but I guess that’s 90 second that’s probably my best ability to sum it up for you.

That’s right … Alpha is making sure to diversify … is Southern West Virginia doing the same?