Demand From China Sparks Boom in Coal

By Keith Lawrence, Messenger-Inquirer, Owensboro, Ky.

Feb. 14–The coal fields of western Kentucky have seen booms and busts for decades.

In June 2002, Peabody Coal opened Big Run, an underground mine near Centertown.

Four-and-a-half years later, the company shut down Ohio County’s last mine, saying there was no market for the coal.

Now, rising world demand is creating a new boom.

And St. Louis-based Armstrong Coal, a two-year-old newcomer to the mining industry, will reopen Big Run the first week of April with 115 to 120 miners, Kenneth Allen, vice president of operations, said Wednesday.

The company plans to open at least four, possibly five, surface and underground mines in Ohio County by 2011, he said, and employ 850 to 900 people.

Armstrong has said that the miners will earn an average of $49,000 a year — about $16,000 more than Ohio County’s median income.

Company officials said earlier that they plan to spend $60 million to open the mines and build a rail-loading facility, a barge-loading facility and two coal-washing plants.

Suddenly, western Kentucky coal is hot again.

Thank the folks in China, Allen says.

“China has always been a major exporter of coal,” he said. “Last year, they began importing coal for the first time. Use of coal in the world is rising dramatically, and the United States is exporting more and more coal.”

The U.S. Energy Information Administration predicts that world coal consumption will increase by 74 percent by 2030, international coal trade will increase by 44 percent and coal’s share of world energy consumption will increase from 26 percent to 28 percent.

Tuesday, the Wall Street Journal wrote, “China is doing for coal what it once did for oil: Pushing prices to new highs, adding more pressure to the creaking global economy.”

When China began importing coal last year, the story says, coal prices around the world nearly doubled.

Coal is used to make 40 percent of the world’s electricity, the Journal said.

Allen said western Kentucky coal, which has a high sulfur content, will also get a boost by 2018 when all the nation’s coal-fired electrical generating plants have to have scrubbers to remove sulfur dioxide from their emissions.

With scrubbers, the plants can burn higher sulfur coal, he said.

In 1979, a total of 2,343 people worked in five underground mines and 33 surface mines in Ohio County.

But environmental concerns about the high-sulfur coal led to a bust in the 1980s.

By 2005, the U.S. Bureau of Labor Statistics counted only 109 mining jobs in Ohio County. And most of those were gone by the end of 2006.

“We’re excited to be able to bring mining back to western Kentucky,” said Allen, who began his career in 1967 as an electrician with Peabody.

He was scheduled to speak to the Green River Area Development District’s board of directors Wednesday about Armstrong’s plans, but the meeting was canceled because of icy roads.

Allen said Armstrong will reopen Big Run the first week of April.

By late April or early May, the company hopes to open Midway surface mine in Ohio County with 70 to 80 jobs.

East Fork surface mine should open in July or August with 50 to 70 jobs, Allen said.

Rail-loading, barge-loading and coal-washing plants should also come on line this year, adding more jobs, he said.

“We’ll be continuing to ramp up through 2011,” Allen said. “We expect to open two more mines in 2009 in Ohio County. By then, employment should be at around 600.”

By 2011, he said, the mines should be producing 8.5 million to 10 million tons of coal a year.

“We have 200 million tons of reserves in Ohio County,” Allen said. “We should be mining there for years. But the recoverability of the coal depends on profitability.”

That’s where the world market comes in.

Armstrong Coal has been taking applications for the jobs for about six weeks.

“We’ve had a lot of applications,” Allen said. “We’re seeing several experienced people as well as inexperienced people. There are a lot of good young people out there.”

Applications are available at the Office of Employment & Training, 56 Federal St., Madisonville; Owensboro Career Center, 121 E. Second St., Owensboro; Muhlenberg Career Advancement Center, 50 Career Way, Central City; and Ohio County Adult Learning & Career Center, 130 E. Washington St., Hartford.

—–

To see more of the Messenger-Inquirer, or to subscribe to the newspaper, go to http://www.messenger-inquirer.com.

Copyright (c) 2008, Messenger-Inquirer, Owensboro, Ky.

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NWS,