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Coal industry’s future gloomy

Rob Napier, a displaced coal miner, has an accent that is the audio equivalent to chummy handshake. His speech and phrases are folksy and polite, until he starts talking about what Washington and Charleston are doing to the coal industry.

That is when politeness leaves the self-described “good Christian” and his ire comes out.

“We’ve been screwed,” he said. After his anger settles some, Napier apologizes for his use of “an ugly word” and explains he feels the capitals have forgotten the coal miners — the backbone of the state’s economy for generations and the workers who toiled to keep America strong by mining its main power source.

Coal mining is becoming a forgotten industry, he contends. At one time, coal mining in southern West Virginia was the top job — men mined the black diamonds with honor and pride. Now it is subjacent to other industries and government assistance.

To buttress his thoughts, Napier pointed to last week’s layoff notices given to more than 2,100 miners in southern West Virginia. Two coal mines sent WARN notices to miners in three counties — Boone, Kanawha and Raleigh.

“That’s proof we (miners) are under attack and nobody is doing a damn thing about it,” he said.

What it tells southern West Virginia is its mono economy is in terminal decline. For many, many election cycles, those elected to Charleston and Washington thought coal would be mined well into the future. Sadly, it is not. A number of investment firms issued outlooks recently which predicted a continued slump in coal prices and production.

According to one, Moody’s Investor Service, the future of West Virginia coal is negative. It states, “coal consumption in the region has already been in a rapid decline due to high cost of production, the age of the coal-fired fleet and the availability of natural gas capacity.”

The outlook continues that several regional coal producers have filed for Chapter 11 protection, including Alpha Natural Resources, Patriot Coal Corp. and Walter Energy.

Moody’s predicts roughly a 10 percent decline in 2016 due to persistently weak conditions for both metallurgical and thermal coal domestically and for import markets.

Interestingly, the decline in international markets shows West Virginia is not an isolated state, but a player in the world economy. When the world’s economy contracts, which it is currently doing, demand for goods, including coal, declines. For the last fiscal quarter of 2015, met coal is expected to be around $89 a ton, the lowest level in decades.

Moody’s warned investors that “at this price level, as much as half of global production is uneconomic and further production cuts are necessary to bring the market back into balance. Slowing Chinese demand and continuing weak global steel production will limit any met coal market recovery in 2016.”

Domestically, the decline is because of cleaner, cheaper natural gas being used at a number of power-generating plants and tougher regulations on carbon emissions set by the EPA. It’s obvious the Clean Power Plan, issued in August, will put further pressure on coal over the next decade. In turn, that pressure will drive prices down over the next decade as the plan calls for a 39 percent reduction in carbon emissions by 2025.

That grim forecast has prompted concerns among producers.

“With the weakness in the Central Appalachian coal markets, we have made the decision to limit production and idle certain of our Central Appalachia operations,” Rhino Resources Partners LP announced in a recent press release. “We continue to focus on reducing our carrying costs in Central Appalachia while exploring divestiture opportunities for certain assets in the region.”

That is polite public relations speak for the company is looking to unload some of its money-losing operations.

But the grim news gets grimmer. During a conference call with reporters and investors recently, the chief operating officer of Arch Coal Inc. said smaller mines that are now closing in the region are unlikely to return to operation.

In related news, Xcel Energy plans more wind, solar power and less coal — and sooner — in Minnesota.

When asked about that, Ken Troske, the William B. Sturgill professor of economics and senior association dean at the University of Kentucky’s Gatton College of Business and Economics, agreed.

It is simply too costly to reopen mines after being shuttered, he said. “The cost to reopen, I think, is going to be very difficult,” Troske said. He explained at times it is cheaper for a coal company to continue mining even when operating at a loss, because restarting a mine costs millions of dollars.

Troske’s explanation wasn’t academic, but purely practical. One operator with thermal coal mines in Boone and Logan counties explained recently he was receiving $38 for a gondola of coal, but it cost $55 to produce the coal for that gondola.

“Too costly to shut down,” he said, with a small sigh in his voice.

Headed to purchase Pepsi, pizza and Little Debbie Swiss Rolls at the Little General Store in Comfort Wednesday, shoppers were talking about that day’s headline of more than 2,100 WARN notices issued, including 92 in western Raleigh County.

Alpha Natural Resources sent WARN notices stating it plans to idle its entire 79-person workforce at the Edwight Surface Mine and 13 workers at Independence Coal Co.’s Tunnel Mine, both located in Naoma, by Nov. 30. The company cited “adverse market conditions” as the reason for idling both mines and the terminations are expected to be permanent.

Those gathered on the store’s large parking lot said the notices are not surprising given all the factors against coal, many using the industry-created phrase “war on coal.”

Shoppers spoke of how the region once was filled with men toting Bibles and broken backs, and now it is full of people slipping into dependency and dejection.

Hardworking coal miners are the region’s heritage, they said in various ways. Some recalled grandfathers and fathers with coal dust-caked faces and blackened fingernail beds. Other spoke of going down into the mines for the first time, the satisfaction of continuing a family tradition and the pride of providing a living for family.

The dozen or so people interviewed know coal miners, be it a family member or a church friend. They are feeling sorrow and a bit of anger and wondering what will happen when the coal mining jobs disappear around Thanksgiving.

Raw emotion is not limited to just hardworking men and women stopping at a Little General for milk or a sub sandwich. Over the past year, several local leaders have asked one question, but it was always followed with a request of “don’t quote me on this.” That question on local leaders’ minds is, “Where is Charleston?”

They begin their question with some history. For decades southern West Virginia sent tens of millions, no — hundreds of millions to Charleston in various taxes. “But what did we get in return?” asked one small-town mayor.

Southern West Virginia, the leaders contend, lacks roads needed to attract warehousing and manufacturing jobs. With coal dying, what other industry is left for a tax base? they asked.

Development officials in Charleston said the region doesn’t have enough flat land to attract businesses. After the eyes stop rolling and the facial expressions return to normal, regional leaders point out a number of empty industrial parks, all with acres of flat land.

“Coal made this region, but we need something besides coal to employ people,” said one mayor.

Admit it or not, the lights are going dim on coal.

This article was written by DANIEL TYSON from The Register-Herald, Beckley, W.Va. and was legally licensed through the NewsCred publisher network.

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