As he announced his decision to withdraw from the Paris climate agreement, President Trump said he was putting American jobs ahead of the needs and desires of other countries.
“I was elected to represent the citizens of Pittsburgh, not Paris,” he said Thursday.
Trump said the agreement was “very unfair” for the U.S., especially the U.S. coal industry. And he alluded to some recent good news for the battered industry: the development of new mines.
“The mines are starting to open up, having a big opening in two weeks. Pennsylvania, Ohio, West Virginia, so many places. A big opening of a brand-new mine. It’s unheard of. For many, many years that hasn’t happened. They asked me if I’d go. I’m going to try.”
Yes, mines are beginning to open up, including a new one in Pennsylvania. But that doesn’t reverse the overall decline of the coal mining industry from its glory days.
The coal mines that are opening up produce a special kind of coal used in steelmaking and are opening largely because of events unrelated to federal policy, experts say. The market for the kind of coal used in electricity — the biggest use for coal — remains down relative to where it was several years ago.
In other words, the industry has rebounded slightly after years of layoffs and closures caused mainly by competition from cheap natural gas. And a handful of new mines in Wyoming, Alabama, Pennsylvania and West Virginia are either opening or slated to open in the next few years.
The coal mine Trump referred to is the Acosta Deep Mine in Jennerstown, Pa., about an hour east of Pittsburgh. It is scheduled to have an opening ceremony next week, but there’s no word yet on whether the president will be there for the ribbon-cutting.
“We’re staffing up,” George Dethlefsen, CEO of Corsa Coal Corp., which owns the mine, told Bloomberg in February. The mine plans to employ about 70 people.
Betty Rhoads, the owner of the nearby Coal Miner’s Cafe, in Jennerstown, says she has seen an uptick in business from miners at the mine since last year. “You’ll see a group of 12 or 20 of them come in and have a big breakfast after their shift is over,” she says. “It helps the cook get paid. It helps the waitress get paid. It helps us pay our electric bills.”
The mine, as are many of the others slated to open, will produce metallurgical coal, a special type of coal that is used in steelmaking. This is different from “steam” coal, which is used to generate electricity. “Met” coal makes up about 15 percent of worldwide coal production, according to the International Energy Agency.
The Acosta Deep Mine is one of a handful of metallurgical coal mines opening up around the country to take advantage of very high prices for metallurgical coal, says Art Sullivan, a mining consultant and former coal miner in Washington, Pa.
He says the uptick in met coal is related to events oversees that have little to do with U.S. policy or politics.
One of these factors is that Australia, the far and away leader in metallurgical coal, has experienced disruptions to its supply chain. There have been problems with rail transport of coal, and Cyclone Debbie further hurt the coal industry there, Sullivan says. Those disruptions, combined with greater-than-expected demand for steel in China — the world’s leading steelmaker — caused prices of this special coal to soar to $300 per ton, triple the price of met coal from three years ago.
“With the disruptions in Australia and continuing high level of demand in China, there has been this upsurge in the U.S. with the planning, development and production from metallurgical coal mines,” Sullivan says.
James Stevenson, director of the coal team at IHS Markit, says the metallurgical coal boom has helped the coal industry rebound. The rest of the coal industry has also benefited from higher natural gas prices.
“I think that the broad-brush characteristic is that things have really improved from the bottom,” Stevenson says. “We really saw the bottom of the U.S. coal market in early 2016.”
Since then, the industry has picked up a bit. Several large coal companies have begun to emerge from bankruptcy, buoying the industry.
Still, despite this uptick, the industry isn’t going back to its glory days of a few years ago, regardless of Trump’s pro-coal policies, Stevenson says. He expects natural gas prices to fall and the shortage of met coal to ease. “The direction is downward,” Stevenson says.
“There’s not a whole lot a government can do to change economics, so we don’t really expect a whole lot of change to the coal demand outlook from what any administration really can do,” he says. “Most analysts would agree [Trump’s pro-coal policies] are probably a case of slowing the decline [rather than generating] any real upside.”
Coal production reached a 30-year low in 2015, and the number of U.S. coal miners fell from 90,000 in 2012 to 50,000 in 2016, according to the Bureau of Labor Statistics. The number of U.S. coal mines dropped from 1,831 in 2006 to 1,159 in 2015, according to the Energy Information Administration.
Overall, coal industry analysts say this rebound will pick the industry up, but not to the levels seen at its height around 2011. Blame fracking.
“Natural gas is the big reason why coal use for electric power has declined,” says Jay Apt, a professor of engineering and public policy at Carnegie Mellon University’s Tepper School of Business. Apt says natural gas from the fracking boom has replaced coal on the electric grid; natural gas recently overtook coal as the largest source of electricity in the country.
A recent Columbia University study found that regulations accounted for 3.5 percent of coal’s decline, while competition from natural gas accounted for around 49 percent.
Trump’s pro-coal policies certainly won’t hurt the industry, but the broad trends pushing the industry down are likely to continue, experts say. It’s simple economics.
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