New Coal Mines Elsewhere Aren't Necessarily A Harbinger Of What's To Come In Kentucky
After being name checked in two of President Donald Trump’s recent speeches, a new coal mine opened in Pennsylvania last week. But, while the new mine may be cause for local celebration and useful for political rhetoric, it isn’t a harbinger of what’s to come in Kentucky.
The coal mine opening in Pennsylvania—as well as another one opening in West Virginia—produce a specialized type of coal called metallurgical coal. It’s used for making steel, and it’s distinct from the thermal coal that’s burned in power plants for electricity.
“In Kentucky we do not have a whole lot of metallurgical coal,”
That’s Kentucky Coal Association President Tyler White. Metallurgical coal is in demand all over the world, which is why it’s profitable to open a met coal mine now. But that’s not a bandwagon most Kentucky coal producers can get on.
Despite that, White says there have been several mines that have opened in Kentucky in 2017, and the industry posted a slight increase in production during the first three months of the year.
“We think it’s going to be another slight uptick in production for the second quarter, but nothing completely drastic,” White said.
James Stevenson is the global coal director for analysis firm IHS Markit. He says nationwide, coal is doing okay this year because natural gas prices have been higher, making thermal coal competitive again. But the bad news for Kentucky is that’s unlikely to last. He says natural gas prices are expected to drop next year, which will end up further depressing the market for thermal coal.
“In the longer term you come up against the fact that it’s significantly cheaper to build a combined cycle natural gas unit than it is to build a very efficient coal unit.”
And rather than large expansions, going forward the industry in Kentucky is hoping to just avoid the precipitous drops it’s seen over the past few years.