W.Va. coal exports up 40 percent over last year

W.Va. coal exports up 40 percent over last year, not enough to offset drop in domestic demand

Associated Press

CHARLESTON, W.Va. (AP) -- West Virginia exported 40 percent more coal in 2012 than it did in 2011, but that wasn't enough to compensate for a decrease in domestic demand, according to government data.

The export data released Monday by the U.S. Department of Commerce shows West Virginia coal exports rose by $2.1 billion to a total of $7.4 billion for the year.

Despite the increase in exports, West Virginia coal production was still down more than 8 percent in 2012, and the mining industry in the state lost more than 5,000 jobs, according to the West Virginia Department of Revenue.

Much of the rise is attributable to increased demand from Asia. West Virginia coal exports to China increased more than fivefold, from $93 million to $567 million, between 2011 and 2012. Coal exports to Japan increased more than tenfold, from $29 million to $395 million.

Gov. Earl Ray Tomblin trumpeted the growth in exports in a press release Monday, but officials don't see exports as a substitute for declining domestic demand for coal.

"The foreign markets are going to be erratic, there's going to be good years and bad years for the foreign markets, whereas the domestic markets are more stable," said Deputy Revenue Secretary Mark Muchow. "Overall, the numbers are negative; we see coal production decreasing in West Virginia."

The extreme growth in Japan and China shows the volatility of the foreign coal market.

Japan, with very few domestic energy resources, is the world's second-largest importer of coal. The 2011 tsunami that caused a disaster at the Fukushima Nuclear Power Plant also caused damage at several coal-fired power plants. This caused coal imports to plummet in 2011. Unlike nuclear, coal has since recovered as an energy source in Japan, resulting in the spike in coal imports.

Michael Mellish, a coal analyst at the U.S. Energy Information Agency, said that infrastructure problems within China have made it cheaper to import coal than to transport it from some of the interior provinces to the eastern provinces where it is needed.

"You've got your mining costs, you've got your inland shipping costs," Mellish said. "There was basically this situation where it's cheaper for them to import coal from Australia, the United States, Indonesia."

Disruptive floods in Australia, the world's biggest exporter of coal, have also led to increased Asian demand for West Virginia coal.

All of these factors have been offset by reductions in domestic coal use. Use of both metallurgical coal, for making steel, and steam coal, for power and electricity, has fallen in recent years.

"The United States is not a major steel producing country like it once was," Muchow said. "Between 2012 and 2016, over 8.5 percent of total coal-fired electric power generation in the United States is being retired, and about 15 percent of the coal-powered electric power generation in West Virginia is scheduled to retire."

Coal power plants are being replaced by natural gas, which produces fewer greenhouse gases, and is inexpensive and abundant.

Mining for natural gas is less labor-intensive and creates fewer jobs than coal mining. Muchow estimates that West Virginia would need a 60 percent increase in natural gas production to offset the jobs lost by a 10 percent decrease in coal production.

"It's likely to go lower," Muchow said of mining employment. "But the decrease we see in 2013 is likely less than it was in 2012."

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