August 12, 2020 Read More →

Pandemic exposes weaknesses in troubled U.S. coal industry

International Business Times:

The COVID-19 pandemic has cut a swath of destruction through the beleaguered U.S. coal industry, hurting both production and jobs.

S&P Global Market Intelligence reported that as demand has plunged the average quarterly coal mine employment fell by 13.3% in the second quarter from the prior quarter; and plunged by 23.1% from the year-ago period.

Meanwhile, coal production fell by 24.7% to 112.3 million tons in the second quarter from the first quarter – or plummeted by 37.6% compared to the second quarter of 2019.

The Powder River Basin, the largest coal-producing region in the U.S., saw second quarter production fall by about 13.4 million tons, or 21.5%, compared to the prior quarter. Over the same period last year, that amounted to a 30.1% drop. 

“What seemed to be a slow-moving catastrophe not too long ago has gained momentum, and Peabody’s huge write-down is a stark warning that coal mining’s financial distress will continue,” warned Seth Feaster of the Institute for Energy Economics and Financial Analysis, or IEEFA.

IEEFA noted that overall coal demand is in a freefall.

In 2018, U.S. utilities consumed 637 million tons of thermal coal, while an additional 54 million tons were exported. But this year, utilities are expected to reduce their coal consumption to 377 million tons, a 41% decrease over two years. Meanwhile, exports of thermal coal could fall to 25 million tons, a 50% plunge over that two-year period, according the Energy Information Administration.

IEEFA further warned that the coal industry is in dire straits.

“The U.S. thermal coal market has a vast oversupply of product chasing fewer and fewer customers,” Feaster wrote. “An orderly retreat would make sense, but instead, chaos reigns. The growing probability is that the collapse of U.S. coal mining will be disorderly, resulting in bankruptcies that end in liquidation, abrupt mine closures, the abandonment of cleanup obligations, and possibly the financial collapse of some bonding companies that are supposed to be the backstop for those liabilities.” 

[Palash Ghosh]

More: COVID-19 Pandemic Decimating US Coal Industry Production, Jobs

Posted in: IEEFA In the News

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