Bloomberg/ New York
The clearest sign yet that America’s Coal County is headed for widespread job cuts: The amount of coal being produced per US miner is at the lowest level in eight years.
Productivity has slid 11% this year alone. The last time it was this low was in 2011, when coal companies ended up cutting almost half their workers in a downturn that lasted more than four years.
It underscores the intense pressure facing US coal producers. For years, they relied on exports and metallurgical coal used for steel making to offset shrivelling demand from US utilities. Now even those markets are suffering as the global economy slows, liquefied natural gas becomes cheap and plentiful in Asia and President Donald Trump’s trade war churns away. The bottom line: US production is expected to slide 10% this year, and jobs are at risk.
“It’s highly likely there will be more layoffs,” said Phil Smith, a spokesman for the United Mine Workers of America union. “I don’t think there’s any question.”
The looming downturn comes as Trump, who vowed to rescue the coal industry by easing environmental regulations, begins his re-election campaign. Winning a second term will hinge in part on mining strongholds he carried in 2016, including West Virginia and Pennsylvania.
Cutbacks are already underway. On Monday, Peabody Energy Corp said it plans to close an Illinois mine and lay off about 225 workers. Blackhawk Mining LLC idled four West Virginia mines last week and fired about 340 people. And in September, Murray Energy Corp shut mines in West Virginia.
“Most coal-mining companies will have to reassess production,” said Mike Dudas, an analyst with Vertical Research Partners.
The number of US coal jobs bottomed out at about 48,800 in 2016 as Arch Coal Inc, Peabody and other big miners worked their way through bankruptcy, according to the US Bureau of Labor Statistics. Then, as exports picked up and Trump began his push to roll back environmental regulations, hiring followed suit. The industry added about 4,500 jobs through last month.
Now the market has turned. Lower production means US coal workers will each produce an average of about 12,700 tonnes this year, based on an analysis of production estimates from the US Energy Information Administration and employment figures from the Bureau of Labor Statistics. That’s the second-lowest production rate in two decades.
“People are going to have to get laid off,” said Andrew Cosgrove, a mining analyst for Bloomberg Intelligence. “They’re going to have to close mines.”
The moves reflect the confluence of woes pummelling the industry. Electricity producers are shunning the fuel in favor of cheaper natural gas, wind and solar. Global prices for coal shipped to power plants have plunged by more than one-third in the past year in both Europe and Asia. And met coal prices fell last month to the lowest since January 2017.
“People are going to start to hunker down,” Dudas said. “They won’t ship product into a market that doesn’t
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Qatar’s industrial production rises 1% y-o-y in September
Al Khor Recreation Extension project achieves 3.2mn safe man hours without lost time injury
KPMG in Qatar launches ‘Turkish desk’; holds investment seminar in Istanbul
QFC legal team honoured at annual Qatar Business Law Forum and Awards
Eskom CEO appointment met with surprise and scepticism
SEC chief cites fishy letters in support of policy change
Asia markets end higher after record close on Wall Street
China electronics firm struggles as defaults vex private sector
Dollar roadblock from Fed balance sheet sets up euro rally