Despite accident, coal’s future is bright

Marketplace Staff Apr 6, 2010

Despite accident, coal’s future is bright

Marketplace Staff Apr 6, 2010


Kai Ryssdal: In Montcoal, W.Va., today crews were rushing to get emergency drilling equipment in place. Yesterday’s explosion at the Upper Big Branch coal mine has left 25 miners confirmed dead, four others remain missing.

Upper Big Branch is owned by Massey Energy. It’s the biggest coal producer in Appalachia. It’s also, according to federal records, has a worse-than-average safety record. Mining does sometimes seems like a 19th century industry — especially on days like today — but Brett Neely reports that coal’s future remains bright.

BRETT NEELY: The accident sent shares of Massey Energy down by as much as 10 percent today. But overall, shares in coal companies were up. That’s because the coal industry, for better or worse, isn’t going away.

William Watson is in charge of energy analysis at the Energy Information Administration.

WILLIAM WATSON: Coal consumption is growing at somewhere around 1 to 1.5 percent a year.

He says 40 years ago, Americans used about 600 million tons of coal a year. Now, it’s over a billion tons. One reason the U.S. burns so much of the stuff is…

WATSON: We have a lot of it.

At least another 100 years worth of domestic supply, Watson says. Most of the coal in the U.S. is used to produce electricity. It often comes from coal seams near the surface out West or from dynamiting Appalachian mountaintops. The Upper Big Branch mine was different. It produced met coal, which is used to make steel.

JIM THOMPSON: It tends to be very, very high quality coal, it’s in very short supply.

Jim Thompson is the managing editor of Coal and Energy, an industry publication. He says high demand from Asia and the rest of the world makes met coal a lucrative export business for American firms.

Met coal is almost always found deeper underground, where the mining is more dangerous. But other coal miners in Appalachia may also have to start digging deeper too. That’s because new federal environmental rules may soon make it next to impossible for mining companies to keep blowing up mountaintops.

Here’s Jim Thompson again.

THOMPSON: It is a tradeoff. If you are going to limit surface mining then you are going to be mining in more dangerous conditions.

As more and more coal mining shifts underground, Thompson said more accidents are bound to happen. When it comes to Massey Energy, analysts at Jeffries & Co. said the met coal producer remains undervalued. And recommended investors buy its shares.

In Washington, I’m Brett Neely for Marketplace.

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