Ohio Valley Coal Industry Braces As COVID-19 Impacts Electricity Demand, International Exports

Mar 24, 2020

Credit Peabody Energy Inc. via Wikimedia Commons

As states across the Ohio Valley order the closure of non-essential businesses to help slow the spread of the coronavirus, coal mines will remain open. But as with many industries, the global pandemic is straining the coal sector, and some experts say the already struggling industry could face intense challenges in the months ahead as electricity demand flags and international exports stall.

“What we’re going to see is a big drop in Q2, that is without question,” said Brian Lego, referencing the coming second quarter reports, which will reflect the stark new economic reality. Lego is an economic forecaster who studies the coal industry with the Bureau of Business and Economic Research at West Virginia University.

 


As the economy grinds to a halt, Lego said, demand for electricity is falling. While the use of coal for electricity has fallen in recent years, 23.5 percent of all utility generation came from burning coal in 2019, according to the U.S. Energy Information Administration. That could be a challenge for a state like West Virginia, where a significant portion of its coal is burned by utilities.

The industry is also facing challenges in exporting coal overseas, including to China, which was hit hard by COVID-19.

“Export markets are crippled right now,” Lego said.

Similar grim economics apply to metallurgical, or steel coal. As factories, including car manufacturers pause production, demand for parts is also impacted. While Lego cautioned much remains unknown in this fast-moving situation, so far, the calculus doesn’t look great.

“So both here and abroad it’s a really complicated situation, and it’s not what I would consider positive in any way shape or form,” he said.

Relief Requested

These economic circumstances prompted the national coal trade group, the National Mining Association, to ask Congress for help, saying a strong coal industry was critical for national energy security.

“In a perilous time, the essential work of our coal miners to produce the fuel to keep the lights on and homes warm and the certainty and security provided by coal power is just what we need to keep the country moving forward,” NMA president Rich Nolan said in a letter to Congress and the White House.

The letter included a request for $220 million in relief for taxes that fund the Black Lung Disability Trust Fund, which supports 25,700 disabled coal miners and their dependents, as well as a 50 percent cut in fees for environmental reclamation.

“It just seems like the industry sees an opportunity with the coronavirus pandemic to try once again to shed liability for miners’ health and any environmental damage that they’ve done in the region,” said Wes Addington, executive director of the Appalachian Citizens’ Law Center, which represents coal miners in black lung benefits cases.

In a rebuke to the NMA’s request, bipartisan leaders in the House Natural Resources Committee urged congressional leaders to reject the mining industry’s demands, saying, “It is disappointing that the coal industry is advocating for policies that would not help the tens of thousands of sick, retired, and out-of-work miners that need immediate help and the communities that are still recovering from the legacy of environmental damage caused by the coal industry.”

Phil Smith, a spokesperson for the United Mine Workers of America, called the NMA’s request a “disservice to roll back contributions” to the Black Lung Disability Trust Fund and Abandoned Mine Land Fund. That fund supports reclamation of damaged land that was abandoned before 1977.

“Those are very critical and important economic drivers for people in the coalfields,” he said.

Senate Democrats Monday blocked a controversial omnibus bill put forward by Republican leaders.  That proposal could have provided every American with a modest direct payment and would also have authorized the Treasury Department to distribute $150 billion in loans to industry, including the coal industry, at its discretion. The only industry specifically mentioned in the response bill was the airline industry; the concerns of other industry groups that have sought aid, including the NMA, were not addressed.

‘Essential’ Businesses

As of Monday, March 23, Kentucky, Ohio and West Virginia have ordered residents to avoid unnecessary activities and gatherings. Non-essential businesses have been ordered to close.

Coal mines, as key pieces of energy infrastructure, will remain open.

“Coal, absolutely, has an essential classification to West Virginia,” said West Virginia Gov. Jim Justice during a March 20 press conference. “I’m going to tell you, without any question, without coal-fired generation today, our country would be in big trouble.”

The governor was reacting, in part, to an order by Pennsylvania, which temporarily shuttered coal mines. However, on Saturday, March 21, the state classified coal mines “essential” and they remain in operation.

In Kentucky, mine safety classroom training is suspended and a one-month extension of all training expiration dates has been granted, according to John Mura, spokesperson for the Kentucky Energy and Environment Cabinet. As of Friday, March 20, he said no operational changes had been implemented by the state at coal mines across the state.

One company, Blackhawk Mining, LLC, announced Friday it would furlough employees at all of its eight mining complexes in West Virginia and Kentucky beginning Monday, March 23 for two weeks in response to the coronavirus pandemic. The company employs about 2,300 people.

During the shutdown employees will not be paid, but will continue to be covered under employee benefit programs including health insurance, according to a press release from the company.

“We have been following the CDC’s recommended guidelines for minimizing workplace impacts and have been actively encouraging sick employees to stay home,” said Blackhawk President Jesse Parrish, in a press release. “Despite our best efforts, and considering the growing rate of infection, our company feels compelled to take additional measures.”

Requests for comment from both the Kentucky Coal Association and West Virginia Coal Association were not returned.

While many coal mines remain open, the UMWA’s Smith said the union is urging mine operators to increase sanitizing spaces where miners often interact including locker rooms, changing facilities and bath houses.

Miners are encouraged to practice social distancing, when possible, wipe down equipment before and after shifts and wear personal protective gear, including face masks.

Smith said the UMWA is also concerned for the health and safety of many of its retirees, many of whom are elderly and have compromised lung function due to black lung.