From Deseret News archives:
High prices put coal in limelight
Arch Coal Inc. closed the mine and laid off 200 workers two years ago, when coal was just too cheap to justify extracting. But a mini coal boom is changing all that. St. Louis-based Arch is investing about $40 million to reopen the mine, and local miners are lining up for work.
"We're in about as good a condition as we've been in some time," said Delynn Fielding, director of economic development for Carbon County, where the mine is located.
Fielding's words could apply to the coal industry overall. Companies like Arch have seen surging profits and record-high stock prices. Expansion plans are in the works, from new coal mines to coal-fired power plants. In Washington, a new energy bill has lessened the fear of regulatory hurdles for future coal burning.
But while consumers pay close attention to gasoline prices, few follow the market for a rocky fuel that generates about half of the nation's electricity.
"For whatever reason, (coal is) not in the forefront of people's minds when they think about energy," said Fred Freme, a coal industry researcher with the U.S. Energy Information Administration. "But without it, half the lights in the country would go out."
Coal is in the limelight this fall since increased demand and tight supply have pushed up prices, said Mark Reichman, an analyst with A.G. Edwards & Sons Inc. in St. Louis. Prices rose, thanks to factors ranging from a train wreck last spring to economic growth in China, he said.
The price of a futures contract for a ton of coal in the western United States rose from about $9 in June to $19.50 in October, and that's no blip, Reichman said.
"I think maybe we are entering a little bit of a new price range for coal," he said.
The benefit is clear for the nation's two biggest coal companies. The largest, Peabody Energy Corp., reported a 141 percent increase in profits during the third quarter. Arch reported a 75 percent increase.
Globally, the coal supply tightened two years ago when China switched from exporting coal to importing to feed its own energy needs, said Rich Bonskowski, a geologist with the Energy Information Administration. Coal consumers in Europe, the United States and India are bidding up prices on supplies from smaller producers like Australia and South Africa, he said.
Supplies in the United States tightened further in May when two trains derailed on a track that carried roughly 370 million tons of coal annually, about a third of the nation's supply. Shipments will remain hindered until December, Bonskowski said.
