This week, Arch Coal idled its Cumberland River complex, laying off 213 coal miners. The mining operation spans the border between Letcher County, Ky., and Wise County, Va.
Here’s what’s different about this set of layoffs from the others that have been plaguing Eastern Kentucky for the past several years: Cumberland was a metallurgical coal mine.
Increased environmental regulations for toxic emissions like mercury have played a part in decreasing demand for Appalachian coal. There are also numerous market factors at play—cheaper natural gas, abundant lower-sulfur coal in the Illinois and Powder River basins and declining Appalachian reserves—but elected officials routinely blame the Environmental Protection Agency for coalfield layoffs.
But the regulations apply to thermal coal, or coal that’s burned in power plants. Metallurgical coal, like that mined at Cumberland, is used for steel. And until this year, met coal has been largely immune to a lot of the industry’s problems.
According to SNL Energy, the cuts are due to an oversupply in Australian met coal and less demand from China. Of the coal production cuts announced so far this year, almost all are metallurgical.
Here’s what Arch Coal CEO John Eaves said in a company press release:
“With this move, we are actively responding to currently challenged metallurgical coal markets while striving to enhance our overall competitive cost position in Appalachia,” said John W. Eaves, Arch’s president and chief executive officer. “Our strategy is to increasingly shift our portfolio toward higher-margin, lower-cost metallurgical coal operations, while retaining our valuable reserves for when market conditions strengthen in the future. We will continue to serve our customers here and abroad with the high level of quality they have come to expect from Arch.”
In Kentucky, there aren’t huge metallurgical coal reserves. There are some, in the farthest-eastern counties, but most of the met coal is in Virginia and West Virginia.