Thu August 16, 2012
Analyst: India Contract is a Big Deal, Won't Save Appalachian Coal
Nine million tons of Appalachian coal will be heading to India this year, after a new deal was announced yesterday between several Kentucky coal producers and an Indian company. This is good news for the struggling Kentucky coal industry—but it may not be enough.
The $7 billion deal will send up to nine million tons of Kentucky and West Virginia coal to India annually for the next twenty-five years. Eastern Kentucky’s total coal production was 68 million tons in 2010, and nearly all of that was used domestically. So a standing order of nine million tons—even if some of it comes from West Virginia—is a big deal.
But is it a big enough deal? Over the past decade, Appalachia’s coal industry has been struggling. And energy analyst James Stevenson of IHS says this deal won’t quite close that gap.
“You’ve lost sort of 50, 60 million tons of production,” he said. “This is nine million, obviously that’s a small percentage of that. But probably the better upside here is that this could be the first of a number of deals.”
But Stevenson says the deal is significant. India already imports some coal from the U.S.—about 1.5 million tons in the first quarter of 2012—but most of it is Illinois Basin coal, which is cheaper to mine. He says this deal could open up a new market for the industry.
That’s what Gov. Steve Beshear is hoping for. He called the agreement “a good first step.”