Environment
8:00 am
Fri September 14, 2012

Recent Mine Idling Shows Demand for Metallurgical Coal Faltering, Too

CONSOL Energy has decided to temporarily idle two coal mines, the Buchanan Mine in southwest Virginia and the Amonate Mining Complex in southern West Virginia.

This doesn't stand out as particularly surprising news--after all, demand for coal is dropping, and factors like low natural gas prices, an unseasonably warm winter and upcoming environmental regulations have made it a tough year for the industry.

But these two CONSOL mines are metallurgical coal mines. Metallurgical coal is the higher-grade, hotter-burning coal that's used to make steel, and the market has remained relatively strong as countries like India and China continue to develop and need steel. For many analysts, metallurgical coal and the demand for steel is going to be the major force in keeping the Appalachian coal industry (at least partially) alive for decades into the future.

But as trade publication Coal Age reports, the demand is even dropping for met coal.

Global steel demand is under pressure and as a consequence, raw materials used to make steel are in less demand. Through these idlings, CONSOL Energy is responding to weak market conditions throughout its export markets in Asia, Europe and South America. The idlings are expected to last for 30 to 60 days.

The Buchanan mine typically produces approximately 400,000 tons per month, while Amonate produces about 35,000 tons per month. The Buchanan mine has about 620 production and maintenance employees, most of who will be furloughed. Amonate’s workforce is contracted.

One thing to note is that 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.