Coal makes a comeback in Virginia
Deep Mine 41 in Southwest Virginia produces metallurgical or coking coal. It’s not the kind of coal burned by power plants, but it is an essential ingredient for melting iron ore to make steel.
“It usually burns longer and hotter, and it has the bi-product coke which is essential to steel-making,” says
Tarah Kesterson with Virginia’s Department of Energy.
Earlier this year, it received 17 applications for new mining permits or licenses to sell coal
“We’re hearing from our operators that over half of the metallurgical coal produced in Virginia is actually going overseas,” she explains.
Much of it is headed for China, the world’s largest consumer of coal. It once depended on Australia for half of its metallurgical supply but is now involved in a trade war with that country and is reaching out to other producers including the U.S.
Also driving demand, economies recovering from the shock of COVID-19. Ben Beakes, president of the Metallurgical Coal Producers Association here in Virginia, says demand for steel dropped during the pandemic as construction projects were canceled or put on hold.
“We saw roughly a 20% reduction in both prices and production from 2019-2020. It was one of the worst years the industry has ever seen,” he says.
Now, global demand is back.
“Metallurgical coal is really a proxy for steel, and steel is pretty much a proxy for the overall economy," Beakes explains. "As demand increases for infrastructure, so you will see the demand for our product.”
And if Congress approves a major infrastructure bill, he adds, there will be an even bigger market for coking coal.
“With the influx of federal funds to build bridges and roads, that requires steel.”
Kesterson adds that it won’t be enough to again make coal king in Appalachia.
“You know today we have about 20 mines actually mining coal. If you look back a decade ago there were 70-80 mines working.”
And half of those were mining coal for electricity. Today, given environmental concerns, less than 20% of what’s mined in Virginia is destined for use in producing power.
It’s not clear how long demand for metallurgical coal will continue to grow, but the industry may struggle to fill orders because of a labor shortage. Kray Luxbacher heads the Department on Mining and Minerals Engineering at Virginia Tech.
"As mining has dwindled, particularly in central Appalachia, it’s difficult to recruit a workforce for the metallurgical mines, so as they try to increase capacity, they may be faced with workforce challenges, but I think that those tend to be high-paying jobs, and I’m hopeful that they’ll be able to attract workers."
And while research is underway, she thinks it could be some time before steelmakers find a superior energy source.
"It’s really the only way that we know to make steel at scale right now. People are exploring other means of heating everything hot enough so that we can make steel with different substances, but really we don’t see anything that’s yet commercially viable."
In the meantime, mining of metallurgical coal here in Virginia is providing about 5,800 jobs, and for every one employed directly, the industry creates another four jobs in fields like accounting, law, marketing and transportation.