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Resurgence in Coal: Can Politics “Trump” Economics?

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President Trump’s repeated proclamation of his desire to restore coal jobs certainly appealed to unemployed miners in the coal fields.  True to his word, the new administration has reeled in regulatory initiatives put in place by his predecessor which were viewed as detrimental to the coal industry.  While his efforts may have helped spur the development of met coal extraction, thermal coal development continues to face economic challenges due to regulatory hurdles, construction of new natural gas power plants, abundant natural gas and automation.

On February 16, 2017, President Trump signed H.J. Res. 38 which disapproved the so-called “Stream Protection Rule” which President Trump described as “another terrible job killing rule” whose demise he predicted would save “many thousands American jobs, especially in the mines, which, I have been promising you — the mines are a big deal.”  “Trump signs bill undoing Obama coal mining rule”,  http://thehill.com/policy/energy-environment/319938-trump-signs-bill-undoing-obama-coal-mining-rule  The Washington Post reported on March 15, 2017, that President Trump is expected to issue an executive order soon withdrawing the Clean Power Plan.  “Trump poised to issue a sweeping order dismantling Obama’s climate plan this week”,  https://www.washingtonpost.com/news/energy-environment/wp/2017/03/14/trump-is-poised-to-issue-a-sweeping-order-dismantling-obamas-climate-plan-this-week/?utm_term=.6e098d444a0a

The President’s efforts have apparently supported new development of metallurgical coal.  “Met” coal is utilized in steelmaking and other industrial processes in contrast to “thermal” or “steam” coal which fuels coal-fired power plants.

Kentucky based metallurgical coal provider, Ramaco Resources, raised $81million through an IPO of 6 million shares on February 2, 2017.   http://www.nasdaq.com/article/coal-world-ramaco-resources-prices-81-million-ipo-at-1350-the-midpoint-of-the-range-cm742620

Platts reported in December 2016 in the wake of President Trump’s election that three met coal mines were expected to open in Pennsylvania.  http://www.platts.com/latest-news/metals/newyork/three-new-met-coal-mines-expected-to-open-in-21413879

Indeed,  Pennsylvania based Corsa Coal Corp. announced on February 19, 2017 plans to develop a new coal mine in Somerset County that is expected to bring 70 jobs to mine met coal in anticipation of steel demand arising from President Trump’s infrastructure improvement plans.  “New Coal Mine to Bring 70 Jobs or More to Pennsylvania”,  http://pittsburgh.cbslocal.com/2017/02/19/coal-mine-boswell-somerset-county

However, the Toledo Blade reported on March 5, 2017 that the future of coal is dim while the future of gas in bright in terms of Ohio power plant development, due to the economic advantage of natural gas over coal and nuclear.  “Natural Gas Industry Gains Steam”,  http://www.toledoblade.com/Energy/2017/03/05/Natural-gas-industry-gains-steam.html

Abundant natural gas is not the only impediment to a resurging coal industry.  The Brookings Institute reported on January 17, 2017, that automation poses a headwind.  “Increased automation guarantees a bleak outlook for Trump’s promises to coal miners”, https://www.brookings.edu/blog/the-avenue/2017/01/25/automation-guarantees-a-bleak-outlook-for-trups-promises-to-coal-miners/

No doubt out of work coal miners welcome any opportunities to return to steady jobs.  However, the availability of natural gas and other variables (retired coal-fired power generation, new natural gas power plants, etc.) pose continuing challenges to a broad resurgence in coal.

This article was prepared by Stephen Smith, stephen.smith@steptoe-johnson.com.

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