Coal Exports Review 6

8/22/2019 Coal Exports Review 6

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COAL EXPORS

A Publication of the West Virginia Coal Association 2013

PPORUNIIES AND CHALLENGES


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FAST FACTS ABOUT COAL EXPORTS

Primary Ports & Destinations

Wheres It Going To?

Wheres It Coming From?

Coal Exports is published by the

West Virginia Coal Association

P.O. Box 3923,

Charleston, West Virginia 25339

Chairman Jim Laurita

President Bill Raney

Senior Vice President Chris Hamilton

Vice President Jason Bostic

Assistant to the President Sandi Davison

COAL FACTS

More than 63,000 West Virginia families

depend on coal mining for their livelihoods.

West Virginias coal industry pays more

than $3.4 billion in annual wages and

generates approximately $26 billion intotal economic impact each year.

Last year, coal severance taxes, which are

paid as a percentage of the sale price of

coal, topped $500 million. The industry

in total is responsible for more than $1

billion in total revenues each year.

COAL: We Built This

For the past decade, we have used the Coal

is West Virginia jingle in our radio spots, butit is far more than a radio jingle. It reects a

very basic reality -- West Virginia and coal

mining are almost synonymous. It simply is

who we are -- whether we actually work in the

coal mines today or walk the halls of the State

Capitol, whether we dtive a coal truck on a

surface mine or teach at the local high school,

we share in that heritage.

Its never been an easy job, but we have

always taken a quiet pride in that. We have

always thought of ourselves as just a little

special. And we should, after all, it was through

our work and that of our parents before us

that our nations economy was built. Our coal

made the steel and not only do we keep thelights on ... we turned them on in the rst

place.. Our coal made the steel that built our

railroads, our cars and the skyscrapers of Man-

hattan. Our coal was the basic feedstock of our

nations chemical industry and it has provided

us cheap, reliable electricity for the past 100

years.

We look around at what our nation has be-

come and we can say with pride ... WE BUILT

THIS.

Bill


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CHARLESTON Earlier this year, Gov. Earl Ray omblinannounced that or the third consecutive year West Virginiaexports have reached record levels, with coal exports leadingthe way. At a West Virginia Coal Forum meeting in Charles-ton this week, Gov. omblin and other prominent coal

industry and state ocials expanded on those numbers andprovided a look at what is expected over the next ew years.

In March, omblin announced that West Virginia exportsgrew rom $9 billion to $11.3 billion between 2011 and 2012.Coal led the way.

According to statistics rom the U.S. Department o Com-merce, coal exports grew 40 percent, increasing rom 5.3billion in 2011 to 7.4 billion in 2012. West Virginia coalaccounted or 49 percent o U.S. coal exports in 2012. Tetop markets or West Virginia coal with the largest growthwere Japan (growing rom 29 million in 2011 to 395 millionin 2012) and China (growing rom 93 million in 2011 to 567million in 2012).

Last year, West Virginias exports grew by 25 percent, sur-passing the national growth rate o 4.6 percent, said Gov.omblin in making the announcement in March. Exportsare a valuable contributor to our states economic growth andstability. While coal continues to be our traditional strength,our top exports also included manuactured products such asplastics, chemicals, machinery and components or medical,

automotive and aerospace applications.

Tis weeks Coal Forum took a closer look at theactors that led to the increase in coal exports andwhether that trend would continue into the uture. TeCoal Forum is group that represents both industry andlabor groups in West Virginia.

OPPORTUNITIES & CHALLENGES

Since the Obama Administration began its assault onthe nations coal industry in January 2009, orcing the

shutting down o hundreds o coal-red power plants

Coal Forum Outlines Importance o Exports


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and implementing whatamounted to a moratoriumon the issuance o new min-ing permits particularlyin Appalachia, the domes-tic coal industry has been

struggling to adapt. Com-bined with an articially lowand unsustainable marketprice or natural gas and amilder than normal winter,production o steam coal(used or electric genera-tion) has dropped. Te onebright spot has been theproduction o metallurgi-cal coal used in steel mak-ing, which has been in highdemand, particularly in thedeveloping nations o Asia,such as China and India.

Despite being in the middleo an economic slump deep-er than the United States,Europe has been switchingrom nuclear and natural gasor electric generation andhas been increasing its im-

porting o American steamcoal, which has helpedmoderate the policy-drivenslump in demand here inthe United States.Its impacting all o us,omblin said during hisopening remarks at the CoalForum. omblin added thatthe states nances havebecome very tight as coalproduction has been on the

decline.

Its really rustrating tome when someone can sitin an oce in Washingtonand make decisions aboutour uture and whats goingon without looking at theeconomic impact, omblinsaid. Tey dont lookat those tears in the wives

eyes when their husbandscome home and say Ive lostmy job. Te mines closingdown.

Te result o these policies,

omblin said do not takeinto account the local eco-nomic impacts o a hobbledcoal industry.

Chris Hamilton, seniorvice president o the WestVirginia Coal Associationand co-chairman o the CoalForum, talked about theirony o West Virginia coalminers being laid o when

demand or coal worldwideis increasing and is evenprojected to surpass oil by2015.Exports have always been asubstantial part o our statesmining portolio, Hamiltonsaid. Over the past coupleo decades, our state has ledthe nation in coal exports-- accounting or nearly 1 oevery 2 tons that leave our

countries borders. So, amidall the gloom and doom otoday, this has been the onearea that has provided uswith optimism going or-ward...representing some-what o a sliver o silver.

And this growth is pro-jected to be sustained wellinto the oreseeable uture,

Hamilton continued. Tus,opportunity abounds and asa state, we are poised to playa major role in what every-one says will be substantialincreases in seaborne coal

around the globe over thenext decade. We are in closeproximity to multiple portsthat serve us well but oursuccess in global markets isalso testament to our highlyskilled workorce, our ex-ecutive management and thehigh quality o our coals.

But Hamilton said the ques-tion is not whether West

Virginia coal can competebut whether it will be al-lowed to compete in thisglobal marketplace.

We have it here this oppor-tunity i we can eectivelycompete and maintain ourviability in world marketswhere we ace erce compe-tition rom oreign sourceswho are also growing their

mining inrastructure andpreparing to ramp up pro-duction capabilities, Ham-ilton said. On one hand,increased or an expandedmarket but no guarantee thecoal will come rom here.Tis competition relies onchild labor and in manyinstances these countriesdont have the same work

orce saety, human rightsprotections or environmen-tal protection.

Bill Raney, president o theWest Virginia Coal Asso-

ciation, said production isnow down about 3 percentthis year. Tat decline hasbeen occurring or severalyears, but has been maskedby stable coal revenues. Tereason or the discrepancyhas been price increasesthat outpaced losses romvolume.

Its clearly coming to every-ones attention now, Raneysaid. Not only are we losingvolume, were losing dol-lars because the price is notnearly as robust or as strongas then.

Raney said the ederal gov-ernment should be encour-aging both domestic andinternational use o coal.

Its amazing to me thateveryone else in this worldwants it, he said. Itmakes absolutely no senseto me.

Raney said he remains opti-mistic.

We are hopeul againsthope all o this is going to

turn around, he said.

COAL EXPORTSUP BUT FUTURE ISCLOUDYTe top markets or WestVirginia coal with thelargest growth were Japan(growing rom 29 million in2011 to 395 million in 2012)

Its really rustrating to me when someone can sit inan ofce in Washington and make decisions aboutour uture and whats going on without looking at theeconomic impact Tey dont look at those tears in thewives eyes when their husbands come home and sayIve lost my job. Te mines closing down.Gov. EarlRay Tomblin on Obama Administrations anti-coalpolicies


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and China (growing rom93 million in 2011 to 567million in 2012).As is shown in the accom-panying chart, coal ex-ported rom West Virginia

is primarily sent to Nether-lands ($801 million), Italy($698 million), India ($689million), China ($567 mil-lion), Brazil ($558 million),South Korea ($520 million),United Kingdom ($457million), urkey ($403 mil-lion), Japan ($395 million)and France ($383 million).

At the end o the day, allo these positive numbersmeant that West Virginiansare on the job, making a liv-ing, and its thanks to coal,omblin said.

omblin said other coun-tries have a huge interest inWest Virginia coal and thatthe state should continueto support eorts to engage

in global coal markets. Headded that he was a riend

o coal and I always will be.

A SHOCK OF COLDWATERKelly Goes, state director orSen. Joe Manchin, D-W.Va.,spoke on his behal. Goeslauded the impact o coalexports but said President

Obamas recent speechencouraging climate actionis a shock o cold waterthrown on the industry.

We are not going to let thiswar on coal be the deeat oour stat., Goes said, add-ing that Manchin believesObamas climate agenda isa pie in the sky plan thatignores reality.

Mary Elisabeth Eckersonwas on hand or Rep. ShelleyMoore Capito, R-W.Va., whocould not be at the Forumdue to requirements onCapitol Hill. Eckerson read astatement on Capitos behal.

In the statement, Capitochastised the Obama ad-ministration, particularlythe EPA and praised the coalindustry and the importanceo exports.

Exports have played animportant role in maintain-ing jobs in the West Vir-

ginia coal industry, Capitosstatement read. Oureconomic situation wouldbe ar worse i it were notor coal exports.

Fred ucker, a retiredUnited Mine Workers oAmerica member and co-chair o the West VirginiaCoal Forum, told the crowd

that by turning its back oncoal, America has orgottenwho brought them to thedance.Coal miners provided theopportunities the pro-vided the utility companieswith the coal and built whatwe have today, ucker said.Our country was built onthe backs and the sweat othe people who mined thecoal. I think they need totake a look at themselvesand see i we can work outsomething that will makecoal meet the environmental

requirements.

OTHER CHALLENGESCoal executives Jack Porco,president and CCO oXcoal, which ocuses largelyon the export coal market,and Mike Zervos, Presidentand CEO o United Coalsaid current export chal-lenges include a marketthat had been oversupplied

in anticipation o demandincreases.

Weve had some goodtimes. I want to tell youwere in a challenging mo-ment, Porco said. Teyrenot challenges we cantovercome, but there arechallenges.Porco said current marketconditions have more to dowith the oversupply o coalthan a soening o de-mand. Demand or coal hassteadily increased globallywhile alling in the U.S.

One surprise has been theslowing o the Chineseeconomy.

Te industry has investedabout $50 billion world-wide gearing up or whatit thought was going to beever-increasing demandrom China, Porco said. Whats happened is that


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Chinas demand or import-ed coal has leveled o.

Another actor, accordingto Zervos, has been the re-surgence o Australian coal,recovering rom the impacto fooding rom monsoonsover the past couple o years.Also, Zervos said, Canadahas suddenly become amajor competitor or U.S.

global markets.

PRESCRIPTION FORTHE FUTUREPorco said the real chanceor the uture will be chang-es to delivery contractsbringing a ocus on quar-terly and spot prices versusannual prices.

Companies are going tohave to manage their coalmines on a short-term basisbecause thats the way prices

are going to be, he said.Youre going to see priceschange on a quarterly basisor a spot basis. Only thelow-cost producers are go-ing to survive. Not every-one is going to survive thismarket.

Porco said that recovery orthe coal industry is going

to require a level regula-tory playing eld but also abroader economic recovery.Te bottom line is clearlythat there are challenges ac-ing the coal industry both interms o its domestic and in-ternational markets mucho the problem is the resulto deliberate policy initia-tives by the Obama Admin-istration that have resultedin signicant job lossesand now it is playing out interms o reduced prices orcoal and with it dropping

revenues or the state.

Until now, the export mar-ket has provided a cushionagainst those impacts butwhile there remains signi-cant opportunities as globalcoal demand rises, there alsoremains signicant chal-lenges that must be over-come i West Virginia andindeed the entire domestic

coal industry are to takeadvantage o the demandand rebuild our economy.

Additional Coal Forums areplanned at various locations

around the state.

Te next Coal Forum willbe in Wheeling on August

15 and will be co-hostedby West Liberty Univer-sity.

Ten another Forum willbe held in Martinsburgin early September (DateBD), which will be co-hosted by the lcoal Cham-ber o Commerce.

Conrmed and expectedguests or these orumsinclude Hamilton, ucker,Raney, Jerry Mullinso the National Min-ing Association, SenatePresident Je Kessler,Congressman DavidMcKinley, (R-1st Dst. oWest Virginia.

In addition West VirginiaDepartment o Com-merce Secretary KeithBurdette, Je Herholdt othe State Energy Depart-ment and Mike Zervos oUnited Coal.

Invitations have also beenextended to Congress-woman Shelley Capito,

X-Coals Perco and arepresentative rom theAmerican Coalition orClean Coal Electricity(ACCCE).

Look or more inorma-tion on our Facebookpage at https://www.ace-book.com/riendsocoal.


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Coal Exports Review 6