Coal is Taking Its Lumps in Utah

PHOTO
Empty coal cars wait on the side tracks near Helper. Utah mines operated by seven companies excavated 27 million tons of coal in 2001.

On paper, Utah’s coal industry seems to be holding its own heading into the 21st century.

BY MIKE GORRELL
THE SALT LAKE TRIBUNE

Production has been steady for a decade. While employment continues to decline, increased use of rapacious longwall mining machines has elevated productivity to once unfathomable levels. And although the market value of coal remains low, prices have stabilized the past five years after fairly sizable drops in the mid- to late 1980s.

"From deregulation to California’s energy meltdown to Enron to war fears to Venezuela, coal just seems to be bedrock by comparison," Utah Energy Office spokesman Jon Allred said.
His agency and the Utah Geological Survey last month released a report on the state’s coal production and distribution during 2001, the latest year for which complete figures are available.

According to the report, 13 Utah mines operated by seven companies excavated 27 million tons of coal. That was just 45,000 tons less than the 1996 record, and worth an estimated $480 million.

But the price of coal averaged just $17.76 per ton. Twenty years ago, the going rate for a ton of coal was $29.42. Back then, just less than 17 million tons of coal were mined by 4,296 people. Employment in 2001 was down to 1,564.
While the production numbers for 2001 were impressive, some mining people fear troubled times lie ahead for the eastern and central Utah communities reliant on coal for their livelihoods.
"The trend is heading downhill," said Jim Kohler, chief of the U.S. Bureau of Land Management’s solid minerals branch in Utah. "The easy stuff to mine has been mined, so we’re getting into the deeper, more difficult mining conditions.

"As mining costs go up as you get into more difficult situations, and if coal prices continue to stay depressed, you push up against the envelope where you can stay in business," he added, noting that a century of mining in the Wasatch Plateau Coal Field had used up much of the easily reachable coal and that technological improvements must be made before deeper coal seams are accessible. The Wasatch Plateau yielded 81 percent of Utah’s coal production in 2001.

Mike Dalpiaz, longtime president of the United Mine Workers of America district that includes Utah, believes companies would develop that technology if there was more of a market. He becomes animated EXORCIZED while criticizing national and state leaders for not doing more to prop up manufacturing operations, such as Geneva Steel, that burn Utah coal and provide high-paying jobs that benefit society.

"Our state can sell our coal to other states, other countries because we have some of the best [low sulfur] coal in the world," he charged. "But we’ve missed the whole point. Manufacturing jobs stimulate the economy because they pay so well. But we’re more worried about bringing in computer jobs with low pay scales that do not stimulate anything."
Dalpiaz also suspects the employment figure is misleading, contending most companies now round out their work forces with "contract miners," part-timers who sign on for short stints, lower wages and no benefits.

"There’re hundreds and hundreds of them," he said. "We’re allowing our government and our industrial employers to exploit these people. It’s a tragedy."
Delena Fish manages the Emery County Employment Center. She has not had an influx of laid-off coal miners in her office since PacifiCorp closed the Trail Mountain Mine in March 2001. "We’ve had some contract miners that occasionally get laid off come in, but most of them are pretty steadily employed at this point," she said.

In Carbon County, Utah’s perennial leader in coal production but now third behind Emery and Sevier counties, Price Employment Center Manager Roger Sparks said mine employment has stabilized following a sizable layoff in September.
Cyprus Plateau Mining Corp. dismissed 220 hourly workers and reassigned 80 others to another company operation a month after a fire and explosion killed two miners at the gassy Willow Creek Mine — its second accident in two years.
"Willow Creek hurt us when that mine blew up," Sparks said. "But since then I’d say it’s been stable."

The BLM’s Kohler and Lowell Braxton, director of the Utah Division of Oil Gas and Mining, said their agencies have been as busy as usual in carrying out their regulatory duties. But most of the work in recent years has involved modifications to existing mines, shutting down used-up areas and moving into uncut areas of the coal seam.

"There are not companies wanting to go out and explore an unknown part of the coal field," Kohler said. "If you look at the mines that have closed, it’s clear we have fewer players and the export market has gone away. . . . As reserves deplete, we see some real shortages in 15 years or so."
The state report noted that coal exports to Pacific Rim countries dropped from nearly 5.5 million tons in 1996 to 2.4 million tons in 2001 — and that number was expected to dwindle further next year as Asians turned to Australia for cheaper coal.

Nearly half (12.5 million tons) of Utah coal ended up fueling the state’s electric utility plants — PacifiCorp’s three plants and the Intermountain Power Plant outside of Delta, which supplies power to California.
Another 7.4 million tons were shipped to out-of-state utilities; two-thirds went to four Nevada power plants, but five Utah coal companies also combined to send 3.6 million tons to Tennessee.

Geneva Steel’s closure cut off the market for Utah coking coal, leaving producers with limited industrial markets. A half-dozen cogeneration plants in California bought 1 million tons of coal in 2001, while Kennecott Copper Corp. was the state’s biggest customer with 374,000 tons. Ashgrove Cement Co. in Leamington also purchased 120,000 tons.
This mixed bag of impressive numbers but a darkening future are apparent to Boyd Griffin, owner of Chute Supply in Cleveland, Emery County.

"A couple of these local mines around here mine a lot of coal, but they’re not selling it. We have a couple of loadouts stockpiled to hell and nobody is taking it," the mining equipment supplier said. "But we’re hanging in there. This [situation] has to get a lot worse before I get out."

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http://www.sltrib.com/2003/Feb/02162003/business/business.asp