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Coal optimism undercut by production, jobs decline to end 2017

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Coal miners prepare to start their evening shift at a Peabody Energy Corp. mine in Illinois in this 2006 file photo. A new analysis of federal data shows coal mining jobs and production declined in the fourth quarter of 2017.
Source: Associated Press

The average number of U.S. coal mine employees and coal production fell in the fourth quarter of 2017 despite positive market indicators and support from the White House.

Coal production fell 1.6% and average mining employment fell 2.3% in the fourth quarter compared to the prior period, according to an S&P Global Market Intelligence analysis of federal data. The reported 52,866 average coal mining jobs in the fourth quarter is the lowest total figure since President Donald Trump took office promising a comeback in coal jobs and production.

"We have ended the war on American energy, and we have ended the war on beautiful clean coal," Trump said in his January State of the Union address.

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The coal sector has cheered as the Trump administration has rolled back several regulations in an effort to help the industry. While most coal companies are reporting much better financial performance after markets improved and several major players completed bankruptcy reorganization, few new coal projects have materialized in the U.S. Export opportunities have created an outlet for some producers, but domestic demand has remained relatively weak in the face of flat electricity demand, cheap natural gas and the ongoing retirement of an aging coal fleet.

Recently, coal companies are talking more about mergers and acquisitions to consolidate the industry than about bringing new coal production to the market. Instead of boosting output, several coal companies are focused on returning cash flow to shareholders. Fourth-quarter coal production in 2017 was about 3.2% lower than the prior-year quarter, U.S. Mine Safety and Health Administration data showed.

Coal production and average employment peaked around the fourth quarter of 2011. Employment slid until the first half of 2016 as production also trended lower. An upturn in the back half of 2016 in employment and production remained somewhat stable through 2017.

Peabody Energy Corp., the operator of the largest U.S. coal mine, mines thermal coal in the large Powder River Basin. Peabody CFO Amy Schwetz said Feb. 7 that, taking further power plant closures into consideration, the company expects production in the region to be "marginally down" in 2018.

While overall average U.S. coal employment in the fourth quarter was up by just 705 jobs compared to the prior year, some regions fared better than others. Average coal jobs in the period were up 13.0% in Central Appalachia and up 24.2% in the smaller Southern Appalachia basin, where a lot of the coal produced is metallurgical-grade coal used for steelmaking. Every other coal mining region in the U.S. reported fewer jobs in 2017 than in 2016.

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The five states reporting the largest decrease in average coal mining employment all continue to produce much less coal and employ fewer miners than in the fourth quarter of 2011.

Average mine employment in Kentucky is now 64.8% lower than the peak six years ago, at 6,339 jobs in the fourth quarter. Over the same period, West Virginia coal mining employment has fallen 44.2%.

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In many states, the coal industry's activities are concentrated in certain counties. Some were hit by coal's decline harder than others and have seen drastic drops in production and employment levels since 2011.

Boone County, W.Va., coal companies reported 888 average coal mine employees in the fourth quarter, down from 4,554, an 80.5% drop. Pike County, Ky., saw jobs decline roughly two-thirds, while Wise County, Va., went from producing 1.8 million tons of coal in the fourth quarter of 2011 to 256,182 tons in the most recent period.

In the 25 counties with the largest difference between the recent period and the near-term peak, cumulative coal production is 41.1% lower than the 2011 fourth quarter and average employment is down 57.8%.

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