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Coal stocks halved over 2019; mining fatalities fall drastically over decade

The U.S. coal mining sector closed the book last week on a tough year plagued by depressed stock prices, financial instability and weakened demand.

U.S. coal mining companies' stocks fell by more than half from the beginning of 2019 to Dec. 30, 2019, amid a wave of bankruptcies and challenging market conditions for the sector. The S&P 500 rose 28.5% year-to-date, while the SNL Coal Index sank by 53.5% during the nearly 12-month period. Though the presidential administration has worked to help the struggling coal industry, many investors have turned away from the fuel and producers have grown all the more cautious about capital expenditures.

Seaborne demand in 2018 provided many opportunities for U.S. coal producers to sell their fuel internationally. However, those opportunities were more limited for western producers with little access to West Coast coal terminal capacity. Lawsuits entangled two proposed coal terminal projects in California and Washington state, and the respective developers made little progress last year. International coal prices also fell considerably in 2019, to levels some experts said were not supportive of U.S. exports, which serve as a swing supplier in the thermal market.

Gregory Marmon, a senior research analyst with Wood Mackenzie, said current seaborne thermal coal prices may hinder producers' ability to fill existing port capacity.

"At the moment we don't really see any new increase in our port development," he said.

On a more positive note to end the decade, annual fatalities resulting from coal mining have plunged in recent years. The U.S. Mine Safety and Health Administration recorded 11 deaths in 2019, the second-lowest number since 1900. Over the last 10 years an average of 18.2 people were killed while working in the sector annually. That was down 60% from 45.4 fatalities in the 1990s and nearly 43% from the 31.8 people killed per year in the 2000s.

A spokesperson for the U.S. Department of Labor said the administration constantly works with mine owners, operators and workers on ways to improve health and safety.

"While it's great to see fewer fatalities, the number we always strive for is zero," the spokesperson said.

Researchers are also working on a three-year project to suppress respirable dust in coal mines. Investigators at Virginia Polytechnic Institute and State University are trying to improve the efficiency of dust scrubbers in underground mining operations.

"Heavier dust settles in the mine, but respirable dust travels in all directions with the flow of air," Hassan Amini, a research scientist working on mining and minerals engineering at the university, said in a news release. "Our focus for the project is to develop technology to meet demonstrable efficiency targets that allow us to catch more particles and go longer between filter changes."

On the transportation front in 2019, John Ward, the executive director of the National Coal Transportation Association said in an interview that while there have been more coal-related issues before the U.S. Surface Transportation Board, or STB, that does not suggest a weakened relationship between producers, railroads and regulators. The board is considering several issues, which may be decided in 2020 or beyond, including potential reforms to the railroad rate reform process, demurrage and revenue adequacy.

"As a general overall theme, we appreciate that the STB has become active in this space, and as general principles, we're encouraging the STB to come up with rulemaking revisions that keep in mind the principles of reciprocity, accessibility and procedures that allow the expeditious resolution of disputes," Ward said.

Last week, Consol Energy Inc. also named Mitesh Thakkar as interim CFO after David Khani resigned from the post at year's end. Khani joined EQT Corp. as CFO, according to a Jan. 3 announcement from the natural gas company.

Upcoming events

Coaltrans USA: The 2020 conference will take place Jan. 23-24 in Miami.

15th Annual Southern African Coal Conference: IHS Markit will hold a conference from Jan. 29-31, in Cape Town, South Africa.