The American Coal Council urged the U.S. coal industry to use environmental groups' tactics to help push policy and its message as analysts project flat demand and volatile prices in 2018.
According to a Dec. 11 webcast by the American Coal Council on enhancing coal's social media effectiveness, the presenters recommended the coal industry use some of the tactics suggested by Saul Alinsky, a community organizer who worked to improve the conditions of the poor and wrote the book Rules for Radicals, often used by various environmental groups as a strategy guide.
"The anti-coal groups have used the ideology and Rules for Radicals very well for their narrative of coal being dirty and horrifically bad for the environment as well as people's health — especially children," said April Zoebisch, senior fuels analyst for Georgia Power Co., a subsidiary of Southern Co. "Pro-coal groups can follow the same approach, utilizing the same tactics in Rules for Radicals to take that power away."
The suggestions came amid continued challenges faced by the sector despite President Donald Trump's coal-centered rhetoric. A recent report by Moody's states that even with the president's vocal support for the industry, regulatory pressures and uncertainties will continue to limit coal capacity investments due in large part to a significant global momentum for "green energy."
The rating agency estimates thermal coal production will settle at 788 million tons in 2018, a trivial decrease from this year's 790 million tons but a plunge of 27.3% from 1.084 billion tons in 2010. Meanwhile, coal consumption, which is expected to reach 682 million tons in the year ahead, is in a "secular decline" due to substitution for cheaper alternatives such as natural gas and renewables.
Moody's also expects U.S. metallurgical coal prices to remain volatile, due in large part to its exposure to import demand from China and to supply disruptions in Australia.
Another highlight of the week was Contura Energy Inc.'s sale of its Powder River Basin assets, drawing opposing views from analysts. Contura subsidiary Contura Coal West LLC agreed to sell its Eagle Butte and Belle Ayr mines in Wyoming to Blackjewel LLC for deferred consideration of up to $50 million.
"You're looking for discipline [in the Powder River Basin] as opposed to some unknown coming in and just taking matters into his own hands," William Wolf, vice president of business and market analysis at John T. Boyd Co., told S&P Global Market Intelligence. He expressed concern that the new owner "is going to ramp up production and get additional tons and god knows what that will do to the pricing out there."
Following the completion of the deal, Moody's downgraded the corporate family rating of Contura from B2 to B3.
"The downgrade reflects our view that the transaction will further limit the diversity of the company's business, and increase its concentration in the volatile metallurgical coal markets," Moody's analyst Anna Zubets-Anderson wrote in a Dec. 12 report.
Contrary to some coal pricing concerns linked to additional tons from increased production following the sale, analysts Lucas Pipes and Ted Beachley of B. Riley FBR Inc. see such M&A activity as a positive catalyst for the domestic coal industry at large.
"As deals often beget more deals, we believe that today's announcement could be a positive harbinger for 2018," Pipes and Beachley said in a research note following the sale. "One of the reasons why we consider M&A positive for the industry is that it holds the potential for further production rationalization, especially on the thermal coal side."
Planned exports terminals of Millennium Bulk Terminals-Longview and of Oakland Bulk and Oversized Terminal also continued to face regulatory and legal challenges this week.
Washington's Cowlitz County filed an appeal to a hearing examiner's decision to deny shoreline permits needed for Millennium Bulk's project.
The county appeal, filed before the Washington state Shorelines Hearing Board, said the hearing examiner's decision "constitutes an unlawful and unjust application of the Cowlitz County Shoreline Master Program and the Shoreline Management Act" because "it contains a clearly erroneous application of the State Environmental Policy Act."
In California, state Attorney General Xavier Becerra defended a municipal ban on handling and storing coal at the proposed Oakland Bulk and Oversized Terminal.
Becerra filed an amicus brief Dec. 8 on behalf of the city of Oakland, which is being sued by the terminal developer. Oakland Bulk and Oversized Terminal's lawsuit claims the ban violates the Commerce Clause of the U.S. Constitution.
"The ordinance is a proper exercise of Oakland's police powers and is not pre-empted by federal law or barred by the Constitution," Becerra wrote. "It is the city's response to the plight of its residents who will be subject to significant additional pollution from coal and who are currently already unfairly burdened by industrial pollution."
Upcoming events:
American Coal Council:
Center for Strategic and International Studies:
