U.S. Coal Companies Ride Exports To Booming Business

One might expect the U.S. coal industry to be reeling from the glut of low-cost natural gas and the regulations imposed by the Environmental Protection Agency. Instead, coal companies are doing a booming business in exports to Europe and Asia.

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MELISSA BLOCK, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block. The coal industry in this country has taken its share of hits over the past few years, in large part because of concerns about carbon pollution, also because of a glut of low-cost natural gas. You'd think the coal companies would be wobbling on their last legs but in fact some are doing a booming business. NPR's Jackie Northam reports this is due to a huge demand for coal overseas.

(SOUNDBITE OF TRAIN)

JACKIE NORTHAM, BYLINE: Trains carrying coal roll slowly through a large industrial area here near Baltimore's waterfront terminals. The coal will be loaded onto a massive conveyor nearby. Beyond a chain-link fence and some scrub brush, I can see the conveyor distributing the coal over a large area - creating small mountains there which is minute next to the conveyor, moves alongside and flattens the mountains of jet black coal.

(SOUNDBITE OF TRAIN)

NORTHAM: The stockpile of coal will eventually be loaded onto cargo ships at the nearby Marine terminal owned by Consol Energy. It'll end up at power generators and steelmaking plants in Asia, South America and increasingly Europe. It's a similar scenario at other coal terminals along the East Coast and the Gulf of Mexico. There's been a dramatic increase in the number of U.S. exports of coal over the past few years - says, Hal Quinn, president of the National Mining Association.

HAL QUINN: The United States are running at well over a hundred million tons a year. So we're over double the levels we're exporting 2005 and '06.

NORTHAM: The boost in exports has been a welcome surprise for an industry reeling from environmental restrictions and a fall in demand and prices here in the U.S. - says Phil Flynn, a senior energy analyst at the Price Futures Group in Chicago.

PHIL FLYNN: And there's kind of this feeling, you know, that if we, you know, crack down on our power plants we increase our proposal to cut carbon emissions, you know, that somehow this coal is just going to sit in the ground. But what we're finding is that - that that's not the case. So at the end of the day, while here in the United States we might be writing the epitaph on coal - coal is experiencing a real rebirth.

NORTHAM: Flynn says the boost in exports is due in large part to an abundance of cheap, natural gas in the U.S. which has deflated the domestic demand for coal. But the rest of the world pays much more for its natural gas supplies - which is forcing countries to diversify their energy sources. Flynn says that's allowed American coal to find a healthy market elsewhere.

FLYNN: Germany, which has got rid of their nuclear power plants, is looking to coal to replace it and they have really coveted the U.S. coal. But other countries, such as Japan, it's increased pretty dramatically because of the Fukushima disaster, you know, they have to replace that power generation some way. Japan plans to increase its coal-fired capacity by a whopping 21 percent over the next 10 years.

NORTHAM: Quinn with the National Mining Association says the surge of coal exports was inevitable.

QUINN: This has been a story more about the global growth. If you look at Asia and look at the developing world it's really a carbon backbone built on steel, cement, electricity and they're all very much dependent on coal.

NORTHAM: That growth is particularly dynamic in China and India. But the U.S. faces tough competition for those markets from Australia, Russia and Indonesia - which have easier access and lower prices than American companies. Divya Reddy, Director of Global Energy and Natural Resources at the Eurasia group says U.S. coal companies could do more to tap into the Asian market. And there are efforts to build three coal terminals in Oregon and Washington, each with a 50 million ton capacity, which would offer a very direct route to Asia.

DIVYA REDDY: So that would significantly open up an opportunity in terms of capacity to ship the coal out. The problem is, you know, there's clearly a lot of environmental opposition in the Pacific Northwest for exporting coal.

NORTHAM: Reddy says there's also the risk that by the time the terminals are approved and built the boom in coal exports may be over. That's why many coal companies are focusing on Europe, which is closer to home and hungry for U.S. coal. Jackie Northam, NPR News Washington.

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