A 30-year-old mining technique is becoming all that’s keeping a group of U.S. coal producers from joining their competitors in bankruptcy.
Coal, already locked in a battle with cheap natural gas, now faces federal environmental rules that threaten to reduce its share of power generation to the lowest in 66 years. Companies from Illinois to Northern Appalachia are responding by leaning more heavily than ever on longwall-mining, a technology that’ll be used to produce a quarter of America’s coal this year, up from 19 percent in 2013.
Investors are backing the miners who rely on the efficient approach. Think of a giant deli slicer with multiple revolving blades that cuts coal from a seam into slices. Eighty percent of analysts covering Foresight Energy LP and CNX Coal Resources LP, both known for longwall operations, recommend buying their shares, compared with less than a third for producers who use it less, data compiled by Bloomberg show.
“People ask me all the time, ‘What’s the new mining technology that saves coal?’” Jim Stevenson, director of North American coal for consultant IHS Inc. in Houston, said by phone July 31. “It’s the longwall. It’s the proliferation of this 30-year-old technology that’s keeping coal coming out of these basins.”
About $175 million buys the machinery — the roof supports, the shearer and the conveyor system that catches and moves the coal — as well as the labor to dig the mine slope and shaft. Once set up, a miner in Northern Appalachia can produce coal for $45 a ton, compared with $60 that was once the benchmark in the heart of the region, Stevenson said.
There were 68,400 people employed in U.S. coal mining in July, down 21 percent from 2010 levels, Labor Department data show. The largely automated longwall process threatens further job cuts in an industry that already has shed tens of thousands.
For the rest of this article, click here: http://www.bloomberg.com/news/articles/2015-08-10/the-30-year-old-trick-that-s-going-to-keep-america-s-coal-alive