The crushing forces prevailing against the U.S. coal industry have triggered an unprecedented shakeout, sparking bankruptcies of the industry’s biggest players — such as last week’s collapse of Peabody Energy — and battering jobs in Appalachia even as mines in the west weather the fallout.
Peabody, the nation’s largest coal company, slid into Chapter 11 bankruptcy last week, just five years after its market value reached a high of $20 billion, as the oil and natural gas shale boom shifts the seat of power to miners in states such as Montana and Wyoming, where extracting coal is cheaper.
Peabody’s bankruptcy filing follows at least 50 in the industry over the last few years including Arch Coal in January and last year’s filings of Patriot Coal, Alpha Natural Resources and Walter Energy.
In West Virginia — the heart of American coal country — production may hit lows in 2016 that have not been seen since crippling strikes rippled through the region in the late 1970’s, according to West Virginia University economist projections. The state’s economy has already lost more than 35% of its coal jobs since 2011 — and that number is expected to continue rising.
West Virginia state labor officials project a 23% decline in non-oil-and-gas mining jobs from 2015 to 2017. In Kentucky, the number of coal mining jobs plummeted 28% in 2015 to 8,401, according to state figures.
Nationally, the number of coal jobs was 56,700 in March, down from a high of 178,300 in April 1985, according to U.S. government data. There are indications that surviving mines are cutting positions to part-time, as well.
The reasons for coal’s troubles are many. The rise of natural gas during the oil and shale rush tops the list. Then there’s China’s reduced use of coal and heavy debt accumulated through a wave of industry consolidation and a corresponding borrowing binge in recent years. Finally, costs associated with environmental regulation have made it prohibitively expensive for certain mines to remain in operation, leading some to simply shut down altogether.
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