Illinois leads US coal renaissance: report

WHILE doomsayers pile on admittedly convincing evidence that US coal in dire straits, the inevitable industry revival has established its vanguard in a region many analysts may have overlooked.
Illinois leads US coal renaissance: report Illinois leads US coal renaissance: report Illinois leads US coal renaissance: report Illinois leads US coal renaissance: report Illinois leads US coal renaissance: report

Underground at the Prairie Eagle mine, Illinois.

Justin Niessner

After decades of decline, Illinois coal has found new life in overseas exports and positioned itself as the unlikely leader of the sector’s evolving market realities.

According to a report by the St Louis Post-Dispatch, Illinois coal production rose 13% last year, surging through the end of August as a rate no other state can match.

Only Colorado joined Illinois among state which actually produced more coal this year than last year. Heavyweights such as Wyoming and West Virginia posted production declines.

On track to produce 40 million tonnes of coal for the first time since the mid-1990s, Illinois has also reportedly added more than 800 coal jobs over the past year.

Unsurprisingly, this boost in activity has been attributed largely to increased export opportunities.

Although historically mined for local power plants, Illinois coal has made a notably successful push to embrace burgeoning overseas markets.

Illinois coal shipped overseas almost tripled last year to 7Mt, comprising about 20% of all the state’s production. This compares with 2.5Mt exported from the state in 2010.

The St Louis newspaper cites industry analysts who believe Illinois exports could top 10Mt this year, but high volatility in the international market is keeping most speculation in check.

In 2011, European and Asian markets represented 76% of total US coal exports.

And while explosive growth in Chinese and Indian markets has stolen most of the business-section headlines, it is Europe which is driving most of the US’ – and Illinois’ – export traffic.

Due to its higher energy content compared to Appalachian products, Illinois Basin coal has been particularly competitive in Europe, despite increased logistical barging challenges.

Arch Coal which controls more than 700Mt of coal in the Illinois Basin placed a major emphasis on exports in its long-term strategy.

In a company outlook statement presented by Arch president and chief executive John Eaves last month, the miner outlined a “compelling long-term opportunity” for global metallurgical and thermal markets, increased seaborne demand and US port expansion.

Arch projects US port coal capacity to more than double to 270 million tons in the next five years, with Pacific and Atlantic coast developments tipped to achieve 50Mt and 100Mt of capacity respectively.

Future growth in European demand was cited as the driver of an increase in Atlantic Basin coal exports to 570Mt by 2020.

Other companies expanding capacity in Illinois include Peabody Energy, White Oak Resources and St Louis-based Foresight Energy which the Post-Dispatch says is in the midst of a $1.6 billion plan to build four mine complexes in the state.

Illinois’ recoverable coal reserves rank third in the nation behind Montana and Wyoming at 38 billion tonnes.

The Illinois Coal Association’s latest records tally 11 underground and eight surface mines in the state, although some 4500 distinct coal mines have operated in the state since 1810.

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