Reed: Coal is making comeback in state

By ED HOWELL
Posted 8/10/19

Mining officials said Thursday in Jasper a major new mine in the Fayette and Tuscaloosa area, employing up to as many as 700 people, could be proposed by Warrior Met Coal by the end of year, while …

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Reed: Coal is making comeback in state

Posted

Mining officials said Thursday in Jasper a major new mine in the Fayette and Tuscaloosa area, employing up to as many as 700 people, could be proposed by Warrior Met Coal by the end of year, while Senate Majority Leader Greg Reed, R-Jasper, emphasized coal is making a comeback in the state.

Yellowhammer News held the hour-long panel discussion on the Alabama coal industry that night at Musgrove Country Club, featuring Reed with industry, state and community leaders watching on. Yellowhammer plans to use clips and information from the session across its platforms. 

A number of state House and Senate members were present, including House members Tim Wadsworth, R-Arley, Tracy Estes, R-Winfield, and Kyle South, R-Fayette. Edward F. Poolos of Jasper, deputy commissioner of the Alabama Department of Conservation and Natural Resources, and Paul Housel of U.S. Rep. Robert Aderholt's staff were  among those representing state and federal agencies. Jasper Mayor David O'Mary and Walker County Commissioner Chairman Jerry Bishop were seen. 

Others on the panel included Brett Bussman, senior vice president and general manager of Tractor and Equipment in Birmingham; Judy Adams, vice president of marketing for the Alabama State Port Authority in Mobile; Philip K. Saunders, vice president of engineering for Warrior Met Coal in Brookwood; and Ken Russell, director of workforce solutions for Bevill State Community College. Alabama Coal Association President Patrick Cagle, who has family from Walker County, was also present. 

Reed prided in calling himself the "coal senator," representing some of the top coal-producing senators in the state and coming from Cordova. Growing up, "just about everybody growing up was involved, in some way, in the coal industry," including those who supplied goods to the industry. "It's just part of the fiber of who I am." 

He noted ups and downs over the years, and recalled early in his tenure in the Senate when 1,000 coal miners in his district were out of work. Now, he said the industry is coming back, with most of those people gone back to work.

"Things are back, and they're positive and their exciting," he said. 

Bussman's company is heavily involved in the surface mining industry, which, in turn, is involved in thermal coal, which makes up 20 percent of the state's coal production. 

A fleet of equipment to mine coal would usually cost $15 million, involving a couple of  bulldozers, a few 109-ton trucks, a loading tool and a drill, Bussman said. That equipment is purchased in the area, and also purchases with other area fuel, engineering, steel and other companies in the process. 

Warrior Met produces metallurgical coal in Alabama, used to produce steel. Saunders noted how longwall mining has advanced in technology, able to load "massive amounts of coal. They are heavily, heavily mechanized" and able to be programmed. 

He noted the reserves in Alabama are conducive to longwall mining, especially underground metallurgical coal.

"This is the cheapest underground mining you can do," he said. "We're very, very fortunate to have those reserves in Alabama." Other states are seeing their costs go up to conditions, unable to use the longwall mining used in five situations in Alabama. Warrior Met owns three of the five, he said. 

Metallurgical is important to steel production and can be taken quickly to the state port, amounting to about 11 million tons last year, Saunders said. The coal can go quickly by vessel to Northern Europe, South America and Asia. 

Russell, a former miner at Jim Walter Resources, noted training for miners was different in the 1970s due to legislation that protected miners health and safety. The training center and a mining academy at Bevill State was created in the late 1970s for training miners, thanks to coal severance tax revenue. 

"We train quite a few people. We'll hit 9,000 miners. Over 4,000 of them will be coal miners. There is only 2,600 miners in the State of Alabama," he said. Over 600 new underground miners have been trained this year to date, with similar numbers for surface mining.

Today, he said he may meet with a coal company at their office and see what their needs are to develop a training system for their needs, noting Bevill has about six classrooms and a simulated mine training facility. A company can be trained for four weeks on all the tasks needed to confront underground. 

Russell said the law only requires a basic 40-hour training for a miner. "I'm lobbying for more, Senator Reed. That's not enough training for a new miner," he said to Reed. 

Reed noted he has rewritten incentives, but he said the best recruitment will be to have a well-trained workforce for any coal operation. He said Bevill State can help to insure training will be available to those companies. 

He noted the Legislature voted to allocate $1 million this October through the Education Budget to help renovate the mining academy program at Bevill State. Reed said when he approached some legislators for the work, due to growth in the mining industry, some said, "What are you talking about? We thought the mining thing was dead. Do you not watch CNN, Senator Reed?"

He also noted the Alabama Surface Mining Commission is still in Jasper to help the industry.

Saunders said on job growth, in 2016, when Warrior Met Coal was formed, the company had 650 people and handled 3.4 million tons that year. 

"Last year, in 2018, we did 7.7 million tons with over 1,500 people," he said. "So without these programs, we would struggle to find those people." He said many people don't understand the starting pay is about $85,000, and after a second or third year one can go well over $100,000, without a college degree. 

Bussman noted that many of those employees are home-grown in Alabama, with many staying for decades. 

Saunders said as for growth, he pointed to untapped reserves in the Blue Creek project in south Fayette County and north Tuscaloosa County, with 114 million tons of high-quality metallurgical coal. The resource base is 178 million tons. Final evaluations are being made on the project by Warrior Met, and a new mine project would be presented to the company's board near the end of the year. 

"As far as I know, that is one of the largest untapped reserves in the United States," he said, adding for his company it could add between 3 million to 6 million tons to the annual output. A new preparation plant would be needed, and 450 to 700 jobs could be created, while start up capital could amount to $550 million to $600 million, Saunders said. 

He noted another 3,000 jobs are currently benefited in a multiplier effect outside the 1,500 Warrior Met directly employees. 

Asked about global coal competitors, Saunders pointed to Australia, which has ports to compete in Europe, Asia and India. All the upgrades done to benefit Alabama coal is to really keep the state competitive with Australia.

"The global supply chains are now integrated," Adams said. "Our markets are bigger than what they used to be," with the goal to economically ship more per voyage. She said the state and nation needs to invest in infrastructure and technology to compete with other nations. 

"Talking about the future of Alabama, there is a very large reserve base there," Saunders said. "If you look at Warrior Met Coal by itself, we have close to a quarter billion tons of coal. Most of that is metallurgical coal. ... We are in very good position in Alabama to get those numbers up." He pointed to investments at Bevill State and legislative changes that have helped improve the state industry's position. 

Saunders talked about how the Trump administration's position on permitting also helped the industry, with a friendlier environment emerging for permitting. 

Reed also noted an investment by hundreds of millions of dollars in west Alabama by two energy companies - Peabody out of Pennsylvania and Murray out of Ohio - because of the coal industry in this area.