King Coal is still King

 

Last week, as I was working on a story about the so-called “War on Coal” being waged by Obama (spoiler alert: It’s cheap natural gas, not the current administration, that’s the culprit), I ran into an article indicating that Peabody Energy, the biggest coal company in the world, plans to lay off about a thousand workers in coming months.

That’s potentially bad news for the Powder River Basin in Wyoming, where Peabody owns two massive mines and employs thousands of high-wage workers. At first glance, it appears that maybe the war on coal is taking its toll, and that King Coal may be getting a demotion. But look closer and it turns out that the war, in this case, is being waged against the coal miners by the companies themselves.

Peabody says it hopes to save some $100 million over the next year, in part by slashing 1,000 jobs in the United States and Australia. On its face, that makes sense, given the hard times faced these days by the coal industry, which is getting battered mostly by cheap natural gas but also by upped regulations (and the threat thereof). 

But wait. Peabody, it turns out, is not hurting at all. In fact, the same story about the layoffs notes that its earnings during the third quarter of this year were higher than last year. Peabody has thrived during alleged war waged by the Obama administration. It’s had higher profits for each of the last four years than it did in 2007. Even during the recession’s 2009 trough, when coal demand plummeted, Peabody’s operating profit exceeded that of 2007 by a significant margin. We’re talking billions of dollars in gross profit, (hundreds of millions after taxes, amortization and other tangential expenses). This company, at least, is doing quite well during the War on Coal.


In other words, Peabody is slashing jobs not to stay afloat, but merely to up shareholder returns. And, perhaps, to add a bit more to their political campaign contribution fund. Peabody and its buddies Arch Coal (which hasn’t done as well as Peabody, but has still raked it in during the Obama years) and Oxbow (owned by Bill “the other brother” Koch) have together forked out millions of dollars this election season, most of it aimed at toppling Obama and getting Republicans into office. They’re also supporters of the National Mining Association’s “Mine the Vote” effort, which is supporting conservative candidates, almost exclusively Republican, everywhere. 

So how can this beleaguered industry make such big profits or sink so much into political candidates during times when domestic coal demand is fading? Part of it is that the bad times aren’t being felt across the entire industry. Peabody has actually upped production and expanded its workforce since 2007 at its North Antelope Rochelle Mine -- the second largest coal mine on the continent and maybe the world (the biggest is Arch Coal’s Black Thunder complex, also in the PRB). Western coal, in general, is holding up better than Appalachian coal because it’s generally cheaper to mine per Btu and is also cleaner-burning.



Selling coal elsewhere also helps. Peabody has mines in Australia, and is building its presence in China, Indonesia and Mongolia. And U.S. coal mines are offsetting decreased domestic demand with growing exports. This year, the Department of Energy predicts that exports will exceed 125 million tons, an all time record. That’s in spite of the fact that the powerful effort to build coal shipping terminals in the Pacific Northwest are still a long ways from fruition, and face increasing scrutiny. Though Asia and its ever-expanding hunger for energy of all forms is the long-term jackpot for the coal industry, Europe is actually proving to be a pretty good market, too. Since Germany’s post-Fukushima decision to shutter its nuclear power industry, the entire continent has leaned towards coal. Relatively cheap, clean American coal. As for that lack of shipping terminals? Even Western coal mines have found a run-around, shipping through Texas and the Gulf of Mexico. 

Corporate coal, in other words, is still king. 

Jonathan Thompson is a senior editor for High Country News. His Twitter handle is @jonnypeace.

High Country News Classifieds
  • NOVA SCOTIA OCEAN FRONT
    Camp or Build on 2+ acres in Guysborough. FSBO. $36,000 US firm. Laurie's phone: 585-226-2993 EST.
  • TECHNICAL ADVISOR TO THE GOOD NEIGHBOR AGREEMENT
    Northern Plains Resource Council seeks an independent contractor to implement the Good Neighbor Agreement (GNA) between local communities and the Sibanye-Stillwater Mining Company in Montana....
  • POEM+ NEWSLETTER
    Start each month with a poem in your inbox by signing up for Taylor S. Winchell's monthly Poem+ Newsletter. No frills. No news. No politics....
  • STAFF ATTORNEY
    The Southern Utah Wilderness Alliance (SUWA), Utah's largest conservation organization, has an immediate opening in its Salt Lake City office for a staff attorney. SUWA's...
  • DEVELOPMENT & COMMUNICATION SPECIALIST
    Idaho Walk Bike Alliance seeks a lover of bicycling, walking, and all modes of active transportation who willingly puts the car in the garage and...
  • COMMUNICATIONS DIRECTOR
    Friends of Inyo - the Communications Director is a full-time permanent position that reports to the Executive Director and utilizes communication strategies and production skills...
  • INDIGENOUS AFFAIRS EDITOR
    High Country News seeks an editor to oversee the work of our award-winning Indigenous Affairs Desk. This individual will lead a team of passionate journalists...
  • HIKING TO THE EDGE:
    Confronting Cancer in Rocky Mountain National Park. Poetry and photos on survival thinking. E-book and paperback available at Amazon.com.
  • OPERATIONS MANAGER
    Founded in 1936, the National Wildlife Federation has grown into America's largest and most trusted grassroots conservation organization with 53 state/territorial affiliates and more than...
  • IPLC RIGHTS AND EQUITY PROGRAM ASSOCIATE
    A LITTLE ABOUT US Founded in 1951, the Nature Conservancy is a global conservation organization dedicated to conserving the lands and waters on which all...
  • EXECUTIVE DIRECTOR FUTURE WEST
    Future West seeks an executive director to lead this dynamic organization into the future. Based in Bozeman, MT this well-respected nonprofit provides communities in the...
  • PART-TIME EXECUTIVE DIRECTOR
    Mitchell Museum of the American Indian Location: Evanston, IL Salary Range: $45,000 @ 24 hours per week. send resume: [email protected] www.mitchellmuseum.org
  • COMMUNICATIONS LEAD
    Southeast Alaska Conservation Council is hiring! Who We Are: The Southeast Alaska Conservation Council (SEACC) is a small grassroots nonprofit based out of Juneau, Alaska,...
  • SENIOR POLICY ADVISOR
    Since 1989, The Nature Conservancy in Alaska has been doing work you can believe in protecting the lands and waters that all life depends on....
  • OUTDOOR PROGRAM - ASSISTANT DIRECTOR
    St. Lawrence University seeks to fill the position of Assistant Director in the Outdoor Program. To view the complete position description, including minimum qualifications required,...
  • PUBLIC LANDS DIRECTOR
    Job Announcement Conserve Southwest Utah is seeking a dedicated advocate for conservation and public lands Public Lands Director a "make a difference" position Conserve Southwest...
  • FOR SALE
    Yellowstone Llamas Successful Yellowstone NP concession Flexible packages
  • DIRECTOR OF DEVELOPMENT & MARKETING
    Grand Staircase Escalante Partners is seeking a full-time Director of Development & Marketing. This is a senior position responsible for the development of all marketing...
  • WE'RE LOOKING FOR LEADERS!
    As we celebrate 50 years of great Western journalism, High Country News is looking for a few new board members to help set a course...
  • WIND RIVER WRITERS AND PHOTOGRAPHERS RETREAT BY THE NATIONAL BIGHORN SHEEP CENTER
    Enhance your writing or photography skills with world-class instructors in the beautiful Wind River Mountains. All skill levels welcome. Continuing education credits available.