Coal miners in the United States are benefiting from the increased demand for fossil fuels. Bloomberg reports that virtually all of their supply until the end of next year—and some into 2023—has already been sold.
Prices have gone up as well. According to the article, Arch Resources, the country’s second-largest coal miner, has reportedly sold its 2022 supply at prices 20 percent higher than current spot market rates. Coal consumption may not be a one-off blip in the energy transition, given this year’s spike in demand for the fuel. Coal miners’ stock values are also climbing as demand grows. The stock of America’s biggest coal miner, Peabody Energy Corp., rose 17% in one day earlier this month.
The Energy Information Administration (EIA) predicts that coal-fired power output in the United States will rise after a fall of many years. From 2020 on, the growth is expected to be substantial, at 21%. The EIA also observed that as the nation turns towards low-carbon energy production, up to 30% of coal-fired power stations have been shut since 2010, and no new units have been constructed since 2013. Strong demand and record worldwide gas prices have sent natural gas prices in the United States soaring. The price of natural gas provided to power generators was relatively low and consistent between 2015 and 2020. Still, this year’s costs were substantially higher, pushing rising coal consumption, according to the EIA.
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However, demand for coal from other regions of the globe, particularly Asia, is expected to continue robust in the future years, providing new export potential. China is building new coal-fired power plants rapidly, while India continues to generate 70% of its energy using coal. Meanwhile, though, the United States’ coal reserves are depleting. According to the Energy Information Administration, fuel supplies fell by 13.2 percent in August, to 84 million short tons. As far back as records go, this is the lowest August total since that year.
The country’s largest coal supplier, Peabody Energy, has secured long-term contracts for almost all of its Powder River Basin coal and its other US mines’ coal for the following year. Arch Resources, the second-largest producer, has arranged contracts with utilities for all of its 2022 supply from the basin at an average 20 percent higher than current market pricing. As the global economy rebounds from the epidemic and winter approaches, power demand increases, pushing natural gas prices to record highs. Even if coal miners increase their production next year, power firms are signing long-term contracts for every tonne they can acquire. A critical United Nations climate summit begins next week in Glasgow, and these protracted supply agreements serve as additional proof that the shift to sustainable energy will be gradual.
According to the company, an Alliance Resource Partners coal miner on schedule to export 32 million tons this year has already locked up commitments for 30 million tons next year and almost 16 million tons in 2023. According to Bloomberg, a lack of coal miners in the US has made it difficult for US suppliers to meet demand due to global constraints in supplying the dirtiest fossil fuel, coal. The number of coal mining employment in the United States has decreased from 180,000 in 1975 to 42,500 in August this year, a dramatic decline. The mining sector still lacks 9,500 workers compared to the pre-COVID era.
With coal prices soaring ahead of winter due to a hunt for supply in China and Europe, the US coal industry is struggling to hire new miners to meet the rising demand.