Coal industry’s decade-long drop in productivity hits reverse

Years of declining efficiency in the coal industry may be finally coming to an end, especially in the U.S., where miners based in the country’s top producing regions have stabilized or even increased productivity at both surface and underground coal operations in the past two years, a study shows.

According to SNL Energy’s latest report, coal mine productivity — a measure of the clean tons of coal a mine produces per employee hour — has increased even in regions where output has fallen, such as in Central Appalachia, where most of the U.S. coal is produced.

But a large gap still exists across the basins regarding average coal miner productivity, the study shows:

In Central Appalachia, the average underground coal miner produced about 1.37 tons of coal per hour in the recent quarter, while in the Illinois Basin, coal was produced at a rate of about 4.51 tons of coal per man-hour from underground mines. Central Appalachia’s surface mines produced coal at a rate of 3.23 tons per man-hour, while the relatively freshly tapped strip mines of the Powder River Basin produced an average of 30.16 tons of coal per man-hour in the same period.

U.S. coal prices have declined over 15% in the past 12 months. And more pain may be coming as this year power companies are expected to retire substantial coal-fired generation capacity from the grid, mostly because of environmental regulations, the Energy Information Administration said earlier this month.

The forecast coincides with Wood Mackenzie’s latest predictions. According to the intelligence firm, almost 17% of coal production this year in the U.S. could be at risk of idling or closure, as total cash costs plus sustaining capital expenditures exceed current market prices.