CED

February 2013

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Editor's Note Nothing Comes Close Coal's long-term future isn't all black – because nothing beats its abundance to meet Earth's insatiable demand for power. By kIM pHELAN A few months ago I was gathering information for a story that, to be honest with you, kept getting bumped to the back burner and shoved to the next issue until, drat, it's suddenly February and that dang story next never did get written. The subject: the U.S. coal market. Rather than let some good insight shrivel up for want of a bit of ink, I may as well dish up the Readers Digest version here and let you make of it what you will. Back before the election, things were looking kind of grim for coal, and yet folks whose livelihoods are affected by the industry were hopeful, chiefly because of the Romney campaign. Now, it's back to mostly grim – but maybe it won't stay that way. More on that anon. Detour: Many things and people, of course, are affected by coal, besides you and me and our 7-plus billion neighbors, that is: Mine companies, mine workers, power plants and utilities; mining equipment manufacturers and dealers; trucking and railroad industries; ports and their infrastructures; local coal-region economies; and even earthmovingtype contractors involved in continuous reclamation work. Now back to grim. Several factors have been kicking coal in the shins over the last couple of years, the most famous being the rise to stardom of shale oil and gas, and the most infamous being the Obama administration's EPA, whose current regulations have all but ceased the opening of new coal-fired power plants – and I dare say have been the demise of a good many existing ones that have closed in deference to plants burn- ing cheaper, cleaner natural gas. The insidious future plans of the agency is what troubles the Wyoming Mining Association's executive director most; Marion Loomis fears the rumors that EPA's CO2 rules for new plants will next be applied to existing coal-fired plants, but he's seen no draft rule yet, he told me in November. But EPA and natural gas aside, coal has also been hurt by waning demand from China, I'm told, and, while it seems remote now, the historically balmy winter of 2012 also dealt the U.S. coal market a harmful blow from which it is still smarting. About the only thing that isn't warring against coal is nuclear power, which, thanks to Japan's disaster, has a sufficiently swollen PR black eye of its own to keep out of coal's way for a while. But because of the negatives, particularly in the Central Appalachian coal mines, new equipment sales are nonexistent, and about the only opportunity for a mining dealer to get involved in the used equipment activity is when an owner returns a machine to the captive finance company. Otherwise, the close-knit community of 12-15 mine companies in that region pretty much handle the exchange of their used machinery amongst themselves. Given the attractive price of natural gas and the unrelenting regulatory pressure on coal, who in the world would be optimistic about coal today? Actually, I found a few, and they're quite reputable, too, as in CAT and Komatsu dealer executives, and others who know the market intimately. Among the prevailing reasons for a long-range bright outlook for coal: Global demand for cheap electricity is enormous; so even if America scorns its own supply, the U.S. coal export market is bright indeed, according to my sources. The U.S. produces about a billion tons of coal a year, and The National Mining Association estimates that the U.S. holds 262 billion tons. Wyoming hopes to boost its share in the export market from 3-4 million tons to 40-50 million tons in the coming years, according to Loomis. "The rest of world is looking for coal, and it's just a matter of where they get it," he said. He is hopeful that Wyoming will be a source for China, India, Japan and Germany, which have all announced increased demands. He's also optimistic about prospects for coal-to-liquid gasoline plants – one private project by DKRW has all its permits and contracts, and once its financing is secured construction could start this year, Loomis said. That might open the doors to others, he added. Bottom line, in the current environment, mining and utility companies are struggling to find their new normal, especially those in the Central Appalachians; but no one sees the lights going out, either on rampant global appetite for electricity or on the long-term life of the coal industry. Nothing comes close to its abundance, sources said, or its long-term, worldwide affordability. Did you know they're even making bricks from fly ash? Put that in your environmental pipe, and smoke it. Thanks for reading. Kim Phelan (kphelan@aednet.org) is the executive editor of Construction Equipment Distribution and director of programs for AED. February 2013 | Construction Equipment Distribution | www.cedmag.com | 7 7_editors note_KP.indd 7 1/30/13 2:55 PM

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