U.S. Coal Companies Poised to Benefit Due to Nuclear Energy Concerns

Japan's nuclear crisis half a world away could have a significant impact on America's coal-mining industry here at home, ultimately increasing exports and profits.

The dangerous situation at the Fukushima Daiichi nuclear plant has captured the attention of governments around the world, raising concerns about the safety of nuclear power and forcing a reexamination of the international energy supply chain.

While Japan struggles to repair and rebuild, analysts predict the island nation will be forced to rely more heavily on oil, natural gas and coal imports.

"They will turn to their typical suppliers, like the Indonesians and Australians, for some of their coal needs, but over time, as not only Japan's coal demand increases, and also Asian countries' coal (demand) increases, there will be a place for U.S. coal into those markets," said Michael Dudas, Managing Director at Jefferies and Company, a global securities and banking firm.

The United States shipped nearly 2.5 million tons of coal to Japan in 2010, but the U.S. is one of that nation's smallest suppliers, contributing just 2% of total imports. Australia provides about 62% of Japan's supply, while China ships in 20%.

Dudas argues the crisis in Japan will create a domino effect that will reverberate through the world coal market. He predicts coal prices will rise 5 percent  to 10 percent over the next 12 to 18 months.

"It will be an opportunity for the coals out of the United States to meet demands not only in Asia, but even more so, I think, will be in Europe as European countries and utilities had relied more on Australian coal. And that Australian coal is now going to be shipped to Japan and Asia. They need somewhere to go," said Dudas.

According to the U.S. Energy Information Administration, in 2010 the United States produced more than 800 million tons of coal, exporting nearly 61 million tons, equaling about 7.5% of total production. Europe is the largest importer of U.S. coal, bringing in roughly 28.5 million tons in 2010.

Dudas predicts U.S. coal exports will grow by 10 million to 15 million short tons in the coming year and that production could hit 1 billion tons.

Coal is the largest domestically produced source of power in the United States and is used to generate about half of the nation's electricity. Wyoming mines the most coal, followed by West Virginia, Kentucky and Pennsylvania.

America's coal industry employs roughly 123,000 people in 26 states.

More than 600 mining operations and hundreds of supporting companies bring in roughly $35 billion in revenue each year, according to ResearchandMarkets.com.

The National Mining Association estimates 50,000 new mining employees will be needed in the upcoming five years to meet increasing demand and to replace retiring workers. Big name companies include Massey Energy, Peabody Energy, Arch Coal and CONSOL Energy.

CONSOL Energy employs roughly 8,600 people and owns 11 mining complexes in five states, including the massive Bailey mining complex comprised of two mines nestled in the hills of Greene County, Pennsylvania. The facility is the largest of its kind in the United States, churning out 22 million tons of coal per year. The site also boasts the biggest preparation plant in the world where coal is readied for transport.

Bob Pusateri, Vice President of Energy Sales and Transportation Services for CONSOL, believes the company is well prepared to meet the increasing demands of the world coal market with a new mine slated to come online in three years.

“That mine will produce some five and a half million tons of coal and we really believe the majority of that coal will go overseas,” said Pusateri. “It will go into China, Europe as well as Brazil.”

“Over time, CONSOL will be exporting some 15 [million] to 20 million tons of our annual production,” said Pusateri. “We’re currently producing roughly 60 million tons annually. In 2014, with the new coal mine coming online, we expect that to increase to about 65, 66 million so we’re looking for 15 to 20 million tons of export capacity.”

CONSOL boasts more than six decades of coal reserves and Vice President of Pennsylvania Operations David Aloia believes coal offers America a secure future.

“Coal is here to stay. We can find a lot of different ways to use it, but hey, it’s right here in our own United States. Easy to get to, accessible and can be used for all kinds of energy,” said Aloia.