West Virginia Megathread

[DINGO Joe]

Will she embrace WV fastest growing industry, or will she just drool like the rest of them.

http://www.eia.gov/todayinenergy/detail.cfm?id=12311

[DINGO Joe]

There was a story on Platt's yesterday (may require registration to read)

http://www.platts.com/latest-news/coal/pittsburgh/southern-company-sees-decline-in-central-appalachian-21600302

It's about the Southern Company's coal buying from different US producing regions for it's electric plants.  In 2007 they bought 78 million tons of coal with about 26 mt from the CAPP region (CAPP is Central Appalachian--South WV, Western VA, and East KY) In 2012, they bought 42 mt with 8 mt from the CAPP and in 2016 they expect to buy 45-50 mt with only 500,000 tons from the CAPP.  Bottom line is the bottom line and the fact is that for coal plants to compete with natural gas they need cheaper coal than the CAPP region can produce.

Unless you plan to outlaw NG, thermal coal mines in the CAPP will keep closing as far as I can see.

[DINGO Joe]

Was playing around with Atlas and saw that the peak year for voting in WV was 1952 when they cast 873,000 votes for President.  In 2012 it was 670,000.  It's the only state that cast fewer votes in 2012 than in 1952, not Kansas, not Rhode Island.  Only state to cast fewer votes and it cast almost 25% less.  It's not been a steady decline, but it's still amazing how long the WV decline/inability to reinvent itself has been going on.

[DINGO Joe]

It is a bit of a sore spot for WV that no major coal mining company is headquarted in WV.  ANR and JRCC are in VA, Consul in Pittsburgh, Massey in OH, Peabody, ACI and Patriot in St. Louis, ARLP in Tulsa, Westmoreland and Cloud in WY, Walter in Birmingham, so populism does also work against the mining companies in WV.

Also, a WARN notice went out for a mine and processing complex in Wayne Co last week.  177 miners plus 59 at a related trucking company

http://www.platts.com/latest-news/coal/galax-virginia/us-argus-energy-to-close-west-virginia-mines-21789425

And JRCC has idled additional mines in EKY, laying off an additional 200 miners.

http://finance.yahoo.com/news/james-river-coal-idles-four-123915027.html

In the last 18 months there have been about 6500 workers directly involved in mining who have lost jobs in the CAPP.  Outside of the CAPP, the only mine that I know of that has shut down was in Colorado, which had something horrible happen that led them to seal the mine with a 100 million dollar piece of equipment left inside--It's a Koch brothers operation so let your imagination go wild.

[DINGO Joe]

Some group called the  American Energy Alliance has a new ad out on Rahall accusing him of, surprise, being anti-coal.

AEA= Koch brothers front.

[DINGO Joe]

Will the Democrats try to use the recent chemical spill against the Republicans? ("A vote for [GOP candidate] is a vote to make it even easier for companies like Freedom Industries to get away with incidents like these") And if they do, how successful will it be?

Sure.  But the whole thing is illustrative of how virtually impossible it is to move West Virginia forward.  How can you attract anything other then chemical/industrial development to a place that is as toxic as WV?  There's been long-term degradation of water and soil in this region.    Sure it looks scenic but most of the mining occurred before any real environmental regulation and obviously modern day mining hasn't done them any favors. 

[DINGO Joe]

Just to give a little perspective on how rapidly CAPP coal (the center of the CAPP coal region is Rahal's district)  is dying, some coal production numbers:

2008   East Kentucky (CAPP)       90.6 million tons
           West Kentucky (Illinois)    30.2 mt

2013   East Kentucky (CAPP)       39.2 mt
           West Kentucky (Illinois)    40.9 mt

2008   South WV  (CAPP)             116.7 mt
           North WV   (NAPP)             41.2 mt
         
2013   South WV (CAPP)              70.4 mt
           North WV (NAPP)               42.5 mt

2008   Virginia (CAPP)                   24.7 mt
2013   Virginia (CAPP)                   17.1 mt

The CAPP region has the oldest mines (older generally means more expensive to get remaining coal out)  and the mines had higher transportation costs to get to the power plants they supplied.  They also employed more people than NAPP or Illinois coal mines do per ton.  Virtually all the plants in the Southeast that will continue to burn coal are switching to Illinois Basin coal because it's cheaper and the high sulfur content doesn't matter anymore because any plant still burning coal will have to have scrubbers.

The coal miners have been hit with a second whammy this year by the big drop in met coal (used in steelmaking) prices due to a global glut of supply.  Met coal has been the more profitable product and became super profitable in 2011 when Australian mines had massive flooding.  That's only a memory now and thanks to the global price drop, one US CAPP miner, James River Coal Company has gone bankrupt and intends to auction off what's left of the company.

Also, a  Russian miner Mechel, which ran three complexes in Southern WV through their US subsidiary, Bluestone, had hired JP Morgan to try and sell the mines, then started laying off around Thanksgiving  and seems to have completely shut down.  They're also being sued by two WV counties for not paying their property taxes which were due April 1st.  For work related reasons,  I spent an excessive amount of time last week scouring the internet for any info I could find on what's going on at Bluestone from any backwoods WV newspaper or even stooping to Topix message boards (which is about as much fun as reading a bathroom wall at a gas station). 

Anyway, this region is just doomed, it's incredibly poor, lacks infrastructure or educational opportunities, has severe environmental issues and has little to no diversification, oh and the number of current corruption scandals in the region I read about last week were just numbing.

[DINGO Joe]

Two more mines (and rather large ones) in Rahall's district had WARN (impending layoff) notices issued today.

http://wvmetronews.com/2014/04/23/patriot-coal-announces-possible-major-cutbacks/

And the feds are just getting started on a corruption investigation at another mine in the district that should provide great entertainment and ample convictions

http://wvmetronews.com/2014/04/22/wvow-report-another-worker-fired-at-arch-coals-mountain-laurel-complex/

[DINGO Joe]

Mechel Bluestone, the American subsidiary of Russian miner Mechel, announced the shutdown of their met coal mines in McDowell and Wyoming, although I think they actually shutdown production late last year.  They had actually hired JP Morgan last year to try to find a buyer for the mines.  Doesn't have anything to do with Ukraine and current US-Russian disputes, but the fact that they owe alot of entities money  and are in fact Russian could lead to some jingoistic stories.

http://in.reuters.com/article/2014/04/29/mecheloao-brief-idINL3N0NL2DE20140429

ANR coal mine in Nicholas County is shutting down.

http://www.wowktv.com/story/25477002/subsidiary-of-alpha-natural-resources-idles-2-mines-in-nicholas-county-wv

And just across the border in Buchanan County VA, another met coal mine is dropping a shift--188 miners.

http://www.tricities.com/news/local/article_69da462e-d271-11e3-801b-001a4bcf6878.html

Met coal is used for making steel and gets a higher price than thermal coal, used for electricity, but there's a glut in the global market and the price has tanked, and pretty much any met coal that was being exported from North America is now out of the money.  Met coal traditionally employs more miners per ton than thermal miners and it generates more revenue in excise taxes so it's a bit of a double whammy for the state.

[DINGO Joe]

Two more mines (and rather large ones) in Rahall's district had WARN (impending layoff) notices issued today.

http://wvmetronews.com/2014/04/23/patriot-coal-announces-possible-major-cutbacks/

And the feds are just getting started on a corruption investigation at another mine in the district that should provide great entertainment and ample convictions

http://wvmetronews.com/2014/04/22/wvow-report-another-worker-fired-at-arch-coals-mountain-laurel-complex/

Two miners died last night in one of the mines that had a WARN notice issued.  The mine also had a history of safety violations.

http://www.wvgazette.com/article/20140513/GZ01/140519765/1419

Apparently the accident occurred as the miners were engaging in retreat mining, which is technique used to extract some last bits of coal as a mine seam is played out and being prepped for closure.  It's regarded as riskier than most mining.

http://www.wisegeek.com/what-is-retreat-mining.htm

And an excellent article on the issue of retreat mining.

http://www.snl.com/InteractiveX/Article.aspx?cdid=A-24915559-10797

[DINGO Joe]

Booth Goodwin launches his war on coal (corruption):

http://wvmetronews.com/2014/05/30/feds-break-up-coal-mine-kickback-scheme/

People have asked why coal is so important to WV when there are so few actual coal miners left, and of course the answer is that it's where the money is at.  Besides the miners (who are kept to a minimum because you have to pay benefits--especially the union ones), you've got the vendors and the contractors, and then the severance taxes. 

[DINGO Joe]

McDowell county sheriff launches a tirade on the "Russians" as the death spiral continues

http://wvmetronews.com/2014/06/02/mcdowell-countys-financial-struggles-building/

[DINGO Joe]

Time for another coal update.

Cliff's issued a WARN notice on it's Pinnacle met coal mine in Wyoming County, WV.  450 jobs in danger there.

http://www.charlestondailymail.com/article/20140625/DM05/140629561/1280

Across the border in Dickenson, VA, ANR is shutting down an aging met coal mine.  121 jobs will be gone there

http://www.tricities.com/news/article_81f92a82-fdae-11e3-ac1d-0017a43b2370.html

And SNL financial has a nice summary of coal mining job losses by state/county since employment peaked in 4Q 2011.

http://www.snl.com/InteractiveX/Article.aspx?cdid=A-28396594-11046



Just reinforces how uneconomic the CAPP coal region is.

[DINGO Joe]

McDowell county sheriff launches a tirade on the "Russians" as the death spiral continues

http://wvmetronews.com/2014/06/02/mcdowell-countys-financial-struggles-building/

From reading the article, he actually seems to have a legitimate gripe.

Well, the good news is that the Ruskies coughed up $800,000 (of 1.2 mil owed), the bad news is that just about every vendor that's being doing business with Mechel is suing for non-payment and some type of bankruptcy looks likely.  As for the part where the Chinese are gonna buy the mine, well I'd eat one of those straw hats if that happens.

I really can't tell if behind all the bluster and ranting Cappalachia actually comprehends how screwed they truly are or if stupidity and ego overrule all.