1980s: The Massive Build Out Begins – 1980-1989
The 1980s opened with the coal industry grappling with increased regulations and recovering from fierce labor battles. President Jimmy Carter was trying to convert utilities, steel mills, and industrial boilers from oil and natural gas to coal. He and his successor President Ronald Reagan were both big proponents of building a domestic energy plan. A larger slice of the energy pie was up for grabs if the coal industry could only get its act together. It eventually would, but no before the landscape changes dramatically.
A major build out was about to take place in the 1980s. The coal industry would add 151 million tons and most of the expansion would be in the West. After a 10-year moratorium, the Department of Interior (DoI) resumed coal leasing on federals lands. With the passage of the Staggers Rail Act of 1980, many regulatory restraints on the railroads were removed. The Interstate Commerce Commission would subsequently approve several rail mergers and coal consumers in the Midwest and Southeast began to see coal from the West moving their way.
While regulation was freeing up some sectors, the opposite was taking place with coal mining and utilization. Surface coal operators were learning to contend with the Surface Mining Control & Reclamation Act of 1977 (SMCRA) and the Office of Surface Mining (OSM), which administered the regulations. Underground miners were coping with dust sampling and black lung issues. Utilities were dealing with amendments to the Clean Air Act and by the end of the decade concerns about acid rain would lead to even more regulations.
As far as mining and processing, computers were beginning to play a larger role as technology shifted from mainframes to PCs. Similar to everyday life, technology and computers began to improve all aspects of mining. In the mid-1980s, Autocad drafting software operating on IBM 386s replaced hand-drawn mine maps and the Leroy lettering guide. By the end of decade, the squeal of the Hayes dial-up modems could be heard in mine offices as email began to supplant facsimiles. The increased use of computers begins to influence every aspect of mining from pass matching on the surface, to ventilation surveys underground, even train loading systems at the prep plant.
Safety performance and productivity take huge strides. Most of the coal produced underground is cut with continuous miners working room-and-pillar sections. Longwall technology has arrived and throughout the decade American coal miners would improve a system developed by Europeans. On the surface, loading and hauling equipment continued to grow in size and speed. Traditional area strip mines with draglines moving overburden begin to incorporate truck-shovel techniques for pre-stripping and mining; and they also experiment with bucketwheel excavators (BWEs) and cross-pit spreaders for moving overburden. Coal processing would evolve from a way to improve the environment by reducing black water and pyritic sulfur to a way to capture more fine coal.
Coal Age remains under the leadership of Joseph F. Wilkinson, editor, and Paul C. Merritt, managing editor, for most of the decade. At the time, Wilkinson was also editing Engineering & Mining Journal (E&MJ). During 1980 and 1981, regular editorial columns appear without photos facing the inside back cover. Most are written by Wilkinson, some are penned by junior editorial staffers and a few guest commentators weigh in occasionally. That is the only glimpse the readers get of the editorial team.
In true McGraw-Hill fashion Coal Age reports the news about the coal business and tries to remain unbiased. Throughout the decade, the editorial staff experiments with articles reporting on specific forms of equipment or areas of mining and processing. Two great examples are the U.S. Longwall Census and the U.S. Prep Plant Census, which Coal Age still publishes today. For several years, readers selected certain leaders for the Coal Age Award. Many of the covers where illustrations, which were trendy at the time, and the magazines routinely contained more than 100 pages, sometimes as many as 200 pages or more.
Coal Age also had competition. Maclean Hunter’s Coal Mining & Processing, which later became Coal Mining, was competing for readership and advertising dollars. Maclean Hunter had also successfully launched two trade shows, Coal Prep and Longwall USA. By the end of the decade, Coal Mining would take over Coal Age, and the magazine would never be the same again.
General Market Overview
The Department of Energy (DoE) estimates that about 300 million tons of coal will be needed annually by the late 1980s to supply 100 new power plants and 1,600 projected coal-fired industrial coal-units. This prediction is based on the fact that, durring most of the 1970s, annual electrical demand growth rates were about 7% and promised to run even higher in the 1980s, even though in 1982 there was a negative 2% per year growth rate. This prompted utilities to enter into numerous long-term contracts to ensure adequate supplies.
At the onset of the 1980s, it seemed coal was in for a rough period because of a drop in crude oil prices, which peaked at the mid-$30 per barrel level. But coal enjoyed a cushion of sorts, because almost all of the conversions of oil-fired electrical plants to coal-fired had been completed and federal law forbid the construction of large new oil-fired generating stations.
Oil companies, many of which owned coal mining operations, made lots of money from coal when oil prices soared in the 1970s. Several of the oil firms began dumping their coal interests after coal prices fell in the early 1980s and the returns on their coal investments began to erode.
In February 1980, Wilkinson frames the situation. “Coal enters 1980 burdened with over capacity, a soft spot market, and unemployment and mine closings in the eastern half of the country,” Wilkinson wrote. “Yet 1980 and the new decade promise increased consumption of coal, relaxations of stifling environmental regulations, greater political power working in support of coal from the White House. Despite an ill-defined national energy policy, circumstances—the steady increase in the cost of oil and the incident at Three Mile Island nuclear generating plant for instance—steadily draw the U.S. toward exploitation of its abundant power source—coal.”
By that time, it was already clear that Western coal production was going to grow significantly. The Energy Informa-tion Administration (EIA) estimated that western production would expand further. Utah would be the underground leader followed by Colorado, and Wyoming will dominate the surface mining scene followed by Montana.
By the mid-1980s, however, the news reads remarkably like the coal news of the 1920s, the 1930s and the 1950s. Over-capacity brings about cut-throat pricing, layoffs and mine closings. Coal markets are being squeezed by the arrival of more nuclear generating capacity. Coal loses market share to nuclear with 9.9 gigawatts coming online in 1987. The 31 new nuclear plants under construction in the U.S. will supply future demands and displace 7.5 million tons per year (tpy) of current coal capacity. Coal employment is down 7.4%. Production is steady and stocks are down 10%. The spot market rekindles competition.
Coal successfully weathered the tough period. The price collapse in oil, a soft economy, and the growth in nuclear power took their toll. The National Coal Association (NCA) predicts record production in 1987 of 914 million tons, up 30 million tons from 1986. The run-up, however, is not due to demand. Utilities were preparing for potential strikes related to collective bargaining with the United Mine Workers of America (UMWA). To the surprise of many, the UMWA works out an agreement with the Bituminous Coal Operators Association before the contract expires.
The decade ends with coal in over capacity. U.S. utilities, which are now planning fewer electric power plants than they have in decades, continue to delay plans for new plants of any kind until they better understand future power demands, the direction of acid rain legislation, and emerging generation technologies.
Underground Productivity Improves
Room-and-pillar mining with continuous miners and tethered shuttle cars is the predominant form of underground coal extraction. In an ad in the May 1980 edition, Joy Mining Machinery documents a one shift 2,594-ton record for its Joy 12 continuous miner at Western Mingo mines.
Diesel-powered equipment slowly but surely gains a foothold in America’s underground coal mines. Long rejected by the UMWA and still illegal in West Virginia, diesel haulage and supply vehicles nevertheless have proven themselves sufficiently productive for mine operators to bring them into the mines in greater numbers.
Thin-seam mines in the East are using continuous haulage systems. A 10-miner crew using a continuous haulage system at GM&W Coal Co.’s Grove No. 3 mine in Pennsylvania sets a company record by mining 1,793 tons of raw coal in one shift in a region where 800 tons per shift is considered good. The crew was using a Long-Airdox continuous haulage system and a Lee Norse HH106 continuous miner advanced 210 ft in 11.5 cuts in 8-ft coal.
In 1980, longwall production accounted for approximately 5% of the coal mined in the U.S. The first U.S. Longwall Census appears in the December 1980 edition. By mid-1985, the number of longwalls climbs to 118 faces, of which nearly 110 were equipped with shield roof supports.
Longwall mining continues to advance. Westmoreland Coal’s Holton mine in Virginia programs the shearer to initiate shield movement as it travels along the face. In 1986, Joy and Dowty report that Mapco’s (now Alliance Resource Partners) Mettiki mine in Maryland has set a longwall production of 322,403 tons in 22 days.
“Consol’s underground productivity increased 75%, compared with 60% increase for the coal industry,” Ralph Bailey, chairman of Conoco, the subsidiary through which Consolidation Coal Co. reports to du Pont. By the end of the decade, continuous miner sections are routinely reporting cut rates of more than 1,000 tons per shift.
Surface Mining Scales Up
The coal industry purchased and assembled a lot of draglines during the 1970s. In the 1980s, some of those surface mines encountered higher overburden and dragline re-handling was becoming an issue. Surface mines began using truck-shovel mining in pre-benching applications, while lignite mines with soft, sandy overburdens were successfully using BWEs and cross-pit spreaders.
In September 1986, Arch Minerals installed a BWE at the Captain mine in Illinois. The 700-ft machine was built on the revolving frame of an older BE stripping shovel. It works in tandem with the Marion 6360 supper shovel. Texas Utilities installed a massive cross-pit spreading system that became operational in 1986. Spanning 1,000 ft, the huge XPS system strips 4,000 cu yd per hour of overburden to access Texas lignite. The unit was built by Mannesmann Demag Corp. in Germany.
Most electric shovels have a 40-yd dipper capacity or less, but some have been built with 60-yd dippers. Hydraulic excavators are becoming more prevalent. By 1987, the Dresser 301-M, a new electric shovel, can load 170-ton trucks. It is available with a 65-yd dipper.
Still other types of machines have been developed that employ the continuous cutting concept. Most of these have a transverse cutting drum, usually under the machine, that can cut and load coal within inches of the bottom and then top load it into haulers. Examples include the Easi-Miner, distributed by Bucyrus-Erie, and the surface miner manufactured by the German firm, Wirtgen GmbH.
Caterpillar Tractor Co., which was marketing the D11N dozer, became Caterpillar. The size and strength of dozers increase. Ripping mechanisms for dozers also improved. Hydraulic systems that impart a series of impulses to the dozer’s ripper shank to make it function somewhat like a jack hammer were developed and thus enhanging the dozer’s ability to fracture rock.
The size of the rolling stock continued to grow throughout the 1980s. A front-end loader survey in 1980 included names such as Caterpillar, Clark (Michigan), Dart, International and Marathon LeTourneau. Bucket capacities on the mining class loaders ranged from a 12.5-yd Cat 992C to a 24-yd Clark 675. Marathon LeTourneau had the 22-yd buckets for the L-800 and L-1200.
A report on haul trucks in the early 1980s lists, among others, the 100-ton Cat 777, 170-ton Euclid R-170E, a 3,500-hp, 350-ton Terex Titan (the caption explained it could haul uphill), a 200-ton Mark 200, a 200-ton Rimpull CW 200, and a 250-ton Wabco 3200 (2,475 hp).
Blasting crews at the mines begin honing their skills. Mixtures of ANFO and emulsions of ANFO take the place of dynamite. In addition to improvements in blasting agents, the use of sequential blasting gained in popularity. Such blasting, timed to go off sequentially milliseconds apart, was used for casting over-burden into the previous pit and on to spoil piles, as well as to improve fragmentation.
Drilling equipment also took advantage of new technology. To improve blasthole drilling, drills acquire on-board control systems that consist of a microprocessor-based drill monitor that automatically zeros each new hole, provides the drill operator with a display of the depth and rate of penetration, prints an on-board detailed log of operations, and a graph of penetration rate versus depth.
Due to the simple fact that surface mining is a far more productive method for coal extraction, it grows to more than 61% of total U.S. production by the end of the decade.
Prep Plants Invest in Fine Coal Recovery
The increase use of continuous miners and the need to liberate sulfur were creating more fines. Prep plant operators investigate more techniques, such as heavy-media cyclones and froth flotation to recover the finer coal sizes that were once discarded but are now salable.
Prep plants also begin to experiment with other forms of fine coal recovering, including filter presses, multi-deck screens (including Banana screens) and primitive spirals. In 1986, United Coal Co.’s research division, working with Diester Concentrator and Clint Hollingsworth (inventor), develop a production version of his new forth flotation concept, the Floataire cell. Column flotation becomes a reality. The first 8-ft dia x 15-ft high commercial cell capable of processing 20 ton per hour (tph) commenced operation June 23, 1986.
Traditional technologies improve as well. KHD Humboldt Wedag offers a 350 tph Romjg for separating coarse coals. Online analysis enters the coal prep lexicon and begins to assist blending operations to better meet specifications. By the end of the decade, more than 500 prep plants are listed in the Coal Age Prep Plant Census.
The UMWA Becomes More Organized
At the beginning of the decade, employment stands at roughly 250,000. Underground coal miners are the best paid industrial workers in the country, with an average hourly wage in 1985 of $15.25. Steel workers made $13.35 an hour and construction workers averaged $12.26 an hour that year. Much of those gains came through collective bargaining.
As the decade begins, the coal industry is still recovering from the 111-day strike in 1978 when the UMWA and BCOA last negotiated terms of their agreement. In early 1980, Wildcat strikes are still occurring frequently in Appalachia. Sam Church Jr. has replaced Arnold Miller as head of the UMWA. Church moves quickly, according to Coal Age, to put the flagging union’s house in order as it prepares for March 1981 negotiations when the current UMWA-BCOA contract expires. Consol, which had withdrawn from the BCOA in May 1979, returns to the BCOA when Church describes a selective strike strategy.
Coalfield politics and bungled communications inside the UMWA helped turn 1981’s critical coal negotiations into a long strike. The impact of the strike is not expected to be as bad as 1978, but it damages the UMWA’a bargaining power. Despite promising signs in 1980 and 1981 of better UMWA leadership under Church, he ultimately fails. The result of this strike would lead to selective bargaining by 1984. From a high of 70% in 1974, the UMWA grip on eastern coalfields slips to 49% in 1978 and 44% in 1981, and many believe it will slip further. The BCOA, according to Coal Age, had its act together much more so than during the 1978 collective bargaining session.
On March 31, 1981, UMWA rank-and-file votes down the proposed contract by a 2:1 margin. Consol’s B.R. Brown warns that the UMWA rejection reflects a disturbing lack of bargaining discipline in the UMWA, which puts the integrity of the bargaining process in serious jeopardy. More than 160,000 UMWA miners are out of work.
In a sense, the strike is timely. The domestic economy is easing into a sluggish spell, with only modest gains expected in U.S. industrial production. Steel production is edging up, but electrical power generation is receding. The strike continues into June and utilities, steel companies and manufacturers begin to feel the pinch.
The strike ends after 72 days when the UMWA ratifies a new contract. Church regains some credibility. B.R. Brown simply says the contract was good for the union. A $3.60 per hour increase for all miners over the course of the contract would increase wages for the highest paid miners to $113.32 per day by 1984. The new contract restored the royalty on non-union coal and increased the payment from $1.90 to $2.23 per ton. The 45-day probationary period for red hats was eliminated and the miners received $150 for returning to work.
The October 1981 agreement was a 40-month deal instead of the usual three-year contract. The next expiration date was October 1, 1984. Before the ink is dry, speculation begins to focus on Richard Trumka of District 4 as potential candidate to replace Church.
Trumka does replace Church. In 1984, B.R. Brown is again directing the BCOA and Trumka is imposing new order within the UMWA. During September 1984, the two sides were able to reach agreement on a 40-month contract without a strike—an event that had not happened in 20 years.
The UMWA decides to selectively strike independent coal producers. A.T. Massey and National Mines Corp. are among some of the larger independents not covered under the agreement the UMWA signed with the BCOA. The contract dispute between Massey and the UMWA continues for two years. One of A.T. Massey’s subsidiaries (Omar Mining) signed with the union and raises the question as to whether that also binds the other subsidiaries.
In the meantime, women miners who had entered the workforce during the 1970s were seeking equal rights and more benefits, such as maternity leave. In an August 1986 article, “They Fought to Move In, Now They are Fighting to Move Up—Women Miners Dig Away at Discrimination,” Coal Age talks about how coal companies were reluctant to hire women in the 1970s and in the 1980s they are even more reluctant to train and promote them.
At the end of 1986, with labor negotiations a little more than a year away from the January 31, 1988, deadline, Trumka takes a tough stance. Even though market conditions have deteriorated from the last contract negotiations in 1984, rank-and-file rebuffs concession and pushes for more opportunities. It’s estimated that a strike of 75,000 workers in 1987-88 would deplete the $47 million strike fund in less than a month. “Should we fail,” said Trumka, “we will have walked away from our last best opportunity to do so. I can see a time when the union will have little if any strength at the bargaining table…”
Coal operators want the UMWA to accept more flexible hours, diesel equipment underground, and measures to contain medical costs. Trumka has expressed concerns about “double-breasting,” the ownership of union and non-union mines by the same company. In a letter to rank-and-file he said the “upcoming fight could be long, arduous, and brutal.”
In April, Trumka forges an agreement with Island Creek Coal that gives job preference to union members at all Island Creek operations, including leases and contractors. Roughly 75% of Island Creek’s employees are UMWA members. Known as the 1987 Employment and Economic Security Pact, the agreement protects Island Creek for up to one year beyond the national deadline and reduces the royalty it paid into the UMWA pension fund by 77%, which was $1.10 per ton to $0.25. Many predict the BCOA will suffer because of the early agreement. Island Creek had discontinued its BCOA membership in 1984. B.R. Brown criticizes the agreement signed by UMWA and Island Creek and other non-BCOA companies as “Band-Aids for serious problems.”
A new National Bituminous Coal Wage Agreement was ratified by members of both the BCOA and the UMWA. The five-year agreement was approved by a 2:1 margin by the UMWA. The agreement was reached January 30, 1988, one day before the expiration date of the old contract. The agreement contained a modest wage increase of $1.05/hour over three years. For the first time, the new contract allowed union miners to “panel” to bituminous mines or facilities not yet covered by the UMWA contract. Another provision requires that 100% of all job openings at a signatory employer’s sub-contracted operations will go first to UMWA classified employee laid off from the signatory’s operations. The new agreement opens the door for heightened UMWA benefits.
During April 1989, UMWA pickets the Pittston Coal Group, after working without a contract for over one year. Pittston had opted out of the BCOA, and talks continue while miners remained on the job. More than 1,700 miners walk off the job. U.S. Secretary of Labor, Elizabeth Dole appoints Robert Usery as a “super-mediator” to settle the bitter strike. Both sides eventually settle on an agreement in March 1990.
After more than 40 years of separation, the UMWA rejoins the AFL-CIO. In mid-October 1989, Trumka and Lane Kirkland, president of the AFL-CIO, appeared together in Washington, D.C., to make the announcement.
Regulations Increase
The industry is wrestling with the 1977 SMCRA laws. The DoI, under Congressional pressure, yields power to the states. Even at the middle of the decade, eight years after enactment, the National Coal Council is still challenging the legalities of SMCRA and OSM.
The Black Lung Trust Fund, set up under a 1977 federal law covering victims of coal miner’s pneumoconiosis (black lunck), is $400 million in debt. Self-insured coal companies that re-insure themselves against too many black lung cases are having policies canceled in the face of a flood of black lung cases. The Black Lung Trust Fund is financed by royalties; $0.25/ton for surface mined coal and $0.50/ton for underground coal, not to exceed 2% of the selling price.
Utilities are worried about complying with the New Source Performance Standard (NSPS). Scheduled to take effect in 1985, the revised NSPS established by the EPA in 1979 in accordance with the 1977 amended Clean Air Act, essentially place a priority on coal washing and scrubbers for power plants. The regulations regarding sulfur emissions are of the most concern:
- SO2 emissions averaging 1.2 lb SO2 per million Btu averaged over a 30-day rolling period;
- A 90% SO2 removal requirement for all coal down to a floor of 0.6 lb;
- A 70% SO2 removal requirement for coal below the 0.6 lb per million Btu level; and
- Calculations include a credit for sulfur removal by coal washing or catching of the sulfur in the fly or bottom ash.
Coal Age devotes a whole section in the January 1981 edition debating coal characteristics nationally and the effectiveness of coal washing and scrubbing techniques. Reagan vetoes the $18 billion CWA, but it becomes law in 1987.
In 1986, Henry Waxman (D-CA) proposed an acid rain bill that would reduce emissions by 5 million tons by 1993 and another 5 million tons by 1997.
In September 1987, Congress is under considerable pressure to complete action on Clean Air Act amendments by the end of the year. If the deadline is not extended, the EPA must ban new construction of sources of acid rain and halt the federal highway construction funds for offending cities. Congress fails to meet the deadline.
Mine Safety
In general, mine safety improved significantly in the U.S. Coal fatalities dropped below 100 to 70 in 1983. The number spikes to 125 in 1984, before falling to 68 in 1985. The U.S. Bureau of Mines works to improve safety for underground coal miners. New laws mandate self-contained self-rescuers (SCSRs) underground.
Despite the forward momentum, an April 1981 mine explosion killed 15 miners at Mid-Continent Resources in Redstone, Colo. The explosion is blamed on defective wiring on a shuttle car. Other ignitions and explosions occur taking the lives of miners. All of these tragedies are overshadowed by a fire at Emery’s Wilberg mine near Price, Utah, which takes the lives of 27 miners on December 19, 1984. This would be the worst disaster in the U.S. since 26 people were killed in two methane gas explosions in 1976 at Scotia Coal Co.’s mine in Kentucky. The miners’ remains were recovered in December 1985.
In April 1987, UP&L and Emery Mining were cited with 34 violations in connection with the Wilberg mine disaster. MSHA’s preliminary report raised questions about the safety of using a two-entry development section for longwall panels. MSHA believed the fire resulted from a poorly maintained air compressor.
MSHA was under fire for what critics contend is the agency’s inability to protect the lives of miners both in the field and through regulations. David Zegeer resigns as MSHA chief, a position he served since November 1983. UMWA welcomes the change. The affable Zegeer, according to Coal Age, had focused on working with mining companies where possible, trying to convert MSHA’s role from adversary to counselor.
In December 1986, J. Davitt McAteer director of the Occupational Safety and Health Law Center, a private group, wrote to Labor Secretary William E. Brock proposing an advisory committee review upcoming regulations. Brock ordered MSHA Chief Alan McMillan to take whatever actions necessary. Following congressional hearings on Wilberg, MSHA continues to take heat from all sides.
Politics
In a nationwide energy address July 15, 1979, President Jimmy Carter proposed legislation that would require power plants to halve their oil and natural gas consumption by 1990 and force utilities to burn more coal. The legislation to be introduced as an amendment to the Power Plant and Industrial Fuel Use Act of 1978, is designed to reduce utility oil consumption by at least 750,000 barrels a day by 1990 and more in 1995.
Even though there were stark differences between President Carter and his opponent, presidential candidate Ronald Reagan, voters didn’t see much of a difference when it came to energy matters. Ronald Reagan, like President Carter, believed the eventual deregulation of oil and natural gas prices would encourage domestic production. Similarly, the two also agreed the country would benefit from the increased use of coal and the safe use of nuclear power. The big difference was that Reagan believed the Carter administration had gone too far with environmental regulations.
The UMWA joined forces with the NCA, BCOA and AMC offering the country a well-reasoned program aimed at increasing the use of coal to solve the national energy problems. While they claim they are working together, Wilkinson questions how long it will last. “The strike of 1977-78 certainly served little in the cause of using coal to resolve the energy crisis,” Wilkinson wrote. “That strike and the rash of wildcat strikes that preceded it did much to demonstrate that coal could not be counted on, and that the leaders of the operators and unions were not businesslike or effective.”
Reagan was elected and the coal industry was looking forward to him undoing a thicket of environmental regulations. The Clean Air Act, which was coming up for revision in 1981, would probably be weakened by Reagan.
Reagan took office in 1981. The Reagan administration faced many decisions affecting the coal industry following some last minute activity by the Carter administration regulators in a number of controversial areas. The EPA proposed new wastewater discharge regulations for existing and future coal mines and prep plants. The new regulations, mandated under the CWA, would strengthen discharge limits for solid material, iron and manganese.
A report to the new president by his Energy Department transition team urged him to repeal the 1978 Power Plant and Industrial Fuel Use Act, accelerate the rate of oil and natural gas price decontrol, and trim the Energy Department budget. Whether or not Reagan will make good on his campaign pledge to kill the Energy Department is called a “policy decision.” After years of bureaucratic bickering between the DoE and DoI over the pace of energy development on federal lands, President Regan is viewed as a leader capable of assembling a team to carry out a pro-production policy.
A Democratic victory in the 1986 mid-term elections gives them a solid majority in the Senate. Sen. Robert C. Byrd (D-WV) became the Senate majority leader. Byrd promotes clean coal technology and fights against acid rain legislation. Byrd urges low- and high-sulfur coal producers to remain united, opposing the acid rain issue.
Status quo best describes the outcome of the 1988 presidential elections. Coal industry officials claim to be cautiously optimistic for the future of the industry under President George H.W. Bush. Bush built his platform on a strong energy policy and clean air, while backing clean coal technologies. Sen. Majority Leader Robert C. Byrd retired from the leadership position in November and passed the gavel to George Mitchell (D-Maine).
Clean air legislation moved closer to reality when President Bush announced his own emissions reduction plans. Although perhaps a dozen other bills would be introduced, Bush’s plan, which called for a 10-million ton SO2 reduction and a 2 million ton drop in NOx, serves as baseline for future legislation. The coal industry has two choices: it can either jump in front of it and attempt to stop momentum, while risking getting run over, or it can place guides and pathways that will steer the measure into a workable bill.
Mining Associations Roll with the Times
In the early 1980s, there were three national mining lobbies: the National Coal Association (NCA), the American Mining Congress (AMC) and the Mining and Reclamation Council of America (MARC). MARC was established in 1977 following passage of SMCRA and courts small- and medium-size operators with less expensive membership packages. Carl Bagge is still president of the NCA and companies are beginning to question the value of NCA membership. In May 1980, AMAX, the nation’s third largest coal producer, withdraws citing a $350,000 membership fee. Texas Utilities made a similar move when faced with a $90,000 fee. MARC soon merges with the NCA.
In August 1987, representatives from the NCA and the AMC hold an exploratory session to consider a merger. Unlike the 300-member NCA, AMC’s 600 members come from a broad range of industries—from all types—manufacturing to banking. Both groups were rated by the National Journal as among the worst trade associations on Capitol Hill because of their large size, which makes deal-making and resolution reaching far more difficult.
In 1987, the NCA announced a new president, retired four-star Air Force General Richard L. Lawson. He takes the helm at a critical point in the NCA’s history. Lawson comes to the association with strong Congressional experience, which the group will need as it preparesto debate issues such as trade, clean air legislation and budgets.
During the 1980s, a series of annual division meetings and expositions were rationalized to form MINExpo INTERNATIONAL. The AMC Coal Division held a successful Coal Expo during May 1980 at Chicago’s McCormick Place. More than 400 exhibited and attendance was strong. AMC’s International Mining Show attracted 650 exhibitors in 1984. Exhibits dip back to 450 for the October 1986 AMC International Mining Show in Las Vegas, Nev. The difference was attributed to a decline in the hardrock mining business and over-capacity within the coal industry. In 1987, Cincinnati hosts the annual convention of the AMC coal division. Sen. Dan Quayle is the keynote speaker. Hugh Lucas, vice peresident of Mining at AEP, presents a paper on the Superwall at Miegs No. 2 mine. The AMC eliminates the distinction between coal and hardrock mining shows and decides to sponsor international expositions in 1988, 1992, and every subsequent four years. MINExpo INTERNATIONAL begins. AMC’s MINExpo 1988 is scheduled for April 24-28 in Chicago, Ill.
Who’s Who
By the mid-1980s, the U.S. economy is in terrible condition. The nation’s economy is stagnant. The mines are not producing coal at the level they were designed for. Many coal companies that overpaid for properties during the energy-short 1970s are being squeezed by customers and low-cost competitors. Something would have to give. Either wages would fall or companies would go out of business or maybe both. The country’s top coal companies were reporting flat earnings with strong performers not doing as well as previous years. Volume was low, prices were low, and the industry was ripe for rationalization or consolidation.
Peabody was already implementing productivity improvements, cutting administrative staff by 15%, and trying to improve operating costs. The company believed that low prices would continue throughout the rest of the decade.
Consol Chairman B.R. Brown believed the outlook to be brighter. He thought production would exceed 900 million tpy. He cited two important points: a growing U.S. economy and the efforts to build stockpiles in anticipation of the 1988 labor negotiations with the UMWA.
A committed Consol increased its reserve base while others left the business. Broken Hill Proprietary (BHP) sold its Sierra Coal to Consol for $49 million. Sierra had 300 million tons in eastern Kentucky and West Virginia. Inland Steel Co. sold its three remaining mines to Consol. The deal includes the Sesser and McLeansboro mines in Illinois and a third property near Marshall, Ill.
A dramatic shakeout begins to take place in Appalachia. Peabody acquires Eastern Associated Coal Corp. (EACC). Eastern Gas & Fuel Associates swapped its coal properties for a 15% interest in Peabody Holding Co. The properties include 800 million tons of reserves in West Virginia. The second largest coal producer in West Virginia behind Consolidation Coal Co., EACC produces 8 million tpy.
Peabody made its first move into West Virginia in 1984 when it acquired Armco Steel’s coal properties. The EACC assets amounted to 10 active mines in West Virginia and an inactive Powderhorn Coal near Grand Junction, Colo. Eastern becomes one of five Peabody stockholders. Prior to the deal, Newmont Mining owned 61.5%, Boeing and Bechtel (16.75% each), and Equitable Life Insurance Society (5%).
Arch Minerals Corp. offered $135 million Diamond Shamrock Coal. The deal falls through before being accepted in May of the following year. The transaction included more than 700 million tons of reserves. Many were surprised about the low price. Diamond Shamrock was selling 7 million tpy at the time. Arch Minerals was jointly owned (50:50) by the Hunt Brothers and Ashland Oil.
Shell Oil and Fluor Corp. announced plans to split A.T. Massey. The nation’s fifth largest coal company has been operated as a 50:50 joint venture since 1980. Under the agreement, Shell would get Marrowbone, Wolf Creek and Pike County Resource Groups, along with Massey’s Atlantic Coast coal terminals in Newport News, Va., and Charleston, S.C. Massey’s Richmond headquarters and other mines (Martin County Coal, Sidney Coal, Rawl, etc.) would go to Fluor. In 1986, the mines going to Fluor produced 18.8 million tons.
Times were tough for Island Creek Coal, but the company did make some giant strides from the difficulties of 1984, when it lost $40.3 million. “Last year’s progress doesn’t provide any guarantees for the future because coal prices will remain depressed and the industry will stay brutally competitive for the foreseeable future,” said Bud Ogden, Island Creek’s chairman.
Quintana Minerals, formerly Robertson Coal Co., bought 500,000 acres of land in West Virginia containing 1 billion tons of coal from CSX. Coal no longer fits with company’s strategic plans. Virginia Power sold Laurel Run to Island Creek. Pittston acquired Paramont Coal in Wise, Va. The assets include four surface mines and four underground mines that produced 1.2 million tons.
In October 1986, U.S. Steel laid off 545 in southern West Virginia. At the end of 1986, U.S. Steel shut Alpheus Operations, dismissing 1,000 workers. (Gray, W.Va.). Five underground mines and a prep plant, which it opened in 1902. The mine, which produced low vol met coal for USX plants in Gary and Clairton, Pa., was supplanted by USX mines in Alabama.
The M&A activity would continue into the 1990s.
Worldwide Events
During the 1980s, world coal production grows to 3.1 billion mt. China sets its sights on 1.2 billion tons by 2000. It has already emerged as one of the world’s leading coal producers with an annual output of about 850 million mt RoM coal, but has not yet become a factor in international coal trade.
Sir Robert Haslam took over as chairman for British Coal, which is undergoing a massive restructuring. He succeeds Sir Ian McGregor. Haslam said he expects more mine closures and voluntary layoffs. McGregor’s program of layoffs and mine closures trimmed BC’s losses from £485 million in 1983-84 to £50 million in 1985-86. Haslam takes over at a period when price concessions from British utilities were forcing BC to lose another £400 million in revenue.
Australia, Canada and Colombia begin to export more coal. Drummond Coal begins to invest in Colombian coal mining operations. Exxon buys Colombia’s Carbocol and begins to lauch El Cerejon. The Kooragang coal terminal opens in Newcastle, New South Wales, Australia. It has a 50 million mt capacity. Canada’s production grows to 60 million tpy. Possible sanctions against South Africa could open European coal markets for the U.S. and other exporters. Demand for coal in Asia is expected to grow considerably through 2000.
Coal Age’s Demise
During the autumn of 1987, Harold W. “Terry” McGraw, the 38-year-old heir apparent and son of the chairman emeritus, Harold W. McGraw Jr., decided to take McGraw-Hill Publishing Co. in a new direction. Except for a couple architectural, aviation and electronics publications, and Engineering News Record, he sells many industrial trade journals, including Coal Age and E&MJ. The McGraw-Hill mining publications group had been losing money since 1984. Advertising revenue had declined. McGraw-Hill had showed considerable patience with the mining publications before giving up on them. One of the problems was costs and the overhead for operating a business in Manhattan was high. The Maclean Hunter titles were headquartered in Chicago, which was more reasonable.
Few readers probably noticed that, in the upper left-hand corner of the magazine’s January 1988 edition, the mast had changed from McGraw-Hill to Maclean Hunter. A letter from Publishing Director Robert Lick explained that, on December 10, 1987, Maclean Hunter Publishing Co., the Chicago-based subsidiary of Canada’s leading publishing company, acquired Coal Age from McGraw-Hill. Also included in the sale were E&MJ and McGraw-Hill Mining Information Services, which published the Keystone Coal Industry Manual and other mining-related directories.
The acquisition made Maclean Hunter’s Mining & Construction Group the largest combined force for mining trade journals. The 75-year-old Coal Age had been acquired by its 25-year-old rival, Coal Mining, which was launched in 1964 as Coal Mining & Processing. The Maclean Hunter crowd took pride in the fact that it was reaching a different audience than Coal Age. It targeted middle managers with controlled circulation (free distribution) while Coal Age was serving the entire market. Readers paid for subscriptions to Coal Age. The Mining & Construction Group had already launched two successful trade shows, Coal Prep and Longwall USA. Both of which targeted niche audiences and still exist today.
Moving forward the plan would be to merge Coal Age with Coal Mining. The new title would be called COAL. Combining the strengths of the two predecessor magazines, Lick believed COAL provided coal men and women with the information they needed to know to operate effectively and profitably. In the next edition, February 1988, Joseph F. Wilkinson was replaced by Mark Sprouls as editor. Sprouls was editor of Coal Mining and had recently taken over from Eugene Guccione. Prior to him, Don C. Jones served as editor. George Lindsay founded the publication in 1964 and served as the original editor. Former Coal Age Managing Editor Paul C. Merritt remained with the publication as a consulting editor for a few years before moving into retirement. Former Eastern Gas spokesperson Arthur P. Sanda appears on the masthead as eastern field editor. Russell A. Carter was the western field editor with Coal Mining and remains in that position today.
In 1989, Merritt replaces Sprouls and a Coal Age editor emerges to take over the title. He pens several editorial columns and the magazine continues to offer dignitaries the “Coal Age” award in 1988 and 1989. A new trade journal, COAL, would now cover the coal business as it entered one of its most transformative periods.
