The 1990s: Market Shifts Bring About Massive Consolidation – 1990-1999
Building on the momentum of a fourth consecutive year of record coal production, the U.S. coal industry mined 1.029 billion tons in 1990, a 56 million ton increase over 1989. Most of the increase in coal production occurred east of the Mississippi, where coal production reached a record level of 635 million tons, 36 million tons more than the previous year. The West set a record as well with 401 million tons, a 20 million ton increase.
The impending implementations of the Clean Air Act Amendments of 1990 (CAAA) and utility deregulation have already created a shift in coal demand and production. Wyoming mines were ramping up production and by 1992, coal production totaled 190 million tons per year (tpy). Wyoming has been the leading coal producing state for five consecutive years, and Powder River Basin (PRB) coal has energized this climb.
Coal prices continue to decline. Electric utilities paid on average $28.60/ton of coal in 1993, which was down from $29.36/ton in 1992. Since 1985, when utility coal averaged $34.53/ton, prices have pretty much edged downward every year. Coking coal prices, which averaged $54.30/ton in 1985, now stand at $47.44.
By the Autumn of 1994, the electric power industry is undergoing major structural changes initiated by retail wheeling in California that is reshaping traditional roles, creating opportunities for new participants, and redefining the scope and character of government regulations. Emerging from these changes is a less-tightly integrated, more diversified and above all, more competitive industry. Coal suppliers will come under growing pressure to renegotiate contracts. Utilities with long-term contracts above prevailing prices will be under strong economic pressure to either buy-down or write-down the uneconomic portion of those contracts. The transition costs are referred to as “stranded investments.” The experience of the North American gas industry in the 1980s serves as a sobering reminder.
By mid-1995, the ILB begins to shrink. Typically, the ILB produced 130 million tpy (60 million tpy in Illinois, 40 million tpy in western Kentucky, and 30 million tpy in Indiana). Between the CAAA of 1990 and the UMWA-BCOA strike of 1993, the region took a significant hit. Nearly 13 million tons of western coal and 7 million tons of eastern coal moved into the ILB, while utility purchases as a whole declined by 2 million tons. The ILB lost 22 million tons before Phase I arrives.
Mergers and acquisitions among coal transporters create economies of scale, eliminating multi-line hauls and overhead, and extending the reach for coal transporters. Some of the rail M&A activity includes: Atchison Topeka Santa-Fe-Burlington Northern, Denver Rio Grande Western-Southern Pacific, and Union Pacific-Chicago & North Western. Eventually, the U.S. has two rail carriers, Burlington Northern-Santa Fe (BNSF) and Union Pacific (UP) moving coal east. They begin to experience delays moving massive amounts of coal from one small location in the West, Campbell County, Wyoming, and it’s only going to get worse.
By 1996, PRB production is expected to grow to 320 million tpy by 2000 and 360 million tpy by 2005. PRB production increases since 1990 have been startling—growing from 200 million tpy to 285 million tpy by 1995. Even more surprising is that 40 million tpy of new production can be attributed to expanded output at three mines: Powder River Coal’s North Antelope and Rochelle mines, and Kerr McGee’s Jacobs Ranch operation. Several other mines in the area also increased production by 3 million to 8 million tpy.
Analysts report that, contrary to the belief, environmental compliance is not the only factor driving PRB demand, price is a factor too. Utilities have found that the derate for burning an 8,800 Btu/lb coal was easily overcome by its pricing.
Toward the end of the decade, coal futures contracts are being developed for possible listing on the New York Mercantile Exchange (NYMEX). NYMEX has established a strong track record with futures and options contracts for other energy commodities including crude oil, refined petroleum products, natural gas and electric power. The planned introduction of coal futures trading is a response to structural changes in coal and power markets that are expected to increase exposure to price volatility and stimulate demand for price risk management services. For coal buyers and sellers, the contracts offer protection against adverse price swings and serve as benchmarks for price indexing in term supply contracts.
By mid-1998, U.S. coal production is expected to hit record levels in each of the next three years rising to 1.14 billion tons in 2000. Coal’s share of utility generation is at a high of 57.2% in 1997. That level is expected to remain flat as natural gas increases its share and nuclear pulls back.
Mine Safety Improves Dramatically in the 1990s
During July 1990, MSHA levies the largest fine to date for a single coal mining accident ($507,996) against Pyro Mining, a subsidiary of Costain Coal, as a result of the September 13, 1989, methane explosion that killed 10 employees at its William Station mine in Kentucky. Three coal company executives would eventually be sentenced to prison for the explosion in July 1996. The longest sentence imposed (18 months) was for the general superintendent.
In an effort to attain his goal of zero fatalities by the year 2000, Assistant Secretary of Labor for Mine Safety and Health, William J. Tattersall, makes a concentrated effort to address the problem where it is most prevalent—the Appalachian region.
The U.S. Bureau of Mines has also focused its efforts on improving safety and productivity. Multiple research projects are ongoing, including pre-driven longwall recovery rooms, ground support, ventilation, detonator testing, dust control, horizon control, fine coal processing, diesel engine testing, etc.
During the spring of 1991, a wide spread dust scandal rocks the U.S. coal industry. More than 500 coal operators face nearly $5 million in fines as a result of the Department of Labor citations for tampering with dust samples. The coal industry largely rejected the charges, which revolved around the abnormal white centers (AWC) on the filter media. At a Washington, D.C., press conference Labor Secretary Lynn Martin proposed a civil penalty of $1,000 for each violation and said she would vigorously pursue criminal investigations related to tampering with dust samples. As Martin spoke, an assistant demonstrated three different methods for falsifying the samples. The U.S. Department of Labor requires the use of tamper-resistant sampling cassettes to help ensure the integrity of mandatory dust sampling.
On July 20, 1993, the Federal Mine Safety and Health Commission issued a decision in the AWC case. The decision concluded the Labor Secretary had failed to carry the burden of proving by preponderance of the evidence that AWC on a cited filter establishes that the mine operator intentionally altered the weight of the filter. The decision represents a major victory for the accused companies that have for more than two years litigated and refused to acquiesce in the Secretary’s allegations of tampering.
Coal-related fatalities drop to new lows during the decade. Mining fatalities in coal fall to a record low of 45 in 1994, 39 in 1996 and 29 in 1998.
Environmental Regulations
At the end of the 1980s, the Bush administration established a new concept for controlling emission rates by caps and credits, breaking away from the old command-and-control approach. Under this scheme, utilities are granted allowances or credits according to an elaborate formula that takes into account the average sulfur emissions during a three-year period from 1985 through 1987. This creates a nationwide bank of tradable credits whose value will be a function of the value of removing 1 ton of SO2 per year.
The CAAA mandates a 10-million-ton cut in SO2 emissions, but allows leeway for emissions trading to reach the goal. The economics of installing scrubbers against that of using low-sulfur compliance coal will largely depend on the details of the emissions trading rules.
The first phase effects 111 coal-fired power plants in 21 states, but concentrated mostly in the Midwest. They must cut their emissions by 1995. The law provides an extension for those that decide to build scrubbers. The second phase of the law mandates emissions reductions by 200 power plants by 2000. The law requires that NOx be cut by 2 million tpy to be phased in after 1995.
In 1990, the terms global warming and carbon tax also emerge. Coal leaders applaud President Clinton’s climate action plan at the end of 1993. The Clinton administration’s Climate Change Action Plan relies primarily on voluntary steps to reduce greenhouse gas emissions. Instead of calling for regulatory or legislative actions, the Clinton global warming plan establishes 50 programs including supply options and demand reduction efforts by which businesses can cooperate on emission reductions.
During mid-1995, clashes over environmental policy take place in the context of a federal budget plan after the Republicans take control of Congress. The Congressional strategy for sweeping reductions in federal environmental programs, aimed at the bipartisan goal of balancing the federal budget, draw fire from Clinton and Interior Secretary Bruce Babbitt. Two measures supported by the mining industry include amendments to the Clean Water Act (CWA) and a 35% cut in the Office of Surface Mining (OSM) budgets.
As the decade closes a major battle erupts in Central Appalachia over mountaintop mining. A Chief U.S. District Judge prohibits the West Virginia Department of Environmental Protection from issuing permits. Having rock and dirt classified as waste changes the interpretation of Surface Mining Control and Reclamation Act (SMCRA) and the CWA.
Government & Policymakers
In November 1992, the Bush administration’s National Energy Strategy and key aid to the coal industry passes Congress. Crucial sections of the bill affecting the coal industry will institute an advanced clean coal technology research, development and demonstration program. Among the most controversial sections of the bill was one that will fund healthcare benefits for some union coal miners covered by insolvent trusts. Health benefits would be paid in part by surplus trusts and from Abandoned Mine Land fees.
The bill’s section on global climate change represented a victory for the coal industry. Environmental activists’ effort to mandate a strict global warming policy was turned back. The bill called for a voluntary inventory of greenhouse gasses.
William J. Clinton wins the 1992 presidential election. President Clinton’s running mate and now vice president, Al Gore, is an environmental activist of the first order. President Clinton appoints Carol Browner as EPA chief. She led Florida’s Department of Environmental Protection and received an immediate endorsement from the Sierra Club. Clinton nominates Robert Reich as Labor Secretary. He appoints Hazel O’Leary Energy Secretary, the first and only African-American female to hold that position.
President Clinton proposes a Btu tax beginning July 1, 1994, to be phased in by one-third increments over three years. The tax is intended to raise more than $22 billion. The national Coal Association (NCA) estimates the tax would cost 600,000 jobs and a $170 billion loss in gross domestic product.
President Clinton nominates Davitt McAteer as assistant secretary of labor for mine safety and health. Clinton praised McAteer saying his important work in mine safety will assist him as he works to ensure the safety of our country’s mine workers. McAteer’s strong feelings about mine safety and health enforcement have been manifested over the years in litigation he has brought on behalf of miners effected by black lung and other safety and health issues.
McAteer has a long record of activism stretching back to the 1970s. He worked for the UMWA from 1972 to 1976. Since then, he has been a principal in the Mining Project of the Center for Law and Social Policy and is executive director of the Occupational Safety and Health Law Center.
McAteer’s perspective on mine safety law and his sometimes bitter criticism of mining companies is reflected in his articles in the West Virginia Law Review. In 1981, McAteer wrote, “the harsh fact is that many mine owners and manager still cling to the notion that accidents are caused primarily not by working conditions but by workers.”
During February 1995, the American Mining Congress (AMC) and the NCA announce a merger. The NCA and the AMC officially merge to form the National Mining Association (NMA). The NMA’s mission will be to create and maintain a broad base of political support in Congress, the administration and the public. In doing so, as a secondary goal, to help the country and the world realize the full promise and potential of the natural resources derived from America’s mining industry, may be realized. The new association will be based in Washington, D.C., and will be headed by Richard L. Lawson, who will serve as the NMA president and CEO. He has been the president of the NCA for eight years. The 381 members of the NMA include coal and hard rock mining operators, mineral processors, transporters, equipment manufacturers, financiers and engineering firms.
During the 1994 mid-term elections, Republicans take control of both houses in Congress. Clinton’s proposed initiatives become irrelevant with the congressional agenda being set by the Republican leadership. Three federal agencies, the U.S. Bureau of Mines (BoM), the U.S. Geological Survey and the National Biological Survey, are targeted for elimination by the Republican “Contract with America.”
In mid-June, the House Interior Appropriations Subcommittee gave voice approval to a draft of the 1996 Interior Department budget appropriations bill, in which the BoM is eliminated. The subcommittee cut the current spending by $1.4 billion brining the appropriations down to $11.9 billion. The subcommittee earmarked $67 million in closing costs for BoM functions. The legislation abolishes a relatively small federal agency that played a huge role in protecting and improving the lives of the nation’s miners. Certain health and safety functions of the BoM were transferred to the DoE Fossil Fuels Division, including the Pittsburgh Research Center. Roughly 1,200 mining-related scientists were released just before 1995 holiday season.
More budget battles during October 1995 hit OSM hard, MSHA and DoE survive with wounds.
U.S. Producers Consolidate as Oil Companies Exit
The 1990s open with Hanson Industries, a British industrial conglomerate, making an offer to buy interests in Peabody Holdings from Eastern, Boeing and Bechtel for $504 million, which would give it the 45% of the company not held by Newmont Mining. Hanson already owns 49% of Newmont, so it would effectively control 70% of Peabody Holdings. Later in the year, Hanson sweetens the deal to more than $1.2 billion by purchasing Newmont’s remaining stake in Peabody for $725 million. Peabody, the largest U.S. coal producer will now be held by a foreign concern.
Hanson has a reputation for taking over companies and breaking them up profitably and the transaction stirred speculation that Peabody, which was producing 87 million tons at the time, would face an uncertain future. In November 1990, Hanson cut 275 salaried positions at Peabody.
At the same time, BP America sold Old Ben Coal Co. and other U.S. coal properties to Zeigler. In many respects, Old Ben and Zeigler were a lot alike. Both are old-line coal companies whose origins date back to the turn of the century. Both made Illinois their main base of operations. Both have mines represented by the UMWA. There were also some differences. Old Ben adopted longwall mining early and Zeigler preferred room-and-pillar mining, Zeigler was producing 4 million tpy and Old Ben was producing 12 million tpy. No purchase price was disclosed.
In August 1990, Arch Minerals made an offer to buy Blue Diamond Coal. Although the price is not disclosed, analysts estimate the deal to be worth about $200 million. The move gives Arch Minerals access to operations and reserves in eastern Kentucky and several high-value coal export contracts.
Already a major low-sulfur coal supplier in the West, Amax Coal Industries strengthened its position as a low-sulfur supplier in the East by paying $100 million for Cannelton Holding Co. and its sizable reserves in West Virginia. Amax is the third largest coal producer and shipped 44 million tons in 1990. Cannelton, a subsidiary of Algoma Steel, operates four divisions, which include surface and underground mines. Of its 138 million ton reserves, 100 million is believed to be low sulfur.
Ashland Coal purchases United Co.’s Dal-Tex Coal Corp., which has extensive low-sulfur reserves in West Virginia, for $250 million.
During June 1992, Alabama’s largest coal mining company, Jim Walter Resources, terminates 720 jobs. Officials cite a weak world economy and poor coal sales for the loss of one quarter of its workforce at four mines. In August of that year, Zeigler buys Shell Mining making it the fourth largest coal company.
In March 1993, Hanson Industries traded gold assets to Santa Fe Pacific Minerals Corp. for a couple of coal and quarry assets. Hanson picks up the Lee Ranch mine and 700 million tons of reserves and places the quarries under its aggregate division. The transaction is valued at $150 million. Lee Ranch, a surface mine that began mining in 1984, produced 4.1 million tpy of coal under a long-term contract for southwestern utilities.
Kennecott Energy made two major acquisitions in March 1993. It purchases Nerco for approximately $470 million and Sun Co.’s Cordero mining complex for $120.5 million. Nerco operates the Antelope and Spring Creek mines, and holds a 50% interest in the Decker mine. Nerco has 639 million tons of reserves and produces 18.3 million tons. Cordero produces 17 million tons and reserves of 385 million.
In April 1993, Consolidation Coal acquired Island Creek Coal from Occidental Petroleum. In 1992, Consol produced more than 56 million tons and Island Creek produced about 16 million tons.
Amax Coal Industries merged with Cyprus Minerals in July 1993 to form Cyprus Amax, and in November 1993, Pittston acquired five Addington subsidiaries. The $157 million deal included four eastern Kentucky mines that were producing about 3 million tons annually.
In June 1994, Kennecott purchased Colowyo Coal from W.R. Grace & Co. for $253 million. The move increases Kennecott’s coal reserves to more than 1 billion tons. The Colowyo mine in Colorado produced 4 million tpy and would increase Kennecott’s total production to more than 40 million tpy.
Peabody Holding purchased Carter Mining Co. from Exxon Coal USA in September 1994. The sales price was not disclosed. Carter Mining operated the Rawhide and Caballo mines in the PRB. Both mines produced 25 million tons in 1993.
Ashland Oil acquired a majority of the stock in Ashland Coal in January 1995 and speculation of a merger between Ashland Coal and Arch Minerals begins. Ashland Oil owns 50% of Arch Minerals.
In February 1996, Zeigler subsidiary Triton Coal launched the North Rochelle mine.
After transferring the ownership of several of its Virginia Division operations to Intrepid Coal in October 1996, Westmoreland Coal Co. and its four subsidiaries filed for Chapter 11 bankruptcy citing $160 million in retiree benefit obligations. The company said filing Chapter 11 would protect it from demands by the UMWA pension and benefits fund.
In March 1997, Ashland planned to merge the two coal companies it controlled, Ashland Coal and Arch Minerals, in a deal that would create the nation’s fifth largest coal company.
Kennecott Energy acquired the assets of Caballo Rojo Inc. for $99 million. The Caballo Rojo mine, located adjacent to Kennecott Energy’s Cordero Complex.
The Atlantic Richfield Co. (ARCO) decided to withdraw from the coal business in May 1997 disposing of its U.S. and Australian coal mining operations. In the U.S., ARCO owned the Black Thunder and Coal Creek mines in Wyoming, the West Elk mine in Colorado, and Canyon Fuel Co. in Utah, which operated three underground mines.
In September 1997, A.T. Massey purchased United Coal Co. for an undisclosed sum, giving Massey its first mines in Virginia. The purchase included two mining complexes: Wellmore, near Big Rock, and Know Creek, near Richlands.
Similar to other oil companies, Kerr-McGee announced it would exit the coal business in March 1998. Kennecott Energy bought Jacobs Ranch from Kerr McGee for $400 million.
During the summer of 1998, Lehman Merchant Banking Partners purchased the Peabody Group for $2.3 billion. The transaction was part of the sale of Hanson’s Energy Group to Texas Utilities. Peabody becomes an independent company again.
During August 1998, AEI Resources buys Zeigler Coal Holding in a deal valued at $849 million. Zeigler is the second largest publicly-traded coal company with assets in the PRB, ILB and CAPP. AEI is a private company owned by the Addington family (Addington Enterprises Inc.), with assets primarily in the East.
Chevron announced its intention to sell the Pittsburg & Midway Coal Mining Co. (P&M). P&M owned five coal mines in four states and had a one-third partnership in the Black Beauty Coal Co. in Indiana. Peabody eventually purchases P&M’s share of Black Beauty for $150 million bringing its total stake in the company to 81.7%.
In February 1999, Peabody Group merges the North Antelope and Rochelle mines creating the largest U.S. coal mining complex. The North Antelope-Rochelle complex had a combined output of 64.7 million tons in 1998. Peabody’s Powder River Basin Coal, which also operated the Caballo and Rawhide mines, produces 96 million tons in 1998.
Also in February 1999, Vulcan Coal Holding bought Triton Coal from AEI Resources for $275 million. Included in the transaction were the Buckskin and North Rochelle mines, which have a combined capacity of 30 million tpy. Vulcan Coal Holding is headquartered in Zeigler’s old office in Fairview Heights, Ill.
In mid-May, German coal and energy conglomerate Ruhrkole AG (RAG) purchased Cyprus Amax for $1.1 billion.
CONSOL Energy goes public trading under the ticker symbol CNX.
Railroads Struggle to Keep Pace
In July 1994, railroad executives hold a summit to discuss haulage problems in the PRB. Chief executives of the three major carriers, Burlington Northern, Chicago & North Western and Union Pacific, meet in Omaha to discuss the topic of chronic delays. They agree on a comprehensive plan, which included millions of dollars in track improvements and expansions, to relieve the situation. In addition to allocating more managerial staff in the field, the railroads agree to make improvements and plan for better maintenance schedules. BN will add 20 miles of double track on the joint line and the railroads agree to share the $24 million cost. An estimated 230 million tons of coal will be mined in the PRB this year and production is expected to increase 3% to 5% for the next few years.
During the 1990s, the Interstate Commerce Commission was disbanded and replaced by the Surface Transportation Board (STB). Beyond discussions with the railroads about service, the only legal recourse the shippers have is either using the STB or taking legislative action. In each of the recent merger cases, the STB has sided with the rail carriers.
Beginning in 1998,train delays in the PRB begin to have an impact on utility stockpiles. If demand for PRB coal grows as expected, the railroads on average will have to load 10 more trains per day than they are currently loading—and they were already loading trains at record levels. With NS and CSX preparing to divide the Conrail assets in mid-1999, eastern U.S. coal markets will be served primarily by two railroads and many fear the rail service issues will spread to the East.
Coal Worldwide
With the exception of Great Britain, the world coal trade begins to recover midway through the decade. During October 1992, the British government privatizes British Coal Corp. BCC has been in almost continuous decline since the year-long miners’ strike in 1984. Output has fallen 15%, or 15 million mt, 83 mines (62%) have closed and employment has dropped by 121,500 (68%). Although productivity has risen proportionately, it was still only 5.31 mt per manshift in 1992. BCC is an over-manned and unproductive organization by world standards that is holding onto its crucial power station market only through government intervention.
Indonesia emerges as a force in the world coal market. In 1994, Indonesia’s total output exceeded 33 million tons, a 15-fold increase in 10 years. Over the next six years, the Indonesian Government projects production to increase by almost 9 million tpy by 2000; they are expecting to produce 88 million tons.
By 1995, Colombia has now grown to become the world’s fourth largest exporter after Australia, the U.S. and South Africa. Coal is the country’s third largest export behind coffee and petroleum. Current production is 22 million mt, of which, 16 million mt is exported. Vast reserves of high-quality coal are located in relatively close proximity to the Caribbean Coast.
Production from El Cerrejón’s North Mining complex rivals large North American surface coal operations. The mine has reserves of 1.6 billion mt and is a 50:50 joint venture of Carbocol, the Colombian state company formed in 1976, and Intercor, a subsidiary of Exxon Corp.
Cerrejón shipped 14 million mt in 1993. Other important producers for the export market include Produce and Carbones del Caribe. All three have expansion plans that will raise total capacity to 33 million mtpy by 2000.
The world coal market staged a recovery in 1994. Hard coal production rose by 2.4% from 3.79 billion mt in 1993 to 3.88 billion mt in 1994. Since 1974, world hard coal production rose 61%, which equals an average annual growth rate of 2.1%. The leading producers are China (1.27 billion mt), U.S. (930 million mt), Russia (414 million mt), India (283 million mt), South Africa (200 million mt), Australia (195 million mt) and the European Union (144 million mt).
Longwall Production Pulls Ahead of Continuous Miners
The underground coal industry in the U.S. is about to experience an evolutionary shift in production as coal operators master longwall mining. At the beginning of the decade room-and-pillar mining still dominates the landscape. Continuous miner manufacturers are concentrating efforts on making the machines operate better and improving development methods for longwall gate roads. Four manufacturers exist: Eimco, Jeffrey (Dresser), Joy Technologies and Simmons Rand. Two of the manufacturers have developed on-board independent roof bolting systems. Joy is field testing a system that gives the continuous miner the ability to repeat the cutting cycle automatically. With a cut control system, the machine is shown where to start and stop and how far to sump into the face. The machines will repeat the sequence until it is told to change.
Labeled by some as the most productive mine in the country, Campbells Creek Coal Co., near Bell, W.Va., a contractor for Arch Minerals’ Catenary Coal, is regularly mining 3,200 tons per shift in 1991. The single section mine cuts coal with a Joy 12CM12 continuous miner and uses two Joy 10SC shuttle cars and a battery-powered Simmons-Rand Unahauler.
In 1990, continuous miners represent 55% of underground production and longwalls are producing about 37%. Continuous miners accounted for 60% of underground production in the mid-1980s while longwalls represented only 31%. While the number of longwalls dropped below 100 for the first time in 1990, longwall productivity was at an all-time high of 2,372 clean tons per unit-shift. Productivity ex-pressed in tons per man-shift also increased to 174.
An article detailing the Twentymile Coal Co. in Colorado (December 1992) that was operating some of the longest longwall panels in the country at the time, explained how the mine was using tripper drive technology to power the conveyor belts. At the time, a 10,000-ft longwall panel was considered long. Theoretically a tripper system, one where the conveyor trips coal back onto itself, could be de-signed for any length. Installing another tripper drive anywhere along the conveyor reduced the effective tension and recently developed load-sharing systems based on programmable logic controllers allowed the drives to communicate with each other. This prevented excess sag or the drives from fighting against each other and tearing the belt apart.
As productivity climbed the number of faces declined. The U.S. longwall population dropped to 90 in 1992, 80 in 1994, 72 in 1995, and 65 in 1997. Even though the population drop by more than 35%, production skyrocketed.
Longwall mining tonnage first overtook continuous mining tonnage marginally in 1994, and since then, has steadily moved ahead. In 1996, total U.S. longwall production reached 196 million tons and continued to pull ahead of continuous mining production, which totaled 178 million tons. In 1996, total underground production of 410 million tons was made up of longwall (48%), continuous miners (43%) and other (9%).
Surface Mining
Several advancements are made in the field of drilling and blasting during the 1990s. Drill manufacturers have automated several aspects of blasthole drilling and improved the operator interface. Several models feature new automated controls integrated with diagnostics and a hydrostatic propel system.
Surface mines are using bulk-loaded emulsion and emulsion-Anfo blends. An emulsion explosive can be made extremely fluid and pumped long distances for filling large diameter blasthole. Since they have a high velocity of detonation and high density, they have high detonation pressures. A dozen manufacturers and research organizations are developing electronic delay detonators.
Mine plans are adapting to electric shovels loading 240-ton haul truck in three passes. By 1990, Dresser’s Haulpak Division is marketing a 240-ton 830E electric drive haul truck. Harnischfeger is promoting the P&H 4100 electric shovel, which can load a 240-ton haul truck in three passes with a 56-yd dipper in 28 seconds.
In the mid-1980s, nearly all haul trucks greater than 120 tons were diesel-electric powered. When Cat announced the 240-ton 793 haul truck in 1991, the industry realized that the mechanical drive transmission had caught the electric drives. Haul truck makers include: Cat, Dart (Unit Rig), Euclid (VME), Haulpak Dresser, Komatsu Dresser, Lectra Haul (Unit Rig), Titan (Marathon LeTourneau) and Wiseda.
Just as the industry starts to grow comfortable with three-pass loading, truck makers begin to move toward today’s ultra-class haul trucks. During June 1995, Unit Rig introduced the new 260-ton MT-4400 Lectra Haul. Its frame can support a 310-ton load without failure and will provide a basis for still larger trucks in the future. Komatsu Dresser introduced the 300-ton 930E haul truck.
Electric shovels are now four-pass loading 320-ton trucks. In the past, haul trucks chased the shovel and now the shovels were chasing the trucks. In addition to improving the capacity, shovel makers were looking to improve reliability with better electronic switching technology. They are also improving the diagnostics system to better troubleshoot maintenance. The man-machine interface continues to improve.
Hydraulic excavators have grown to the point where they can also load 320-ton trucks. At this point, almost all of the hydraulic excavators are paired with a truck manufacturer—Komatsu now owns Demag, Terex Ming combines O&K and Unit Rig, Hitachi is paired with Euclid, and Cat and Liebherr make hydraulic excavators and trucks (Liebherr purchased Wiseda).
Hydraulic excavators offer a great deal of versatility. Although they are diesel-powered, many of them employ a similar electronic monitoring system and improved operator interface. In July 1998, Komatsu Demag unveiled the H655S hydraulic mining shovel with a 46-yd bucket. The machine weighs 1.51 million lb and is powered by a 3,714-hp 16-cylinder diesel engine. New geometry increases the shovels breakout capacity.
Michelin develops the 63-inch tire, which allowed truck makers to move to the 360-ton level. Liebherr introduced the 360-ton T282 during October 1998. Cat announced it will build the 360-ton 797 by the end of 1998, and predicts its mechanical drive will deliver 5% to 10% better fuel costs per ton as well as 10% to 15% lower operating costs.
With the exception of Cat, all of the trucks are using AC drive systems. Cat, however, stands by mechanical drive systems and says its trucks are operating 500 to 1,000 hours more than the electric drives. Electronic monitoring and control systems have become standard items on the tucks as well as machine health diagnostics.
The haul trucks are getting larger and so are the loading height and tray width. In August 1999, P&H launched the 4100 XPB electric shovel to keep pace with ultra-class haul trucks. Changes to the front-end geometry enable the 4100 XPB to attain the increase dumping height required for the new trucks. It also results in a higher suspended load rating and in quicker dipper loading.
Coal Preparation Advances
An article in the 1994 edition of COAL talks about “The Prep Plant of Tomorrow” detailing two DoE-funded processes that reached the commercial stage. The air-sparged hydrocyclone exploits surface property differences in a cyclonic flow field to rapidly separate coal from mineral matter. Research on the Microcel column flotation cell underscores the importance of employing a wash water spray positioned in the froth zone.
By the mid-1990s, more than one-half of the prep plants in the U.S. operate a heavy-media cyclone (HMC) circuit. HMCs displaced concentrating tables as a means to process intermediate sizes (3/8 inch x 28 mesh).
Fine coal processing increased markedly between 1976 and 1986, and the number of froth flotation plants doubled. In the 1990s, new spirals have found favor among plant designers and operators. Similarly, the number of column installations increases as coal producers seek to recover as much minus 100 mesh coal as possible.
Another trend taking place is the simplification of prep plants. Plants built during the 1990s have fewer circuits and the operations run smoother. The most significant change is a transition from increasing throughput to improving quality and meeting target specifications.
M&A Activity Reduces the Number of Vendors The 1990s shake-out among vendors started on the underground side of the business. One surprising move came early in the decade when Harnischfeger, an OEM serving the surface mining sector and the pulp and paper industries, acquired Joy Technologies in a $391.6 million stock-for-stock merger.
Long-Airdox acquired Simmons Rand in September 1993. Simmons Rand’s product line included continuous miners, roof bolters and battery-powered haulers. By the beginning of 1995, longwall manufacturers have consolidated into two major consortiums. The merger of American Longwall and Gullick Dobson with Meco International into International Longwall Mining in 1993 has now been duplicated in late 1994 with the combining of Halbach & Braun, Hemscheidt and Westfalia into Deutsche Bergbau Technik (German Mining Technology). Mine Technik America emerges as the U.S. subsidiary of Deutsche Bergbau Technik. These mergers reduce four major shield and armored face conveyor manufacturers into two national vendor groups: British and German. As far as shearing machines, Joy, Anderson Mavor and Eickhoff control a majority of the market.
During March 1995, Marmon Group, which owned Long-Airdox, bought National Mine Service and Anderson Group. NMS distributed mine safety supplies, while Anderson manufactured coal face machinery. The combined purchase price is $46 million. Long-Airdox has the Anderson Mavor shearing machine and the company bought Jeffrey Mining products in July 1999.
Harnischfeger then purchases Interna-tional Longwall Mining and merges it with Joy Technologies. Joy Mining Machinery becomes the first supplier to offer and sell a complete longwall system.
Bucyrus Erie buys Marion Power Shovel from Global Industrial Technologies for $40.1 million and then changes its name to Bucyrus International. Labor Issues Begin to Subside The 1988 Bituminous Coal Wage Agreement expired in January 1993. The UMWA called for a selective 30-day strike and 9,000 miners walked off the job. The standoff began February 2, 1993, and ended March 3, 1993, when the UMWA agrees to a 60-day extension. Richard Trumka is criticized for trying to coerce automatic union representation at non-union mines to save the UMWA. The UMWA walks out again May 19, 1993. The strike expands eight times throughout the year with as many as 17,500 miners on strike at the high point.
The BCOA and UMWA eventually settle on December 13, 1993. Labor Secretary Robert Reich intervened and again appointed William Usery to mediate. Usery mediated the dispute between UMWA and Pittston in the 1980s. Usery told the BCOA he would walk away from the talks if the BCOA hired replacement workers, fearing increased tension and possible violence. Among the hindrances to bargaining was further splintering of the BCOA. Another major consideration was strike violence and amnesty. A contract worker in West Virginia had been shot and hundreds of thousands of dollars’ worth of conveyor equipment had been damaged. Eight union miners were indicted by a grand jury for the shooting.
Both parties got some, but certainly not all, of what they wanted. The union scored a victory against double-breasting and protected future jobs. Three out of five new job openings (60%) at any new, existing or newly acquired non-signatory bituminous operation would be filled by laid-off union workers. Improved operational flexibility would help the BCOA companies compete with non-union counterparts. Companies won the right to establish seven-day schedules for production and processing. The union also won a sizable increase in pensions.
During December 1995, Trumka is elected to the AFL-CIO and Cecil E. Roberts Jr. takes over as president of the UMWA. Roberts, a sixth generation coal miner from West Virginia, has served as vice president of the UMWA since 1982 and played a key role in union negotiating teams. Roberts restructures the UMWA during February 1996. The union’s 16 districts are reorganized into 10 districts.
The UMWA ratified a new contract with BCOA by a record margin in December 1997, nine months before the agreement is set to expire (August 1998). Both sides pushed to complete negotiations well in advance so they could join forces to defeat the Kyoto Protocol, which was also signed in early December in Japan. The new five-year agreement spans January 1998 to January 2003. Coal Age Returns
During September 1990, the former managing editor of Coal Age, Paul C. Merritt, replaces Mark Sprouls as editor of COAL. Merritt expresses his opinion on a commentary page facing the inside back cover.
In 1991, Steve Fiscor, a mining engineer, who worked at a longwall operation in Colorado, joins the editorial team as a technical editor for COAL and Engineering & Mining Journal (E&MJ).
In August 1992, Merrittt retires, but remains on the masthead as Editor Emeritus. Art Sanda is appointed editor of COAL. Sanda does not initially offer a commentary column, but he does offer the industry an opportunity to voice its opinion through a series of surveys. In June 1994, Fiscor is promoted to managing editor, COAL. Russ Carter is still working as the western field editor.
COAL branches out into international coverage with extended coverage in several editions. The editors are dispatched globally to document international coal activities. The first report covers Latin American coal in March 1995. Sanda dives into China with a two-part series documenting the Chinese coal industry, which at the time was producing about 1.2 billion mt. The industry is split into 626 mines controlled by the central government, producing 490 million mt, and an unknown number of privately-held mines producing the remaining 700 million mt. It is the first time the Chinese coal industry is well-documented in English.
During July 1996, COAL is recognized for editorial excellence at the Jesse H. Neal Awards in New York. COAL’s Entry “International Focus,” was one of five finalists in the best subject-related series of articles category for its class.
During this healthy period for the magazine, Intertec Publishing, a U.S. trade publisher with several farming and industrial titles, buys the Maclean Hunter’s U.S. trade publications and associated business in March 1995. Eventually Kravitz, Kravitz, and Kohlberg (K-III Publishing), a group that specializes in leveraged buyouts, buys Intertec Publishing. The K-III name is rebranded as Primedia.
What both Sanda and Fiscor both notice at home and abroad while covering stories is that readers still refer to the magazine as Coal Age. Maclean Hunter changed Coal Mining & Processing name to Coal Mining because it lacked recognition. After eight years, it seemed merging the titles into COAL also lacked the same brand recognition. At this point all of the Maclean Hunter people had been fired or retired so Sanda and Fiscor decide to re-launch the name Coal Age for MINExpo 1996. The Coal Age mast is restored with the September 1996 edition. The magazine sports a snazzy redesign. A small retrospective documents the magazine’s 85-year history. Sanda places a commentary with his photo at the beginning of the magazine and, for the first time, readers can clearly identify an editor with the title.
