For a key U.S. industry facing a glut of natural gas across North America and harsh environmental regulations from Washington, state officials said the importance of this trend cannot be understated. One was Gov. Pat Quinn. “Illinois coal is in high demand overseas and we have the resources and infrastructure to take advantage of this opportunity for growth,” he said, citing the “Illinois Jobs Now!” initiative. “Our rail lines and river ports give us a unique export advantage over other states in the region.”
For a time, coal was barely on the radar screen in the Midwestern state—but recent years have witnessed a massive turnaround. By 2010, most notably, Illinois exported 2.5 million tons of coal—increasing more than 50% to 5.5 million in 2011. As of Q3 2013, analysts said, more than 13 million tons, one-third the state’s total 47-million-ton output, has been exported.
The report by Virginia-based consultancy Energy Ventures Analysis, released in Q2 2013, underscores export increases amid “growth in the global steam coal market, marketing efforts by coal producers, the increased acceptance of Illinois-quality coal and—most importantly—the competitiveness of Illinois coal versus alternative sources available in the global market,” said study Principal Emily Medine.
Illinois, the report added, possesses the largest reserves of bituminous steam coal in the U.S. with the capacity to produce significant coal quantities exceeding domestic demand, making exports a state necessity. The coal is well tailored to an increasing worldwide coal market, given its low cost structure, access to the Gulf of Mexico and capacity use for global customers.
In 2012, 10 producers operating 22 mines accounted for the vast majority of state coal production, with Foresight Energy and Peabody Energy representing nearly 50% of total state output in 2011 and 2012. More than 80% of Illinois coal production last year, meanwhile, came from underground, with 50% from longwall operations. Foresight Energy owns three large longwall mines in Illinois that, altogether, could produce more than 30 million tons by next year, according to the report.
Increasingly, Illinois coal is bound for Europe. Asia, which effectively disappeared as a market for the state, has returned over the last three years, however, South America, meanwhile, is another growing market for U.S. coal overall. But Canada faded dramatically following a policy in Ontario—home to the country’s biggest urban center, Toronto—to mandate closure of the province’s coal-fired power plants.
In all, 18 countries have been destinations for Illinois coal since 2010, the report concluded. Although all the state’s coal exports is shipped from the Gulf of Mexico, the report said, they can also move overseas through the Great Lakes or the Pacific Northwest.
To sustain the state’s coal exports, the report recommends improving competitiveness via Mississippi River navigation while increasing the Gulf of Mexico’s draft to allow for loading of bigger ships. Further recommendations include technical assistance to smaller state producers. Overall, the study concluded, the state lacks companies with a global sales reach—or savvy like its larger counterparts; promoting Illinois coal through trade delegations is another way to boost awareness.