(The following story by Mike Gorrell appeared on The Salt Lake Tribune website on April 5.)
SALT LAKE CITY, Utah — Utah’s coal industry has not been able to capitalize much on the surging global demand for its product because no western U.S. ports are shipping coal to Asia.
The March 2007 closure of the Port of Los Angeles coal terminal effectively put an end to already shrinking exports to Japan and China.
Those two markets had taken in significant amounts of Utah coal from the early 1980s to the mid-1990s, peaking at 5.5 million tons in 1996 (when the state’s production record was set at 27.1 million tons).
By 2003, however, competition from Australia and Indonesia had whittled those deliveries to 220,000 tons. The past couple of years, no Utah coal was shipped overseas.
To get there now requires it to be shipped by train to the East Coast for export. Those extra railroad transportation costs keep Utah coal from being competitive with Appalachian coal.
“The mines back East definitely have the upper hand because they can export their coal,” said Michael Vanden Berg, who prepares the Utah Geological Society’s annual coal report. “Operators here are saying they wish they could get the prices they have back East. But they can’t.”
Still, global demand has boosted Utah coal prices. Vanden Berg’s annual report for 2006, the last year for which figures were available, put the average price of coal at $22.51 per ton. That was 16.4 percent above the previous year and the highest in two decades.
He predicts that 2007 prices will end up 4.9 percent above that, at around $23.62 a ton.
But as Vanden Berg made the rounds of coal country recently, visiting eight active mines in compiling data for the upcoming 2007 report, “the thing I heard the most was a lot of mines can’t find anyone to buy their coal. They’re having trouble getting rid of it. . . . At the Savage Coal Terminal in Wellington, there’s coal everywhere. Huge piles.”
High prices, however, have motivated companies to keep mining, especially with a steadily increasing domestic demand for electricity from coal-fired power plants.
“The market is steady,” Vanden Berg said. “The power plants that do exist still need coal, [as do] industrial companies.”
David Litvin, Utah Mining Association executive director, concurred.
“Utah coal producers have been selling what they’ve been producing. There’s not a glut, but it’s a question of whether [the coal] makes it overseas or not,” he said. “Obviously, the greater capability you have to move coal to different markets, the better off you are. Increased rail and port access on the West Coast would be good for the entire industry, not just Utah.”
Fully mindful of that, Union Pacific Railroad is encouraging ports in California to develop the infrastructure to export the coal its trains haul to the coast from mines in Utah and Wyoming.
“We’re looking at ways we can serve the needs of our customers,” said spokeswoman Zoe Richmond. “We don’t have anything set in stone. But there’s been a lot of talk about it.”
Gordon Smith, a Port of Los Angeles spokesman, said his facility is unlikely to reopen its coal terminal. “Coal dust is a big contributor to air pollution,” he said. “The port puts out a lot of pollution, and we’re on a big environmental push to reduce it.”