Wednesday, October 17, 2012

Consultant: Central Appalachian coal outlook poor

Alan Stagg, one of the most respected consultants in the coal industry, told a major industry gathering last month that Central Appalachian coal mining would last at least 10 to 20 more years, but will continue to decline because the job-hungry region's coal is getting more difficult to mine, mainly because of geological limitations but also because of regulations.

"It's going to run out some day — there's a finite amount of coal — but I don't see that happening in 10 or 20 years," Stagg told Pam Kasey of The State Journal, a business-oriented weekly in West Virginia. Stagg, the president and CEO of Stagg Resource Consultants Inc., has been pessimstic about the industry's long-term prospects for several years, as we reported here, but this is his gloomiest forecast yet.

"This is the elephant in the room. No one wants to acknowledge that reserve depletion is profound," Stagg, of Cross Lanes, W.Va., said at Platt's Coal Marketing Days in Pittsburgh on Sept. 21, according to SNL Financial. "Mining conditions are difficult, and the cost to produce is high. That is a physical fact. It's not pleasant. Nobody wants to acknowledge it. That is a fact, and companies that ignore that fact will not do so well. . . . And by nature, regulations will always increase."

"Stagg cast such a pall on the Central Appalachia coal industry that West Virginia Coal Association President Bill Raney, speaking later in the day, said he felt like a 'funeral director'," Darren Epps wrote for SNL. "Stagg expressed optimism, however, for the Powder River Basin" in Wyoming, which overtook West Virginia as the leading coal-producing state many years ago.

An earlier version of this story was based on a report from SNL Financial that Stagg says misquoted him as saying that he expects coal mining in Central Appalachia to end in the next 10 to 20 years. He did not dispute the rest of the report.

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