"Years of declining productivity, thinning seams, increasing strip ratios, more stringent government regulations and a high-paid workforce have made Central Appalachia the highest-cost region in the U.S," Levesque writes.
"Altogether, about 14 percent of U.S. thermal coal production and 58 percent of metallurgical coal production is at risk because of pricing in today's market," Levesque writes. Wood Mackenzie said the cost produce Central Appalachian coal is about $65 per short ton, compared with $47.50 in Northern Appalachia and $34 in the Illinois Basin. At today's prices, 13 percent of Northern Appalachian coal is unprofitable."
Despite losing money, many mines will remain in operation because an operating mine is more attractive to prospective buyers, some are supplying long-term contracts, and "if a producer is able to beat market prices with a niche-quality coal, or the location of the mine is near an end-user, providing a transportation advantage over competitors." (Read more)