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The gift of foresight

World Coal,


During the second keynote session of the 33rd Coaltrans world coal conference, Berlin, Michael Beyer, president and CEO of Foresight Energy, discussed coal mining developments in the Illinois Coal Basin.

The Illinois Basin is located in the central US, in the states of Kentucky, Indiana and Illinois. Coal can be found underlying approximately 65% of the state of Illinois, making the region integral to the mining landscape of the US. With an estimated 34.4 billion t of recoverable reserves, Illinois has the largest bituminous coal resources in the nation.

Beyer was pleased to announce that Foresight Energy, one of a number of coal mining companies operating in the region, was set to begin operations at a 4th longwall in Q1 of 2014 at the company’s Viking mine.

Foresight  Energy owns three of the most productive underground coal mines in the US, with the Williamson, Sugar Camp, and Hillsboro mines all located in the Illinois Basin.

Beyer reported that the company expected to produce between 20 –25 million t in 2014, and that the company had the potential to develop another five longwalls at its mining operations. The addition of these longwalls could increase Foresight’s capacity to 80 million tpa, Beyer said.

Beyer praised the company’s successful export efforts, announcing that Foresight Energy shipped roughly a third of its coal to 17 countries worldwide.

Illinois coal

Beyer sketched a brief outline of the history of the Illinois Basin. He told delegates at Coaltrans that coal production in the region peaked in 1984 at 143 million t. Growth in coal mining in the region then proceeded to dip, but “has since recovered,” Beyer said.

Illinois coal characteristics

  • 6100 – 6700 kcal/kg.
  • 2 – 3% sulfur.
  • 8 – 10% ash.

Beyer said that one of the benefits of Illinois coal was the low cost offered to the end user, because of excellent infrastructure in the region. With a growing and diversified market access via rail, barge and seaborne trade, Beyer highlighted the Sitrans, Convent Marine, and United-Bulk terminals in particular as being key to the company’s logistics operations, as these terminals allow the company excellent links to the international coal export market, while also allowing the company to access the domestic US coal market.

Coal industry challenges

Beyer identified competition from natural gas, caused in part by the shale revolution in the US, as well as increasing government regulation.

Shale gas had a 200 million t impact on coal, Beyer told delegates.

As for regulation, Beyer highlighted the Mercury and Air Toxic Standards (MATS) and the New Source Performance Standard (NSPS) as posing particular challenges to the US coal industry.

Beyer reported that by 2016, coal production in the US would drop back to 2012 levels, because “the plants that will be shut down by MATS will be the same smaller and expensive plants that couldn’t compete with the impact of natural (shale) gas.”

However, Beyer remained positive on the outlook for the coal industry in the US. “Even with the impacts of MATS and NSPS,” Beyer said, “there is still a very robust thermal coal demand in the US.”

Where will future US coal come from?

Beyer said that as central and northern Appalachian coal supply begins to fall, US coal will increasingly be sourced from the Powder River Basin, particularly Wyoming, and the Illinois Coal Basin. As the industry develops in the Illinois Basin, market would be taken away from central Appalachia, Beyer said, causing it to decline further.

What does this mean for exports?

Looking to US coal exports of coal, Beyer noted industry professionals should be aware of:

- The higher freight costs to Asia from the US, which “have really hurt the coal industry in the US,” according to Beyer.

- There have been no new export transactions for Foresight Energy, as the domestic market currently offers the best prices while the oversupply in the global coal industry has depressed coal prices.

- Domestic coal prices have proven to be “viable and robust.” The high stockpiles at US coal-fired power plants, which lowered domestic prices, has not impacted prices as drastically as some feared, according to Beyer. In any case, “The inventory situation has begun to correct itself,” Beyer said.

Coal research and developments

The state of Illinois has long supported its coal industry through programmes that finance research, development and commercialisation of new technologies and uses for Illinois coal.

In practice, this means developing clean and efficient technologies for use with coal, as well as developing state-of-the-art technology for the capture and storage of greenhouse gasses.

With increasing government regulation aimed at reducing emissions from coal-fired power plants, the futures of both the Illinois and domestic US coal industry depend upon the success of this clean coal strategy. 

Written by Sam Dodson

Read the article online at: https://www.worldcoal.com/mining/31102013/the_gift_of_foresight_206/


 

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