steam coal shipments. Overall coal production in the Mountain
State increased to 97 million tons in 2018, up from 85 million
tons in 2016, due to this growing demand.
Stateside, steam coal sales to domestic utility companies
comprise 46 percent of West Virginia’s total coal production,
according to the West Virginia Coal Association. However, that
share of the domestic electric utility market continues to decline
because of domestic competition, specifically West Virginia’s
nearest neighbor to the north: Pennsylvania.
“We’ve gained a threat from our neighbor who is providing
the same quality of coal,” says Bostic. “Pennsylvania has the
same seam of coal we mine in West Virginia, but it is mined
without a severance tax.”
The West Virginia Legislature attempted to circumvent that
competition by passing House Bill 3142 during the 2019 leg-
islative session to lower the state’s coal severance tax from 5
percent to 3 percent over a period of two years.
“That reduction in severance tax should allow West Virginia
to compete more effectively with not only Pennsylvania but
also—to a lesser extent—Illinois, Indiana and eastern Ken-
tucky,” says Bostic. “It will also help us compete in interna-
tional markets. There’s coal found all over the world, so any-
thing we can do to lower our costs is going to help us.”
Using the Past to Predict the Future
While Bostic says West Virginia has enough coal at current
consumption levels to last another 200 years, two significant
challenges facing the state’s coal industry—and its future—are
aging infrastructure and the depletion of accessible reserves.
To address these challenges and keep up with international
demand, he believes the state needs to move forward with making
improvements to the industry’s rapidly aging infrastructure.
The growing market for steam coal is creating additional
challenges. Steam coal is now competing with metallurgical
coal for dock space at existing deep-water ports where the coal
is loaded onto ships for transport. Lack of available blending
capacity, which is the infrastructure and space through which
coal from multiple sources is blended to meet the specific needs
of a customer, is another obstacle. As the steam coal export
market develops, blending capacity is becoming just as import-
ant for it as it is for metallurgical coal because different sources
of steam coal must be blended to achieve the specifications
required by overseas orders.
The coal industry, as evidenced by the many changes in
market presence it has experienced over the years, is determined
to ensure a demand for West Virginia coal. A long history
of reinventing itself in order to maintain relevance has paid
off, and Bostic is optimistic this will continue to be the case.
“Coal has gone through multiple cycles as the energy needs
of both the country and the world have changed, and these
cycles demonstrate that we can meet the demand whenever
and wherever it may be,” he says. “Given the fact that West
Virginia has the best coal anywhere in the world and because
developing nations are rushing to supply folks with depend-
able power and consumable steel, there will continue to be a
demand for our coal.”
A TRUE DRILL, A TRUE LEGEND
Jimco Equipment Corporation
Home of the John Henry Rock Drill
95 Edens Fork Road, Charleston, WV 25312
(304) 344-9676 | www.johnhenryrockdrill.com
WWW.WVEXECUTIVE.COM
SPRING 2019
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