Companies Bet on Metallergical as Coal’s Future

Coal traffic may be down, but it’s not out. In recent months high natural gas prices have led some utilities to increase their use of coal to generate electricity.

But when coal company executives look to future they see metallurgical coal as their future.

Used in the steelmaking process, metallurgical coal is higher priced than the thermal coal used to generate electricity.

Steel demand can be cyclical but railroads and coal companies see metallurgical coal as a reliable customer base.

A report posted on the website of Trains magazine cited a $400 million investment that Arch Coal is making in a loadout at its new Leer South longwall mine in Barbour, West Virginia, as an example of the direction that coal traffic is moving.

The loadout is located on a short line, the Appalachian & Ohio, which connects with CSX at Grafton, West Virginia.

The facility is expected to reach full production in early 2022. Arch is projecting shipping 4 million tons of coal a year, or 36,350 carloads making up 300 unit trains of 110 cars annually.

CONSOL Energy is investing $90 million in its Itmann mine in southern West Virginia, which will be capable of producing 900,000 tons of metallurgical coal and up to 1 million additional tons of third-party coal.

The Itmann complex is located on the former Virginian Railway – how operated by Norfolk Southern – near Mullens, West Virginia.

Coal mined there will be shipped to domestic steel mills and for export through the NS Lamberts Point Coal Terminal in Norfolk, Virginia.

Export coal is also seen by railroads and coal companies as a viable long-term enterprise.

Aside from Norfolk, some export coal moves on NS and CSX through the port of Mobile, Alabama. Both carriers also route export coal through Baltimore.

China leads the list of customers buying U.S. coal, having bought 2.3 million tons of metallurgical coal in the first quarter of this year.

Other big buyers have been Brazil, The Netherlands, Japan, India, and the Ukraine.

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