At least, for now, money is trickling into Appalachia region in the U.S. again like a mountain stream reviving after a drought.
Investor bets that have, over the last year, doubled the market value of publicly traded U.S. coal companies, to $15 billion, U.S. President Donald Trump’s anti-regulatory policies and Chinese production curbs are a trio of global forces that is powering this revival.
Now blighted with shuttered stores, boarded-up windows and sidewalks laced with cracks are cities like Logan, population 1,800, where streets that once bustled with small businesses and it ends in such cities.
Miners are snagging $1,000 signing bonuses, fully paid health insurance and raises again and the gossip here is no longer about mine closures and mass layoffs.
Much ground has to be made up by Southern West Virginia, a rolling mountainscape of coal-producing counties. Camps for workers, generations ago that grew into thriving towns now near collapse were built by large, out-of-state companies.
Less than half the number in 1950, about 34,000 people live in Logan County. It leads the nation in fatal prescription painkiller overdoses, along with its neighboring counties.
According to the U.S. Mine Safety and Health Administration, production from West Virginia’s southern coalfields fell from 117 million tons to 36.6 million from 2008 to 2016.
The collapse was spurred by cheap natural gas, which became America’s dominant power-plant fuel. including Alpha Natural Resources Inc., which runs the Ruby Energy facility, and Arch Coal Inc., the industry rout drove some of the country’s biggest miners into bankruptcy.
Wall Street took notice. Bankers had come to him last fall “on bended knee,” begging him to take his company public, recalled Randall Atkins, chairman of coal company Ramaco Resources Inc.
The U.S. coal industry’s first IPO in two years was help in February by Ramaco, backed by private equity funds Energy Capital Partners and Yorktown Partners. Following suit in April was Warrior Met Coal Inc., whose largest investor is Apollo Global Management LLC. half a billion dollars was raised by the two companies. And the next may be Coronado Coal LLC, part of Energy & Minerals Group’s portfolio.
“Mainstream investors are now looking at coal again,’’ said Jeremy Sussman, a New York-based mining analyst with Clarksons Platou Securities Inc. “Six months ago, that wasn’t the case.’’
Full production this summer will be reached at Elk Creek, a new Ramaco mine in Logan County. More than 850 people showed up when the company held a job fair there in March to fill about 40 spots.
Companies are covering workers’ health-care premiums for certain high-skilled positions – such as mechanics and electricians, competition for which has grown very fierce. As much as $1,000 for signing bonuses was recently offered by Bluestone Industries – part of West Virginia Governor Jim Justice’s business empire.
But the locals are still cautious because boom and bust are familiar features of the coal business.
(Adapted from Bloomberg)