Ky. coal industry tells sympathetic committee that exports could be its future

08/15/2012 10:19 AM

Facing an “uncertain” future, the Kentucky coal industry now views electricity customers in India and China as its primary market for the future, coal officials told Kentucky lawmakers at Tuesday’s Program Review and Investigations Committee.

Coal production in Kentucky has steadily declined since 1990 from 173 tons of coal mined to 105 million tons in 2010, according to a report presented Tuesday by the Legislative Research Commission. The total haul in 2010 was the smallest amount mined in Kentucky since 1969.

As a result, the workforce related to mining has been cut by more than half. In 2010, the coal mining industry in Kentucky employed 19,085, which is down from a peak of more than 50,000 in 1979.

Mining still accounted for about $6.4 billion in economic activity and brought in a total earnings of $1.7 billion.

Bill Bissett, President of the Kentucky Coal Association told the committee that both organic and man-made factors have contributed to the decline.

Bissett said the biggest man-made factor was the regulatory decision-making by President Barack Obama’s administration, specifically the U.S. Environmental Protection Agency.

“The future of coal is really very simple. What we have in front of us are three questions. How much will we mine, how will we mine it and who will be the end user of that coal?”

And he said the answer to that last question looks to be India and China.

The area of Kentucky hit hardest by coal industry layoffs has been Eastern Kentucky.

David Gooch, President of Coal Operators and Associates, Inc., testified that “I run into people on a daily basis who come in my office wanting to know if anybody is hiring. I’d say where did you work? They’d say such and such, they got laid off. They shut the mine down. They’re not going to reopen it.”

In the 1990s, the Program Review and Investigations Committee investigated the financial stability of the Kentucky Association of Counties’ insurance program and rooted out fraud in the Medicaid program. Over the last decade, the committee has shifted to a more informational role.

Sen. Brandon Smith, R-Hazard, said the committee was the appropriate venue to look into the coal industry because as it struggles, the state loses revenue, which affects all citizens.

“The general fund gets a tremendous amount of the receipts. You’ve seen cuts across the state budget now that are reflected by these idle mines” said Smith. He added, “the receipts coming in for the next year are going to probably be the lowest that I’ve ever seen since I’ve been in and those go into the general fund to fund a lot of important projects.”

Kentucky is currently the third largest coal producing state in the country representing 10 percent of the total volume of coal produced in the United States.
In 2002, Kentucky produced 11 percent of the total volume.


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