Production of Coal in Virginia on the Rise

The production of coal in the state of Virginia is high and still growing, driven by the rising demand for steel as America focuses on infrastructure investment. Virginia mainly produces metallurgical coal, which is primarily used in steelmaking.

President of the Metallurgical Coal Producers Association, Ben Beakes, stated that the demand for metallurgical coal was increasing, noting that current levels were some of the highest the industry had seen in a couple of years.

Data from the U.S. Energy Information Administration shows considerable increases in coal production in Virginia, with its latest weekly report showing that the state’s coal production has increased by more than 15% in comparison to its production at this time in 2021. The production of coal has risen by 8% overall in the broader Appalachian region.

This increase in production was expected, after the state’s Department of Energy began to receive applications for new licenses to sell coal and applications for coal mining permits last summer.

Beakes explained that most of the trends that could explain the rise in mining activity for coal had been cited, noting that the removal of restrictions imposed to help contain virus spread during the pandemic had driven the production of coal as more economies came back to life. Beakes added that the Infrastructure, Investment and Jobs Act was also expanding steel’s market.

The raging war in Ukraine brought on by Russia’s invasion is also influencing the demand for coal from Virginia, as some mines in the state produce PCI (pulverized coal for injection), which manufacturers of steel used to source from Russia.

Figures from S&P Global show that during the first quarter of 2022, the Buchanan Mine No. 1 was the biggest producer of coal in the central Appalachian region. The mine, which is managed by Coronado Global Resources, has stepped up the production of pulverized coal for injection.

Data from the U.S. Energy Information Administration also shows that Norfolk exported more coal from the U.S. than any other port in the country, with about 60% of metallurgical exports for coal coming from this metropolitan area. This report also found that this city’s metallurgical coal exports were 15% higher at the end of last year than they had been at the end of 2020.

Additionally, exports of coal from the city’s three terminals, which are operated by Kinder Morgan, Norfolk Southern and Dominion Terminal Associates, all hit their highest level in three years earlier in the year.

The ongoing energy crisis has seen many coal mining companies such as Arch Resources, Inc. (NYSE: ARCH) try to ramp up their production in order to meet the surging demand. The days of coal as an energy sources don’t seem to be coming to an end just yet.

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