By Timothy Gardner

WASHINGTON, (Reuters) – U.S. producers of coal are trying to increase exports in order to cash in on soaring Ukrainian prices. However, they face major headwinds such as shipping bottlenecks and labor shortages. This also discourages investments in new mines in the long-term.

The outlook means the United States, which holds the world’s biggest reserves of coal, is unlikely to play a major role in international efforts to expand shipments of the fuel to Europe ahead of an expected European Union ban on Russian imports this August to punish Moscow for the invasion.

This means that the U.S. industry will not be able to recover from a decade-long tailspin caused by state and federal efforts to reduce carbon emissions. These efforts have led utilities across the country to switch to cleaner-burning fuels like solar and wind power. To combat climate change, U.S. President Joe Biden set the goal of decarbonizing America’s power grid by 2035.

Ted O’Brien is managing partner at Oluma Resources and chief commercial officer. He cited clogged railroads as well as labor shortages and availability of new equipment to limit the ability of American companies to react (to the price rise).

Ernie Thrasher, chief executive of Xcoal Energy & Resources, a coal marketer, estimated that bans on Russian coal could remove 114 million tons a year from global markets, but that the United States would be poised to fill less than a tenth of that given the lack of investment in the U.S. industry.

“That’s really the issue,” said Thrasher. “There has been practically no capital invested into the industry since 2015,” Thrasher said, adding that Europe is likely to depend most heavily upon other countries, such as South Africa and Indonesia to replace Russian coal.

According to Energy Information Administration data, U.S. coal production is now up 3.8% year-to-date at approximately 203.7 million short tonnes. This represents a small recovery from the COVID-19 Pandemic, when it was at its lowest since 1965.

However, exports haven’t kept pace. The EIA reported that U.S. exports of coal overseas fell 2.5% in the first quarter 2022, to 20.2 million tonnes. The EIA’s 2022 U.S. coke export prediction was lowered to 85.7 millions tons due to logistical issues, which is 3.7% less than its April forecast.

EIA stated that U.S. exports should rebound to 3.6% by 2023, to 88.8 millions tons.

NOT THE THING SHAREHOLDERS WANT

A company which expects exports to be successful is Alliance Resource Partners is a mining company with mines in Illinois, West Virginia and other states. Joe Craft, President and CEO of the company sees war driving U.S. import prices for thermal coal in power plants as well as metallurgical coal to make steel for at least 18 more months than domestic prices.

Alliance’s export volume should rise to more than 6,000,000 tonnes this year from approximately 4 million tons last. Craft also stated that Alliance’s growth is likely to increase by at least 1.5 million tons per year in 2023 in the quarter-end earnings call.

O’Brien, Oluma stated that an industry-wide growth in exports won’t happen fast as very few companies have new mining facilities coming. Most new investments go toward maintaining output at existing plants.

Arch Resources Inc doesn’t anticipate investing in new thermal coal mines, President Paul Lang stated during his No. Last month, 2 U.S. suppliers of coal held an earnings call.

Lang indicated that “I believe we’ll continue generating cash out of those assets but we’re simply going to not put any cash into them.” It’s not the best investment and it isn’t what shareholders want.

Peabody Energy Corp, a top U.S. producer of coal and major miners Alliance and Alpha Metallurgical Resources Inc declined to comment on this story.

According to the National Mining Association, companies are losing shipments as well as extra labor because of rail supply problems.

Katie Mills (NMA attorney) stated that mining companies have great difficulty getting coal to consumers late last month, in her testimony before the Surface Transportation Board.

NMA spokesperson Ashley Burke told Reuters that the industry was “ramping up as much as possible” to supply European buyers, but faced “limits to what the rail transport and ports can handle.”