Demand for W.Va. coal causes price spike

HUNTINGTON -- It can often be difficult to draw a connection between what's going on in Asia and what's going on here in Appalachia.

But not when it comes to coal.

Power plants going up at a rapid place in China and India have meant steady jobs for many West Virginia mine workers, an increase in the state's tax base and a healthy boost for some local companies that supply the coal industry.

Those power plants need high quality coal, a type that can be found in West Virginia mines, making it a popular export now with the weak value of the dollar.

Massey Energy Co. announced earlier this month that it will raise its coal prices higher than previously planned, as its stock has soared. In addition, the company announced on Friday that it plans open a new coal mine at a rate of one every 17 days this year as it continues an ambitious plan to up production 25 percent by 2010 to take advantage of soaring demand and prices.

Meanwhile, J.H. Fletcher & Co., as well as Logan Corp. and Service Pump & Supply, are just a few Huntington businesses that support the coal industry -- in West Virginia and elsewhere -- and are enjoying coal's good run.

"These are pretty exciting times for the coal industry -- big doings," said Steve Roberts, president of the West Virginia Chamber of Commerce. "There's a large and growing international demand for high quality coal. West Virginia coal is very high quality coal. It has a low sulfur content, and it burns very hot."

Some companies are benefiting from the boon to the state coal market and supplying companies around the world.

J.H. Fletcher & Co. in Huntington is the No. 1 producer of underground roof bolting machines in the world, President Doug Hardman said. It supplies not just the coal industry, but other mining industries -- such as gold, lead, zinc, hot ash and gypsum -- around the United States and the globe.

With coal, "We've gone through a couple of turns," Hardman said. "One started four years ago -- there was a pretty good upturn in 2004-05. A lot of that has to do with steel. There was more of a demand for steel in areas like China. To have steel, you have to have metallurgical coal. That started there, and it's continued."

Getting ready to celebrate its 70 anniversary, Fletcher has about 250 employees and about 20 temporary employees. Meanwhile, it contracts with other businesses, which fluctuate their employment level based on Fletcher's account. Two local companies it partners with are D.J. Manufacturing Inc. and Wooten Machine Co.

Fletcher has grown from about 25 or 30 employees when Hardman started there in the late 1960s.

International exports account for about 15 or 20 percent of its business. And that's growing.

It's the international demand that has led to an increase in coal prices lately. Because most coal companies are now publicly traded, prices had previously stabilized because stockholders don't like a lot of fluctuation, Hardman said.

It's a valuable resource for energy, and it's a good strategy for decreasing the United States' dependence on foreign oil, he said.

"I think people realize that we'll have to rely on coal for quite a while, but we need to make more investments in clean coal technology," Hardman said. "I think everyone in the industry agrees on that."

West Virginians are fortunate that their energy is affordable because of easy access to coal, railroads and rivers to transport it, he said.

Huntington-based Logan Corp., which has five branch locations in West Virginia and eastern Kentucky, is another company that's affected by a strong coal industry. Things have been good for Logan Corp. for the past three years, President and Chief Operating Officer J. Calvin Nelson said.

The company fabricates and forms steel used in the surface mining trucks and loaders in the coal mining industry. It also manufactures a line of drill steel and a line of noncomplex parts, replacement parts for mining machinery.

It's building a new 74,600-square-foot Nitro facility that will allow the business to combine its two operations in Charleston into a brand new space. It's a result of expansion and will allow room for more growth, Nelson said.

"Business is very good," Nelson said. "We're seeing a marked improvement over the first quarter of last year. All indications are strong."

Service Pump & Supply in Huntington is expanding and has hired 10 new workers over the past year, bringing its total employees to about 70. It also is opening a fourth location, this one in Washington, Pa. It already has operations in Huntington and Danville, W.Va., and Hazard, Ky.

Service Pump & Supply makes watering pumps that get water out of mines, and pressure pumps that get water into mines for fire prevention, motor coolant and dust suppression.

Within the past year, the company also started manufacturing a new design of rock dusters for the coal mines.

"Things are looking great," said Danny Vance, president of the company. "Actually we've been in business for 28 years, and things have never looked bad, but they're looking better right now than they have for the coal fields. That could change overnight, but we're trying to do what we can while we can."

The state of West Virginia also should ride this wave while it can, Roberts said.

"The impact on the West Virginia economy has been enormous," he said. "The tax collections on coal are very strong. We're producing about 150 million tons, and the severance tax is based on how much is produced and also the price at which it sells."

Severance taxes and taxes paid by people working in the coal industry are "doing a whole lot to drive state revenue, which is allowing us to pay a lot of bills," Roberts said. "All in all for West Virginia, it's a very good combination of events that are powering our economy forward."

At a time when the national economy is struggling, West Virginia's unemployment rates are lower, which can be attributed to both the coal industry and natural gas, and the rivers and rails to transport them, Roberts said.

The state does, however, face some challenges when it comes to coal production, he said. Environmental permits are more difficult to get.

"That impacts the amount of coal production we can have, and we don't know how long prices will continue to go up," Roberts said.

He hopes the state takes advantage of the revenues being generated now and makes investments in education and workforce training to attract new industries to the state.

"The irony is that while the energy sector is booming, manufacturing is not, and we're not building a banking and financial and insurance network to create jobs in those areas. At the West Virginia Chamber, we feel we need to ride the energy wave as far as it will take us and invest in things that will ensure the next generation will have a good economy, too."