Economic Impact of Coal Industry

PURPOSE The purpose of this report is to estimate the economic impact of Alabama’s coal industry. Alabama is much different than other coal producing states since metallurgical (met) coal currently accounts for more than 80 percent of its total coal production with thermal coal accounting for the balance. While met coal and thermal coal have similar geological origins, their commercial markets and industrial uses are vastly different. Understanding the differences between met coal and thermal coal is crucial when studying the economic impact of Alabama’s coal industry and its potential for future growth. To conduct this report, we used 2018 data from primary sources and a survey process to collect data directly from the industry. For the purposes of this report, all coal produced from an underground mine is assumed to be met coal and all coal produced from a surface mine is assumed to be thermal coal. We estimate the actual production breakdown varies by less than 3 percent. INTRODUCTION The Alabama coal industry and its supporting suppliers currently employ over 3,000 full-time- equivalent (FTE) employees and generate approximately $370 million in annual payroll. The industry average payroll is well over $100,000 per annum making it one of the highest paid industries in Alabama, 1.6 times greater than average gross salaries in the state. Alabama is ranked 14th in total coal production and 8th in bituminous coal production in the U.S. The overall coal production in 2018 was estimated to be approximately 13.5 million short tons. Met coal production accounted for 11 million tons or 82 percent of the state’s coal production, while thermal coal made up the remaining 2.5 million tons or 18 percent of overall production. Coal has been mined commercially in Alabama since the 1850’s. In early years, coal was the single most important natural resource assisting in the transition of Alabama’s economy from an agriculturally-based to an industrialized economy through supporting the state’s development of the iron and steel industry. Later, coal mining was the catalyst in making Alabama become an energy producing and export-based economy. 3, average salary for Alabama is $75,736 4Annual Report Statistical Supplement of the Alabama Department of Labor, Mining and Reclamation Division, Mine Safety and Inspection Section, FY 2018, State of Alabama (for the purpose of this report, all underground-mined coal is treated as met coal and all surface-mined coal is treated as thermal coal) 5 ECONOMIC IMPACT OF THE COAL INDUSTRY ON THE STATE OF ALABAMA 7