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Today in Energy

December 2, 2020

The capacity of U.S. coal mines has fallen 28% since its 2009 peak

U.S. coal production and productive capacity
Source: U.S. Energy Information Administration, Annual Coal Report

The U.S. Energy Information Administration’s (EIA) latest Annual Coal Report (ACR) shows that U.S. coal mining productive capacity, or the maximum amount of coal that mines can produce in a year, totaled 1,009 million short tons (MMst) in 2019. This amount represents a 28% decrease from the peak productive coal mine capacity of 1,407 MMst reported in 2009. U.S. coal production declined by 35% during the same period because many coal mines closed and the remaining mines produced less coal.

Annual U.S. coal mine utilization, which is the ratio of annual coal production to productive capacity, was 70% in 2019, and it averaged 72% from 2015 through 2019 and reached a record low of 68% in 2016. In contrast, from 2000 to 2014, capacity utilization averaged 82%. Mine utilization is falling as U.S. coal demand is decreasing across several sectors.

The two primary methods to produce coal are surface mining and underground mining. Productive capacity at surface mines fell from 773 MMst in 2015 to 656 MMst in 2019, a 15% decrease. In addition to lower productive capacity, surface mine capacity utilization declined from 77% in 2015 to 68% in 2019 because the remaining mines were producing less coal.

From 2015 to 2019, despite a 12% decline in productive capacity and 14% decline in coal production, underground mine utilization remained near 77%, which indicates that underground mines were idled or closed rather than left open to produce at lower rates.

U.S. coal production and productive capacity by mine type
Source: U.S. Energy Information Administration, Annual Coal Report

Mine employment and productivity have declined in the past decade as coal demand has decreased. Surface mining operations (especially those in the Powder River Basin, a mining region primarily in Wyoming and Montana that produced 42% of U.S. coal in 2019) are less labor intensive, relying more on automation and heavy machinery than manual labor.

Scaling down production by idling select equipment at surface mines is often feasible even if it makes the mine less productive. Scaling down operations at underground mines, however, is more difficult because of the higher fixed costs to maintain ventilation and ensure worker safety throughout the mine, even if the mine is producing less coal and employing fewer people.

Utilization rates have remained more stable at underground mines because almost all U.S. metallurgical coal, which is used in steel production, is mined underground, and demand for metallurgical coal has remained somewhat stable. Demand for thermal coal, which is used for electricity generation and industrial, commercial, and institutional heat, has steadily declined since 2011. Surface mines produced about 60% of the thermal coal consumed in 2019.

Principal contributor: David Fritsch