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Arch Coal Inc
CONSOL Energy Inc
Alpha Natural Resources Inc
CME Group Inc/IL
For a teenager like Deyonta Coleman, a miner’s starting salary of $70,000 a year has a lot of appeal. Yet after graduating this spring from high school in Logan, W.Va., Coleman began studying to be an electrician rather than following his stepfather into a job underground. “My mom wouldn’t let me be a coal miner even if I wanted to,” says Coleman. “I guess she doesn’t want that to be the death of me.”
With prices near record levels and coal exports climbing to the highest rate in almost 20 years, mines will need to hire 17,000 workers by 2018, government figures show. But like Coleman, many young people from coal-rich regions view mining as too dangerous. And those who might accept the risk often abuse drugs such as crystal methamphetamine. Finding qualified workers for the mines “is a serious issue,” says William L. Burns, an analyst at investment bank Johnson Rice in New Orleans. “There’s no Starbucks (SBUX) underground.”
After just three years on the job, coal miners can earn nearly six figures with overtime, locals say. That compares with a median household income of $34,214 in Logan, Census data show. While his salary as an electrician will likely top out at $50,000, in a mine “I might die on the first day,” Coleman says.
Appalachia, home to the highest-quality U.S. coal, is facing the worst problems. Arch Coal (ACI), the No. 2 U.S. producer, says it expects many of its baby boomer miners to retire soon. At Consol Energy (CNX), the fourth-biggest U.S. coal producer and No. 2 in Appalachia, more than half of employees are nearing retirement, says Michelle Buczkowski, the company’s workforce planning chief. That’s a challenge as Consol staffs up for the opening in 2014 of a new mine in Pennsylvania expected to produce 5 million tons of coal a year. “You get the triple threat,” she says. “Having to increase head count, retiring baby boomers, and building up operations.”
On a recent recruiting trip, Buczkowski found many young people unreceptive to her pitch. When offering what she considered a generous salary, potential recruits “wanted to know what the catch is,” Buczkowski says. “The catch is that you’re working underground. It’s hard work, long hours, and you have to be responsible not only for yourself but others. That can be overwhelming.”
Drug use in communities where coal mining jobs are available has made recruiting more difficult, union and industry officials say. Alpha Natural Resources (ANR), the top producer in Appalachia, says it sees many applicants who can’t pass drug tests. “It doesn’t help our hiring,” says Alpha spokesman Ted Pile. “Crystal meth is an issue. Prescription drugs are an issue.”
Demand for miners could wane if the global economy relapses into recession, which would cut steel consumption and demand for electricity. Environmental Protection Agency regulations also could cut use of coal, limiting the need to hire more miners. The EPA in July issued rules requiring 27 states, from New York to Texas, to trim power-plant emissions.
Nonetheless, the Energy Dept. estimates that global coal consumption will increase to 209 quadrillion British thermal units by 2035 from 139 quadrillion BTU in 2008 as demand from the developing world soars. Coal prices on the New York Mercantile Exchange (CME) have jumped 17 percent in the past year, to more than $73 a ton, and U.S. coal exports could reach 99 million tons this year, the highest level since 1992, according to Energy Dept. data. Coal “is something we’ll be using as an energy source for at least the rest of my life,” says Clemmy Allen, executive director of the UMWA Career Centers, a training program in Washington, Pa. With so many miners retiring, “there is a big hole, and the industry is trying to play catch-up.”
The bottom line: Despite starting salaries of $70,000, mining companies face a recruiting crunch as young people in coal country opt to stay above ground.