In May of last year, it looked like impoverished areas of eastern Oklahoma would be getting a lifeline. Coal mining, once a vital industry there, was on a comeback thanks to increasing international demand. The prospect of hundreds of new jobs had people in the area excited when StateImpact first visited Heavener, but things have changed since then.
Ouro Mining Company’s massive Heavener Project along the Oklahoma-Arkansas borderwas supposed to be producing coal — and jobs — by now. A year and a half ago, people in Heavener, like waitress Leslea Absire, couldn’t wait.
“I know it’s a hard, dirty job, but it pays good money. And that’s what everybody is looking for, something to — to make it a little better than paycheck to paycheck,” Abshire says.
Or, as lifelong LeFlore County resident Jesse Benson puts it: “Some of us so poor we have to milk the cat to feed the dog. That’s pretty poor, ain’t it?”
Well, the mine still hasn’t opened. And probably won’t for some time. What happened?
“Basically, the coal market crashed. That’s what happened.”
Andrew Moore, managing editor for Platts Coal Trader, which follows coal prices and industry trends.
“U.S. coal prices and international coal prices are essentially at multi-year lows because of a massive oversupply,” Moore says. “There are some environmental pushes behind that, but a lot of it is just ‘there’s too many tons on the water’, as they say. Countries like Indonesia, which is the world’s largest exporter of coal, just continue to pump more tons out. And the U.S. has always been sort of a swing supplier.”
Most of Oklahoma’s coal is too high in sulfur to be of much use in the U.S. because of environmental regulations. It’s generally too dirty to burn at power plants. But it works great in the steel making process.
With China booming and the global economy recovering from the 2008 collapse, the price of coking coal — as it’s called — nearly doubled between the fall of 2010 and spring 2011. That was apparently enough to spark Ouro’s interest in eastern Oklahoma’s hard to reach coal seams.
Bob Blackburn with the Oklahoma History Center sees some parallels between Oklahoma’s first coal rush in the late 1800s and what’s happening now.
“So as once we talked about getting it from McAlester to Muskogee, now we’re talking about getting it from Sallisaw to Peking,” Blackburn says. “But the dynamics are the same. What does it cost to get it? What’s the cost to get it from here to there? And what is the market? Is the demand high enough to cover what it costs to get it?”
The answer earlier this decade was a clear ‘yes’. That’s when the coal was selling for more than $300 per ton. Now, a ton of coking coal sells for about $100 on the Asian market, according to information from Platts. Those economies have cooled at the same time they’ve ramped up their own coal production, leaving the U.S oversupplied.
Put more simply. The rest of the world doesn’t need Oklahoma coal right now, so job seekers in Heavener will have to wait. How long is the big unknown.
“You know, I think, based on what we’ve reported, it’s going to be another year before met coal markets rebound,” Moore says.
StateImpact tried to contact Ouro Mining for this story, but the company didn’t respond to emailed questions in time. But State Representative James Lockhart’s district includes the proposed mine, and he got a recent update from an Ouro go-between.
“He said once they burn enough of that coal where it kind of drives the price up, he said, ‘we’ll start mining again,’” Lockhart says. “But he just said right now it’s not profitable to mine.”
There’s one more issue set to complicate coal’s comeback in eastern Oklahoma. China, in an effort to appear proactive on climate change and spur domestic production, has announced new tariffson imports of the kind of coal Oklahoma offers, and an outright ban on high sulfur coal from overseas.
----------------------------------------------------------------------
StateImpact Oklahoma is a partnership among Oklahoma’s public radio stations and relies on contributions from readers and listeners to fulfill its mission of public service to Oklahoma and beyond. Donate online.
