CoBank claims more than 20% of US coal production may be curtailed

31 August 2016 (Last Updated August 31st, 2016 18:30)

A new report released by CoBank has found that more than 20% of current coal production in the US could stop in the next few years.

A new report released by CoBank has found that more than 20% of current coal production in the US could stop in the next few years.  

Plant closures within the country’s coal fleet are expected to have further curtailed consumption of the fuel by another 47 million tonnes during 2015 alone.

CoBank Knowledge Exchange Division lead economist Taylor Gunn said: "The past five years have been extraordinarily taxing for the US coal industry. 

"Market forces have coalesced to create significant headwinds for the coal producers working to keep their businesses sustainable in the future."

"The past five years have been extraordinarily taxing for the US coal industry."

During that period, several coal mining companies in the country were compelled to declare bankruptcy.

The number of operating mines has plummeted from 1,013 in early 2009 to fewer than 400 now.

The report noted that the power industry in the US, which accounts for around 95% of total domestic coal consumption, is currently in the process of reducing its dependence on coal-fired plants. 

US coal fleet reduced by nearly 40GW during 2011-15 due to the combination of new environmental limits on pollutants from power plants and steep declines in natural gas prices.

This cut the industry's thermal coal consumption by 21% over that period.

Since the beginning of Q3 in 2012, around 50 coal mining companies in the US have already filed for bankruptcy. 

As the industry continues to downsize, companies with financial flexibility and operational scale to respond to falling demand are expected to emerge from the downturn.

Gunn further added: "The US power sector will continue to define the domestic coal industry and the lowest cost and cleanest burning coal will remain in high demand, allowing PRB mining companies to hold an advantage over their counterparts that operate in other regions such as the Illinois, and Appalachian basins."