Walter Energy Continues The 200 Year Tradition Of Mining Coal In Alabama
By Harold Hough
While few associate Alabama with coal mining, the Alabama coal industry is nearing its bicentennial. And, during those nearly 200 years, it has fueled one of America’s largest steel manufacturing centers – Birmingham, Alabama, which was to be known as “The Pittsburgh of the South.”
Alabama’s coal mining industry began when veterans of the Battle New Orleans traveled to Alabama. It was these settlers who first discovered what was the southern end of the Appalachian coal fields. But exploiting it wasn’t easy. During the 1840s, Ambrose Doss and David Hanby attempted to transport flatboats loaded with coal to the iron works in Mobile, but river shoals complicated their efforts. During the Civil War, these coal fields provided most of the coal to the Confederacy thanks to a recently built railroad that connected it to the Confederate Arsenal and Naval Foundry in Selma.
What made this Alabama coal so critical to the Confederate war effort was that it was metallurgical coal, which is necessary for producing iron and steel. 13 different iron companies and six rolling mills made Alabama the arsenal of the Confederacy. During the last two years of the war, Alabama furnaces produced 70% of the Confederate iron supply. In the decades after the Civil War, the region rapidly grew and became the industrial center of the South, thanks to its coal reserves.
Although steel isn’t as important to Alabama’s diversified economy today, Alabama metallurgical coal is still a hot commodity. The reason for the strong demand is China, which has few domestic metallurgical coal deposits necessary for high quality steel. China is in the middle of a massive infrastructure building that includes a high speed rail network. As a result, China’s demand for metallurgical coal is expected to be 100 million tons per year. Other nations importing metallurgical coal in 2010 included India (30 million tons) and Brazil (14 million tons). Japan, Korea and Taiwan required another 94 million tons. While export demand is expected to increase by 20% in 2011, the supply is only expected to increase by 13%.
That’s why Walter Energy in Alabama has moved from a local coal mining operation to a major coal company. And, a great part of that growth is in metallurgical coal and coke. In the beginning, Walter Energy’s coal operation was a small producer of less than 1 million tons of metallurgical coal per year for use in Walter Coke’s coke ovens. Today it is one of the 25 largest coal producers in the United States, with 7.1 million tons of metallurgical coal sold in 2010. In addition to producing metallurgical coal, Walter also produces steam coal from a surface operation under its subsidiary Walter Minerals.
JWR's two deep-shaft underground mines — Mines No. 4 and No. 7 — use the standard "continuous mining" method for development and advanced "longwall" mining technology for primary production. In contrast to surface mining or typical underground mines located 200 to 500 feet below the surface, JWR's mines are 1,500 to 2,200 feet underground, making them the deepest vertical shaft coal mines in North America.
Walter Energy has increased its metallurgical coal reserves by purchasing Canadian based Western Coal. It also gives it an edge in exploiting the growing Asian coal market. Western Coal has mines in British Columbia and West Virginia, while Walter energy has mines in the Appalachia in eastern United States.
Western Coal has an advantage in the Pacific Rim market because it uses the relatively free Ridley terminals on the Pacific Coast, while other Canadian coal companies face congestion at Westshore, the country's largest coal export facility.
Walter is also a major producer of coalbed methane. Black Warrior Methane was formed in 1981 to recover and market methane gas principally from the Blue Creek Coal seam on lands owned or leased by the company.
Walter Energy was a pioneer in the production of coalbed methane production. The original motivation for the business was to reduce the level of methane concentrations before mining operation began and reduce the amount of gas to be ventilated from the mines. Today, it represents one of the most extensive and comprehensive commercial programs for coal seam degasification in the United States, producing nearly 21.6 million cubic feet of gas daily from its 400-plus wells.
Although metallurgical coal seems to be more of an export commodity, there is some news that indicates Birmingham may be a larger consumer of the local coal in the near future. Several of the nation's largest steelmakers, including CMC Steel, U.S. Steel, McWane, and Nucor, all have a major presence in Birmingham. In recent years, local steel companies have announced about $100 million worth of investment in expansions and new plants in and around Birmingham.