Investigation of the Virginia coal industry. Final technical report, May 1, 1984-April 30, 1985

Technical Report · Mon Jul 15 04:00:00 EDT 1985

OSTI ID:5591883

Hibbard, Jr, W R; Chisholm, R H; Valdes, R M

The Virginia coal industry was studied in the context of the Central Appalachian coal markets and competitive coal sources from eastern Kentucky and West Virginia. Production, transportation, and marketing were evaluated, focusing on delivered cost to the user as the key issue in sales. The study concentrated on steam coal sales to Virginia utilities because detailed data were available. The study concludes that since coal quality from all three states is similar, then delivered cost is the key to steam coal sales to Virginia electric utilities. Coal from eastern Kentucky and West Virginia was provided at a lower delivered cost than coal from Virginia. Coal from eastern Kentucky had the lowest FOB mine price, and coal from West Virginia was moved at the lowest transportation costs. Since coal from Virginia had a weighted-average FOB mine cost lower than that from West Virginia, its present disadvantage is in its higher transportation costs. All of the mines involved in the study are served by a single railroad system, and all of the utility plants involved are served by a single railroad system. Lowest transportation costs resulted if the mine and the utility were served by the same rail system. An extra $2 to $3 a ton was required to move the coal 6 to 7 miles to the utility on a second system, as in the case of the Norfolk Southern (NS) switch to the CSX system in Chesterfield. Since the coal producers do not have the margins to absorb this additional cost, the coal delivery competition is between railroads who do. The Virginia coal industry's future is tied inescapably to NS, which transports its coal and determines the delivered costs. Future growth requires that NS meet CSX transportation competition costs in order that Virginia coal can compete with West Virginia and eastern Kentucky coal on the basis of delivered cost. Increased Virginia coal sales require the close cooperation of Virginia coal suppliers, transporters, and users. 5 figs., 91 tabs.

• Research Organization: Virginia Polytechnic Inst. and State Univ., Blacksburg (USA). Virginia Center for Coal and Energy Research
• DOE Contract Number: FG22-84PC72268
• OSTI ID: 5591883
• Report Number(s): DOE/PC/72268-5; ON: DE85015592
• Country of Publication: United States
• Language: English

Related Subjects

01 COAL, LIGNITE, AND PEAT
012000* -- Coal
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COAL MINERS
COMPARATIVE EVALUATIONS
COMPETITION
COST
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ENERGY SOURCES
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