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Trump promises a US coal revival, but the world’s energy authority begs to differ


Nearly half of U.S. coal production is wrapped up in bankruptcy right now, and the industry needs to take some bitter medicine before it gets better, the IEA says. U.S. coal companies must further cut capacity above and beyond today’s wave of consolidation and mine closures for the industry to become economically sustainable, in its view.

The IEA believes about three-quarters of current U.S. coal capacity can operate profitably once the industry works through a painful debt restructuring. It assumes the remaining coal companies return to health in the early 2020s.

But even then, the IEA considers a scenario in which “cutthroat competition” keeps global markets swimming in too much coal, putting a lid on prices and extending the crisis. If this happens, coal industry wages could spiral downward as workers settle for lower pay over unemployment.

“Although many mines have been idled or closed, the effect on markets has been more than offset by expanding production from lower cost producers, which effectively impeded the market from finding its way back to balance,” IEA said.

IEA sees little opportunity to boost the U.S. coal industry through exports. It forecasts the three-year decline in U.S. coal exports will continue as consumption in China declines, shipments from Mozambique crowd out American coal in Brazil and Europe, and Colombia wields a price advantage in the shrinking European market.

U.S. coal exports fell 23 percent in 2015 and had fallen another 32 percent through the first six months of this year, according to the U.S. Energy Information Administration.

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