EPA-230/l-75-058a
SEPTEMBER 1375
ECONOMIC IMPACT
OF
INTERIM FINAL EFFLUENT GUIDELINES
ON THE
U.S. COAL MINING INDUSTRY
QUANTITY
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Planning and Evaluation
Washington, D.C. 2046O
.»
-------
This document is available for inspection through the
U.S. Environmental Protection Agency, Public Information
Reference Unit, Room 2404, Waterside Mall, 401 M Street,
S.W., Washington, D.C. 20460.
Persons wishing to obtain this document may write
the Environmental Protection Agency, Economic Analysis
Division, Waterside Mall, 401 M Street, S.W., Washington,
D.C. 20460, Attention: Distribution Officer PM-220
-------
ECONOMIC IMPACT
OF
INTERIM FINAL EFFLUENT GUIDELINES
ON THE
U.S. COAL MINING INDUSTRY
-ntal Protection
on V, I,::. r,ar7
South l?::?l.i'..;\ S,-r-,i;>
Report to
U.S. ENVIRONMENTAL PROTECTION AGENCY
EPA-230/l-75-058a
SEPTEMBER 1975
U.S. Environmental Protection Agency
Region V, Library
230 South Dearborn Street
Chicesto, Illinois 60604
-------
TABLE OF CONTENTS
Page
Preface i
List of Tables ±v
List of Figures vi
I. SUMMARY 1
A. PURPOSE AND SCOPE 1
B. IMPACT 1
1. Soft Coal Segment 1
2. Hard Coal Segment 1
3. Preparation Plants 2
4. Industry Impact
C. LIMITATIONS OF THIS STUDY 2
II. U.S. COAL INDUSTRY - AN OVERVIEW 3
A. COAL MINING AND PREPARATION TECHNOLOGY 3
1. "Soft" Coal Segment (Bituminous, Sub-bituminous,
and Lignite) 3
2. Anthracite ("hard" coal) Mining 4
3. Coal Cleaning and Preparation 4
B. COAL RESOURCES 6
C. DEMAND 6
1. Domestic "Soft" Coal 6
2. Exports 13
3. "Hard" Coal 13
D. SUPPLY 13
E. COAL PRODUCING FIRMS 16
1. Bituminous Coal and Lignite 16
2. Anthracite 23
ii
-------
TABLE OF CONTENTS cont'd
Page
F. SEGMENTATION OF MINES AND PREPARATION PLANTS 23
1. "Soft" Coal Mines 26
2. Hard Coal Segment 26
3. Coal Cleaning/Preparation 32
4. Relationship of Segments to the U.S. Coal
Mining Industry 36
G. COAL TRANSPORTATION 36
H. GOVERNMENT INFLUENCE 36
III. IMPACT ANALYSIS 40
A. SOURCES AND CHARACTERISTICS OF MINE DRAINAGE 40
B. REGIONAL DISTRIBUTION OF ACID MINE DRAINAGE 41
C. INTERIM FINAL EFFLUENT GUIDELINES 41
D. STATE WATER REGULATIONS 41
E. COSTS OF COMPLIANCE WITH INTERIM FINAL GUIDELINES 45
F. COAL PRODUCTION COSTS 45
G. COAL PRICES 46
H. IMPACT ANALYSIS 50
1. Status of Current State Regulations 53
2. Impact Based on Model Mine/Treatment Plant
on the "Soft" Coal Segment 53
3. Impact on Anthracite Segment 58
4. Impact on Coal Preparation Plants 58
5. Summary 59
APPENDIX A 60
APPENDIX B 66
iii
-------
LIST OF FIGURES
Figure
No. Page
1 Mining Methods Used in United States Bituminous
Coal Production 5
2 Coal Fields of the United States 7
3 Coal Consumption by Market Categories 12
4 Productivity at Bituminous Coal Mines 21
5 Characterization Scheme for U.S. Coal Industry 25
vi
-------
I. SUMMARY
A. PURPOSE AND SCOPE
The purpose of this study is to provide the Environmental Protection
Agency (EPA) with information regarding the economic impact of Proposed
Interim Final Effluent Guidelines on the United States coal mining industry.
This industry comprises:
SIC Code 1111 - Anthracite (hard coal) Mining and Preparation Plants
SIC Code 1211 - Bituminous Coal and Lignite (soft coal) Mining and
Preparation Plants
The proposed Interim Final Effluent Guidelines would impose a pH lim-
itation of 6-9 on point source discharges from existing coal mines and prep-
aration plants to navigable waters of the United States.
B. IMPACT
1. Soft Coal Segment
Only mines with acid mine drainage will be affected by the Guidelines.
Acid mine drainage is concentrated mainly in the Appalachian states; con-
sequently our analysis has concentrated on this region.
Many of the states where acid mine drainage is likely to be a problem
have some form of regulations limiting on the pH of discharges as part of
effluent or waste discharge standards. The most lenient seems to be a pH
limitation of 5 to 10. However, our study of state water laws was not
exhaustive. We are not certain if existing state regulations are applicable
to all point sources from coal mines and preparation plants. We do not
know the degree to which state laws are enforced. If the regulations cover
all point sources and enforcement of state regulations is good, incremental
costs to meet Interim Final Guidelines will be minimal. However, since
this may not be so, we studied the impact of neutralization costs on model
mines.
A model mine approach was used as there are a large number of estab-
lishments engaged in coal mining in the United States, making a mine by
mine analysis impossible. The costs of compliance with the Interim Final
Guidelines were provided by the EPA.
The annualized operating costs, as a result of compliance, increased
less than 12 cents a ton. The capital requirements range from $3,500-
77,000. For the large mine segment we have looked at the combination of
a large mine and preparation plant and the cost increase is relatively
modest. For the medium and small surface mine segments the capital require-
ments may range from 0.3 percent to 3.2 percent of capital investment
(excluding treatment equipment). Thus, on the basis of costs for model
-------
The trends in mining methods for the period 1940-1973 is shown in
Figure 1.
2. Anthracite ("hard" coal) Mining
The anthracite district of northeastern Pennsylvania is generally cha-
racterized by steeply dipping, folded and faulted sedimentation. Anthracite
seams vary in thickness from district to district and can range from part-
ings of a foot to major seams averaging 36 feet.
Four methods are currently employed in producing anthracite: deep
mining, strip mining, culm bank reprocessing, and dredging. Deep and strip
mining have been discussed in reference to soft coal. Anthracite production
in 1973 from deep mines was 726,000 tons and 3,279,000 tons from strip
mines.
Lower recovery costs have made old culm and silt banks dumped in the
early days of anthracite mining an important source of fine sized coal.
This source accounted for 2.4 million tons or about 35% of total production
in 1973. The culm material, formerly regarded as waste, is currently
trucked to preparation plants for reprocessing.
Dredging operations are found on the Susquehana and Schuylkill Rivers.
Fine coals which have accumulated from erosion of mine waste and culm and
silt banks are recovered by means of suction devices and then processed,
washed and sized on board. In 1973, dredging accounted for 441,000 tons.
3. Coal Cleaning and Preparation
The objective of coal cleaning is to remove foreign matter such as
rock and slate from coal. The advantages thus derived are a reduction in
ash and sulfur content, control of ash fusibility, increase in calorific
value and improvement of coking properties. The need to clean coal prior
to shipment has resulted from factors such as the adoption of mechanized
mining that does not differentiate between coal and impurities and the
imposition of stringent quality specifications by consumers. Mechanical
cleaning of coal is possible because of the difference in specific gravity
between the free impurity (1.7-4.9) and coal (1.3). Generally, cleaning
processes are classified as gravity-based stratification or non-gravity
processes. Included in the former category are wet processes such as laun-
der washers, jigs, classifiers, and tables; the non-gravity category includes
the heavy media methods (in air or water) as well as froth flotation.
-------
100
t, Strip and Auger Mining
CONVENTIONAL MINING - Hand Loading
A///A///A///A///A///
CONVENTIONAL MINING - Mechanical Loading
10
0
1940 1942 1944 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1973
Source: U.S. Bureau of Mines
FIGURE 1 MINING METHODS USED IN UNITED STATES BITUMINOUS COAL PRODUCTION
-------
TABLE 1
DEMONSTRATED COAL RESERVE BASE OF THE UNITED STATES
ON JANUARY 1. 1974 BY METHOD OF MINING
(Million short tons)
Potential Mining Method
State
Alabama
Alaska
Arizona
Arkansas
Colorado
Georgia
Illinois
Indiana
Iowa
Kansas
Kentucky, East
Kentucky, West
Maryland
Michigan
Missouri
Montana
New Mexico
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wyoming
Total
Underground
1,798
4,246
420
14,000
1
53,442
8,949
2,885
9,467
8,720
902
118
6,074
65,165
2,136
31
17,423
860
1
29,819
667
3,780
2,971
1,446
34,378
27,554
Surface
1,184
7,399
350
263
870
12,223
1,674
1,388
3,450
3,904
146
1
3,414
42,562
2,258o
2
16,003
3,654
434
2
1,181
428
320
3,272
262
679
508
5,212
23,674
297,235
136,713
Total
2,982
11,645
350
665
14,870
1
65,665
10,623
2,885
1,388
12,917
12,624
1,048
119
9,488
107,727
4,394
31
16,003
21,077
1,294
1
31,000
428
987
3,272
4,042
3,650
1,954
39,590
51,228
433,948
Source: U.S. Bureau of Mines.
1Includes measured and indicated categories as defined by the USBM and USGS
and represents 100% of the coal inplace.
2Less than 1 million tons.
-------
TABLE 2
DISTRIBUTION OF U.S. DEMONSTRATED COAL RESERVES
BY SEGMENTS AND POTENTIAL MINING METHODS
(million short tons)
Segment
Potential Mining Method
Central
Component States
Northern Md., Pa., Ohio, Va.,
Appalachia W. Va.
Southern Ala., Ga., East Ky.,
Appalachia N.C., Tenn.
Ark., 111., Ind., Iowa,
Kan., West Ky., Mich.,
Missouri, Okla., Texas
Intermountain Ari., Colo., N. Mex.,
Utah
Great Plains Mont., N. Dak., S. Dak.,
Wyo.
West
Alaska, Ore., Wash.
Underground
85,493
11,964
81,468
19,916
92,719
5,693
Surface
10,872
4,954
26,573
3,740
82,667
7,907
Total
96,365
16,918
108,041
23,656
175,386
13,600
Total
297,235 136,713 433,948
Source: U.S. Bureau of Mines
-------
TABLE 3
CONSUMPTION OF BITUMINOUS COAL AND LIGNITE. BY CONSUMER CLASS,
Year
1967
1968
1969
1970
1971
1972
1973
Electric
Utilities
271,784
294,739
308,461
318,921
326,280
348,612
386,879
Bunker ,
Lake
Vessel &
Foreign
467
417
313
298
207
163
116
WITH RETAIL DELIVERIES IN THE UNITED STATES
(Thousand short tons)
Manufacturing and Mining Industries
Beehive
Coke
Plants
1,372
1,268
1,158
1,428
1,278
1,059
1,310
Oven
Coke
Plants
90,900
89,497
91,743
94,581
81,531
86,213
92,324
Steel &
Rolling
Mills
6,330
5,657
5,560
5,410
5,560
4,850
6,356
Other
Manufacturing
and Mining
Industries
92,464
92,028
85,374
82,909
68,655
67,131
60,837
Retail
Deliveries
to Other
Consumers
17,099
15,224
14,666
12,072
11,351
8,748
8,200
Total of
Classes
Shown
480,416
498,830
507,275
515,619
494,862
516,776
556,022
Source: U.S. Bureau of Mines
-------
consumption and do not include the rapidly growing demand for exported coal
needed to support steel operations throughout the Western World and to sup-
ply power, mostly in Canada. Exports are discussed in the next section.
It can be seen from the trend curves of Figure 3 that the principal
coal consuming sectors are the electric utility and basic steel industries.
The former is by far the largest and fastest growing market, accounting in
1973 for nearly 70% of the domestic consumption. While utility coal demand
should remain strong for the next decade or so, the continued utilization
of coal as a boiler fuel will depend on present and future air quality
standards. In the recent past, it was not uncommon for low-sulfur oil,
most of it imported, to displace coal in a wide and increasing segment of
the utility market, largely because economically viable pollution control
technologies are not yet available for coal-fired boilers. Among the de-
velopments that could combat this trend and permit the utilization of
higher sulfur coal in the future are conversion of coal to clean (high- or
low-Btu) gas, conversion to low-sulfur liquids, and stack gas cleaning
systems such as scrubbers.
Coal consumption by the steel industry has remained virtually constant
over the last decade, despite large increases in raw steel output. This
is a consequence of improvements in blast furnace technology, including
supplementary fuel injection, high top-pressure operation, and better fur-
nace burden preparation.
The most important use of coal in modern steel production is in the
manufacture of metallurgical coke, either in beehive or byproduct coke ovens.
Almost 99% of the coal consumed in coke ovens in 1973 went to byproduct
oven coke plants. In modern byproduct coke-making operations, high-volatile
coal usually is blended with either or both medium- and low-volatile coals
to provide the charge for the coke ovens. These coals should contain as
small amounts of sulfur and ash as are economically feasible, because the
amount of these components present in the coal mixture directly affects
the quality of the coke produced and its performance in the blast furnace.
For this reason, most coals used for the production of metallurgical coke
are beneficiated prior to use.
Generally, the demand for metallurgical coal is relatively inelastic,
in relation to price, in the short run, and may in fact remain so in the
long run. Substitution of non-metallurgical coals or other fuels would
occur when mechanically acceptable chars can be produced from non-coking
coals and if alternative fuel costs become more favorable. Similarly,
where coal is clearly the cheapest fuel, the demand for steam coal would
be expected also to be inelastic. However, it should be observed that the
steam coal demand function is generally complex and dependent to a large
degree on interfuel competition, i.e., cost/availability of fuel oil and
natural gas.
11
-------
o
o
to
o
700
600 -
500 -
.- 400
c
g
a
E
3
1/1
o
O
"55
O
O
Total Domestic Consumption
300 G
200 h
100 H
1950
FIGURE 3 COAL CONSUMPTION BY MARKET CATEGORIES
12
-------
2. Exports
Following World War II, bituminous coal exports became an important
item of U.S. foreign trade contributing positively and significantly to
the international balance of payments. Table 4 shows the trend in coal
exports for a selection of years between 1940 and 1973. Exports fluctuated
prior to 1961 because of various emergencies abroad; the lack of any major
fuel crises since then up to 1970 has enabled exports to increase steadily.
In 1970, the United States exported 70.9 million tons of coal, stemming
from an unprecedented rise in world steel production, a depletion of large
coal stockpiles and a reduction in coal mines capacity abroad. Similarly,
the reduction in 1972 exports resulted generally from diminished steel de-
mand abroad, improved world coking coal supply, and sufficient coal stocks
abroad. Accordingly, coal buying became selective and the adequate world
coal supplies and lower demand resulted in a sharp focusing on prices.
There was a further decline to 52.9 million tons in 1973, stemming primarily
from reduced demands in Canada and Western Europe. But despite the lower
export volumes, the value of coal exports rose slightly over the prior
year to about $1 billion.
In 1973, Japan retained its premier position as an importer of U.S.
coal, receiving about 36% of the total foreign shipments. Shipments to
Canada, Europe, and South America accounted for 30.7%, 26.9%, and 5% re-
spectively. U.S. exports accounted for less than 10% of production.
Compared to 1972, less coal was exported from the Appalachian and Cen-
tral coal regions in 1973. Shipments from the former were 18 million tons
less than in 1972 while shipments from Western Kentucky, Illinois and
Indiana were approximately 2 million tons below those of 1972. Shipments
from the Western states increased almost 14 million tons in 1973.
3. "Hard" Coal
Anthracite consumptions by domestic user categories are similarly
shown in Table 5. Apparent consumption in the U.S. in 1973, (calculated
as production minus exports, including purchases by the Federal Government
to supplement the fuel needs of the U.S. Armed Forces in West Germany),
totaled about 5.6 million tons, of which 51% was used for space heating,
25% by electric utilities, 13% by the iron and steel industry, and the
remaining 11% was distributed among cement plants, colliery fuels, and
other uses.
D. SUPPLY
In 1973, the United States produced 591.7 million tons of bituminous
coal and lignite, thus accounting for about 18% of the world's total out-
put of 3.3 billion tons. Domestic anthracite production was 6.83 million
tons, equivalent to 3.6% of the world total.
13
-------
TABLE 4
TREND IN U.S. COAL EXPORTS
Year Total Exports*
(000 tons)
1940 16,466
1945 27,956
1950 25,468
1955 51,277
1960 36,541
1965 50,181
1970 70,944
1971 56,633
1972 55,960
1973 52,903
*Excludes fuel or bunker coal loaded in vessels engaged in foreign
trade and shipments to U.S. Military Forces.
Source: U.S. Bureau of Mines
14
-------
TABLE 5
Trend in Domestic Consumption of Pennsylvania
Anthracite by Consumer Categories
(thousand short tons)
Residential Iron and Steel Industry
Year
1969
1970
1971
1972
1973
& Commercial
Heating
4,209
4,042
3,850
2,960
2,917
Colliery
Fuel
17
16
15
11
11
Electric
Utilities
1,849
1,897
1,646
1,584
1,442
Cement
Plants
213
W
W
W
W
Coke Making
543
472
451
474
467
Sintering &
Pelletizing
623
464
339
283
231
Other
Uses
1,355
1,357
1,037
603
603
W = Withheld to avoid disclosing individual company confidential data; included
in "other uses."
Source: U.S. Bureau of Mines, Mineral Industry Surveys.
15
-------
Table 6 shows the distribution of 1973 bituminous coal and lignite
production by states, coal regions, and mining methods. Similar data are
shown in Table 7 for Pennsylvania anthracite. The data of Table 6 indi-
cate the Appalachian and Central regions dominated coal production, to-
gether accounting for about 90 percent of total output. Among the individual
states, the leading producers were, in order, Kentucky (21.6% of total),
West Virginia (19.5%), Pennsylvania (12.9%), and Illinois (10.4%).
In 1973, underground mining accounted for 50.6% of bituminous coal
and lignite production, strip mining 46.8%, and auger mining the balance.
Indications are that strip mining probably will increase steadily to about
55% sometime in the mid-1980's, underground mining will probably decline
to about 44% and auger mining to 1%. Table 8 shows the trend since 1940
in the methods of coal mining. To some degree, however, the future trends
in both total coal output and the method of production will depend on
national energy policies and promulgated environmental (especially strip
mining) legislations. Assuming that unduly restrictive strip mine legis-
lations are not adopted, Western coals may account for as much as 33% of
total U.S. production by 1985.
It should be observed that domestic coal production has shown rela-
tively little increase since 1969 despite an apparent increase in demand.
This is believed to be due to the steady decline in labor productivity
brought on largely by the enforcement of the 1969 Federal Coal Mine Health
and Safety Act and several state strip mine laws. The trend in productiv-
ity since 1950 is shown in Figure 4. Note that the decline has been most
severe for underground mines where productivity has dropped from 15.61
tons per man-day in 1969 to only 11.20 tons per man-day in 1973. Strip
mines have declined only marginally from 35.71 to 34.60 tons per man-day
in this period. It had been hoped that 1973 would see the bottoming-out
of the productivity slump and that productivity would gradually return to
around 14-15 tons per man-day by about 1985. Such an expectation may have
been erased by the provisions of the 1974 labor agreement between coal
operators and the United Mine Workers. That agreement provided for addi-
tional personnel in underground mines, and such an increase will be expected
to lower productivity. In surface mining future Federal Strip Mine legis-
lation may have a similarly adverse effect. It ought to be noted that,
despite the decline in U.S. coal mine productivity in recent years, it is
still substantially higher than that of most other coal-producing countries.
In this regard, it is recognized that productivity is not based solely on
mining practice, but is also a function of such other variables as seam
thickness and geology, overburden ratios, and coal quality.
E. COAL PRODUCING FIRMS
1. Bituminous Coal and Lignite
About 4,000 companies produce bituminous coal and lignite. The top
15 firms are listed in Table 9, along with data on their ownerships, coal
16
-------
TABLE 6
1973 BITUMINOUS COAL AND LIGNITE PRODUCTION BY STATES,
COAL REGIONS AND MINING METHODS
(Thousand short tons)
Region State
NORTHERN APPALACHIA Maryland
Pennsylvania
Ohio
Virginia
West Virginia
Sub Total
SOUTHERN APPALACHIA Alabama
Eastern Kentucky
Tennessee
Sub Total
CENTRAL Arkansas
Illinois
Indiana
Iowa
Kansas
Western Kentucky
Missouri
Oklahoma
Texas (lignite)
Bituminous Coal
Underground
66
46,207
16,225
23,437
95,516
181,451
7,618
40,553
3,636
51,807
3
32,570
789
356
22,342
Strip
1,643
29,829
28,527
8,700
17,704
86,403
11,529
23,671
4,236
39,436
432
29,002
24,465
245
1,086
31,337
4,658
2,183
6,944
and Lignite
Auger
79
366
1,031
1,824
2,228
5,528
84
9,742
348
10,174
_____
Total
1,789
76,403
45,783
33,961
115,448
273,384
19,230
73,966
8,219
101,415
434
61,572
25,253
601
1,086
53,679
4,658
2,183
6,944
Sub Total
56,060
100,352
156,410
-------
TABLE 6 cont'd
oo
1973 BITUMINOUS COAL AND LIGNITE PRODUCTION BY
COAL REGIONS AND
Region State
INTERMOUNTAIN Arizona
Colorado
New Mexico
Utah
Sub Total
GREAT PLAINS Montana - Bituminous
- Lignite
N. Dakota - Lignite
Wyoming
Sub Total
WEST Alaska
Washington
Sub Total
TOTAL
MINING METHODS
STATES ,
Bituminous Coal and Lignite
Underground
3,361
733
5,500
9,594
1
425
426
16
16
2.99.1354
Strip Auger
3,247
2,834 38
8,336
14,417 38
10,410
314
6,906
14,461
32,091
694
3,254
3,948
276,647 15,740
Total
3,247
6,233
9,069
5,500
24,049
10,411
314
6,906
14,886
32,517
694
3,270
3,964
591,719
Source: U.S. Bureau of Mines
-------
TABLE 7
1973 PENNSYLVANIA ANTHRACITE PRODUCTION
BY EXTRACTION METHOD
Extraction Method Production (OOP tons)
Underground 726
Strip Pits 3,279
Culm Banks 2,384
River Dredging 441
Total 6,830
Source: U.S. Bureau of Mines
19
-------
TABLE 8
PRODUCTION OF BITUMINOUS COAL AND LIGNITE, BY TYPE OF MINE
Strip
Mining
43,167
55,071
67,203
79,685
100,898
109,987
112,964
139,395
139,506
106,045
123,467
117,618
108,910
105,448
98,134
115,093
127,055
124,109
116,242
120,953
122,630
121,979
130,300
144,141
151,859
165,241
180,058
187,134
185,836
197,023
244,117
258,972
275,730
276,647
(000 tons)
Auger
Mining
205
1,506
2,291
4,460
6,075
8,045
7,946
7,320
7,641
7,994
8,232
10,583
12,531
13,331
14,186
15,299
16,360
15,267
16,350
20,207
17,332
15,554
15,740
Underground
Mining
417,604
459,078
515,490
510,492
518,678
467,630
420,958
491,229
460,012
331,823
392,844
415,842
345,425
349,551
289,112
343,465
365,774
360,649
286,884
283,434
284,888
272,766
281,266
302,256
321,808
332,661
338,524
349,133
344,142
347,132
338,788
275,888
304,103
299,354
Total
Production
460,772
415,149
582,693
590,177
619,576
577,617
533,922
630,624
599,518
437,868
516,311
533,665
466,841
457,290
391,706
464,633
500,874
492,704
410,446
412,028
415,512
402,977
422,149
458,928
486,998
512,088
533,881
552,626
545,245
560,505
602,932
552,192
595,386
591,739
Year
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
Source; Bituminous Coal Data, National Coal Association
20
-------
40
35
30
Q 25
L
£
c
OJ
? 20
0)
Q.
t/5
o
t 15
o
-C
10
1950
1955
1960
1965
1970
1975
Source: Bituminous Coal Data, National Coal Association
FIGURE 4 PRODUCTIVITY AT BITUMINOUS COAL MINES
-------
TABLE 9
TOP 15 COAL-PRODUCING GROUPS IN 1973
NJ
N>
Company
Peabody Coal Co.
Consolidation Coal Co.
Island Creek Coal Co.
Pittston Co.
Amax Group
U.S. Steel Corp.
Bethlehem Mines Corp.
North American Coal Corp.
Old Ben Coal Corp.
Eastern Assoc. Coal Corp.
Westmoreland Coal Co.
General Dynamics Corp.
Pittsburg & Midway
Utah International, Inc.
American Electric Power
Total
Ownership
Coal Production
Relative Standing
(million tons)
Kennecott*
Continental Oil
Occidental
Public
Amax
Public
Bethlehem Steel
Public
Sohio
Eastern Gas & Fuel
Public
Public
Gulf Oil
Public
Public
1973
69.92
60.5
22.9
18.8
16.7
16.2
14.1
12.5
10.8
10.6
8.8
8.7
8.1
7.4
6.6
1972
71.6
64.9
22.6
20.6
16.4
16.3
13.3
12.0
11.2
12.5
9.1
10.0
7.5
6.9
6.3
1973
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
1972
1
2
3
4
5
6
7
9
10
8
12
11
13
14
15
1971
1
2
3
4
5
6
7
11
10
8
12
9
13
14
15
1970
1
2
3
4
5
8
6
12
10
7
11
9
13
14
17
1965
1
2
3
5
4
9
7
12
11
8
13
6
10
31
20
292.6
301.2
*Currently under U.S. Supreme Court order to divest itself of Peabody Coal Company.
Source: 1974 Keystone Coal Industry Manual
-------
production in 1972 and 1973, and relative rankings, in terms of coal output
since 1965. Two companies, Peabody Coal Company and Consolidation Coal
Company, with their subsidiaries, accounted for 22% of the bituminous coal
production in 1973. The top 15 firms were responsible for 49.5% while the
top 50 accounted for 66.4%
Firms producing a million tons or more in 1973 were responsible for
nearly 75% of total output. Of this group, about 26% were controlled by
the coal industry itself. The oil industry controlled about 14%, steel and
utilities about 12% each, and decreasing percentages by other industries.
The large-scale acquisition of coal companies by "outside" industries
was a phenomenon of the late 1960's and early 1970's. The coal industry
characteristically had experienced poor profits and its management was re-
garded as largely outdated. Operators thus were not averse to selling out
at an acceptable price. The buyers, frequently large (petroleum) energy
groups, saw the acquisition of a coal producer as a means of diversification
into another energy source or for obtaining coal reserves in anticipation
of substantial growth in coal utilizing industries. The utilities, chemi-
cals, and metals firms generally acquired coal companies as a means of
guaranteeing themselves adequate raw materials supplies at economical and
controllable prices.
Besides the large producers, the bulk of the coal mining firms are
small independent operators or family-owned mines. These companies, though
numerous, account for a far smaller proportion of the total coal production
than the large firms. Over the last several years, these smaller firms
have been forced to yield to economic pressures arising from low profita-
bility, and the trend towards greater concentration in the industry is ex-
pected to continue.
2. Anthracite
Data from the Pennsylvania Department of Environmental Resources indi-
cate that in 1973 there were about 181 companies involved in anthracite
production. These companies operated one or more of the following types
of facilities: deep mines, strip mines, culm bank mines, cleaning plants,
and breaker preparation plants. Of these companies, only the 20 listed in
Table 10 produced in excess of 50,000 tons of shippable anthracite. Their
cumulative production amounted to about 5.1 million tons, equivalent to
about 75% of the total output of anthracite. The balance of the producers
are typically single-facility operations that serve specific local customers.
Indications are that with time, these small operators may succumb to the
economic and market pressures afflicting the anthracite industry, resulting
in a general consolidation and concentration of the industry in the hands
of a few relatively large firms.
F. SEGMENTATION OF MINES AND PREPARATION PLANTS
We have segmented the U.S. coal industry, as shown in Figure 5, as
"soft" coal and "hard" coal mining and coal preparation plants, by geogra-
phic regions, by type of mine and by size of mine.
23
-------
TABLE 10
TOP 20 PRODUCERS OF ANTHRACITE IN 1973
Operator Production
Reading Anthracite Co. 757,759
Jeddo-Highland Coal Co. 572,808
Blue Coal Corporation 459,969
Greenwood Stripping Corporation 359,741
Kocher Coal Co., Inc., Leon E. 326,266
Lehigh Valley Anthracite, Inc. 324,390
Manbeck Dredging Co., Inc. 275,800
Gilberton Coal Co. 269,920
Hecla Machinery & Equipment Co. 246,221
United Gas Improvement Corporation 244,935
B-D Mining Co. 237,411
Kerris & Helfrick, Inc. 182,688
Beltrami Enterprises, Inc. 179,767
Glen-Nan, Inc. 164,153
Schuylkill Contracting Co. 147,029
Northwest Mining Co., Inc. 97,393
Split Vein Coal Co., Inc. 66,801
Raymond Colliery Co., Inc. 64,317
Schickram, William 59,845
Rosini Coal Co. 58,752
Total 5,095,965
Source: Pennsylvania Department of Environmental Resources
24
-------
Ln
,
Northern Appalachia
Maryland
Pennsylvania
Ohio, Virg ma
1
Vest V
l
r~
I!
S
rgima
H
f
+ +
Same as Underground Mining .
\
$
f
f
J_ 1
3
3
Biturr
Southern Appal ec hi.
Alabama
Eastern Kentucky
J
r
!
a
!
0
3
f
inous
U S Coal Industry
^
*
"Soft" Coal Mining j
Sub Bituminous Lignite
1
i
11,1
C»"ll nntMounum Gt«t Plum 1 Weit
mmo^5 OklSS™ Ar"ona Mon'a™ Alaska
Indiana Texas Colorado North Dakota Washington
Kansas Iowa New Mexico Wvom np |
W Ken
ucky Utah 1
r
L. 1 i 1
crt V) w
Sy,
5 ^T
5 X)
3 •» n o
50. ~ ™ »
_ ™ o s a
I r
" Hard' Coal
(Anthracite)
Mining
,
i
Coal
Preparation Plants
1
,
Pennsylvania
Anthracite
Field
i
1
Anthracite
Preparation Plants
Bituminous Coal
Preparation Plants
i 4 i
Underground
i "^"
? Same as Underground Mining ,
4
s!
?>
<»
s
8
£f
ss
SKIP
Mining
i
Dredging
Culm Banks
r—
+ '» ItftYTY
V
u
§
H
^
u
•?
^
•sl -i1
"° o ^ S s
"1= '3
8I K
r-
*
S
5
f
3
i
aT
5
2
?
2
S
r~
5
2
/)
3
S
S
V
2
?'
*™ 1
T
/A
5 Z
< 5
FIGURE 5 CHARACTERIZATION SCHEME FOR U.S. COAL INDUSTRY
-------
1. "Soft" Coal Mines
Table 11 shows, for the period 1960-73, the distribution of active bi-
tuminous coal and lignite mines as a function of mine size. The total num-
ber of mines declined from 7,865 in 1960 to 4,744 in 1973. Virtually all
of this decline occurred in the less than 10,000 net tons category decreasing
from 4,645 in 1960 to 1,093 in 1973. All other categories remained relatively
stable or increased in number.
In terms of the proportionate share of coal production, all except the
largest have lost ground since 1960. The over 50,000 tons/yr category
has increased its share of total production from 49% in 1960 to 58% in 1973.
On the other hand, the combined shares of the two smallest categories has
slipped from 15.5% to 9.8%
Tables 12 and 13 represent the number of mines and production derived
from 1973 statistics from the U.S. Bureau of Mines—by mine size, mine type
and region.
Nearly 60% of the nation's coal mines were located in Northern Appalachia
and accounted for about 46% of the total production. Auger mines accounted
for 11% of the mines in the region and 2% of the production in this region.
Southern Appalachia had the following distribution for its 1,586 mines—
41% underground, 34% strip and 25% auger.
The Central region had 226 mines (4.8% of the national total) but
accounted for a far higher proportion of "soft" coal output in 1973—i.e.,
26%. In this region there were three times as many strip mines as under-
ground mines and strip mines accounted for almost two-thirds of the region's
coal production.
Only 1% of the nation's coal mines were located in the Intermountain
region but these accounted for 4% of the "soft" coal production. In the
Great Plains and West regions, strip mines dominate coal production.
Table 14 shows the distribution of employment, based on 1973 statistics
from the U.S. Bureau of Mines. Northern Appalachian mines accounted for
nearly 86,000 workers, of whom 55,000 were employed in underground mines
producing over 200,000 tons per year. Small mines with coal outputs of less
than 50,000 tons/yr accounted for only 15,500 employees, a little over 10%
of the total.
2. Hard Coal Segment
Table 15 shows the distribution of number of mines, production and
employment for anthracite based on data from the Pennsylvania Department on
Environmental Resources.
Strip mining was the dominant mining method, accounting for 45% of the
mines, 48% of anthracite production and 60% of employment.
26
-------
TABLE 11
PRODUCTION OF BITUMINOUS COAL. BY SIZE OF MINE OUTPUT
Year
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
Over
500,000
Net Tons
202
195
204
224
238
259
274
281
275
295
307
256
280
280
200,000
500,000
Net Tons
258
225
240
242
220
224
221
244
260
263
266
315
310
308
100,000
200,000
Net Tons
NUMBER
262
242
255
262
270
279
327
267
249
352
405
408
417
384
50,000
100,000
Net Tons
OF MINES
396
420
414
499
553
555
589
542
533
524
617
671
617
600
PRODUCTION (THOUSANDS OF NET
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
204,999
202,923
213,772
242,548
267,363
292,707
308,868
326,578
318,938
337,683
359,516
294,171
336,604
344,380
81,013
73,118
76,458
77,411
73,893
71,897
70,177
77,011
84,118
83,370
84,297
97,661
100,313
95,074
37,204
33,694
35,878
36,001
37,540
39,498
45,220
51,787
48,822
48,770
55,729
58,096
58,523
52,629
27,894
30,325
28,831
33,745
37,985
38,390
41,335
37,695
27,890
37,108
43,310
46,920
44,072
41,707
10,000
50,000
Net Tons
2,102
2,183
2,201
2,250
2,299
2,367
2,386
2,079
1,951
1,898
2,104
1,888
1,945
2,079
TONS)
44,238
45,682
48,463
49,821
52,695
54,311
55,212
49,398
46,576
45,649
50,849
47,576
48,708
52,391
Less than
10,000
Net Tons
4,645
4,383
4,426
4,463
4,050
3,544
2,952
2,360
1,959
1,786
1,902
1,611
1,310
1,093
20,164
17,235
18,748
19,403
17,523
15,285
13,068
10,159
8,898
7,925
9,227
7,772
7,165
5,553
Total
7,865
7,648
7,740
7,940
7,630
7,228
6,749
5,873
5,327
5,118
,601
149
,879
4,744
415,512
402,977
422,149
458,928
486,998
512,088
533,881
552,626
545,245
560,505
602,932
552,192
595,386
591,738
Source: U.S. Bureau of Mines
27
-------
TABLE 12
1973 DISTRIBUTION OF "SOFT" COAL MINES BY SIZE OF PRODUCTION AND TYPE OF MINE
Region
NJ
Number of Mines in Category:
Northern Appalachia
Southern Appalachia
Central
Inter-Mountain
Great Plains
West
TOTAL
>200,000
Underground
249
65
41
17
1
373
Tons /Yr /Mine
Strip Auger
59
53 1
73
7
20
2
214 1
50,000-200,000
Underground
243
111
9
9
1
373
Tons /Yr /Mine
Strip
345
157
37
4
2
545
Auger
18
48
—
—
—
—
66
<50,000
Tons /Yr /Mine
Underground Strip
494
475
5
12
4
1
991
1,139
336
61
3
10
1
1,550
Auger
290
340
1
631
SOURCE: U.S. Bureau of Mines
-------
NJ
VO
Region
TABLE 13
1973 DISTRIBUTION OF "SOFT" COAL PRODUCTION BY MINE SIZE AND TYPE
Cumulative Coal Output (OOP Tons) By Mines
Northern Appalachia
Southern Appalachia
Central
Inter-Mountain
Great Plains
West
TOTAL
> 200, 000
Underground
147,880
33,686
55,181
8,097
315
245,159
Tons/Yr/Mine
Strip Auger
29,986 .
19,059 267
95,511
13,794
31,739
3,940
194,029 267
50,000-200,
Underground
24,583
10,637
930
1,283
96
37,529
000 Tons/Yr/Mine
Strip
31,161
14,717
2,552
607
291
49,328
Auger
1,597
4,715
6,312
<50,000
Underground
8,989
7,484
89
214
15
16
16,807
Tons/Yr/Mine
Strip
25,254
5,659
978
16
62
8
31,977
Auger
3,930
5,191
38
9,159
SOURCE: U.S. Bureau of Mines
-------
TABLE 14
1973 DISTRIBUTION OF EMPLOYMENT IN "SOFT" COAL MINES BY SIZE AND TYPE OF MINE
u>
o
Total Number of Employees in Category
Northern Appalachia
Southern Appalachia
Central
Inter-Mountain
Great Plains
West
Sub-Totals
>200,000 Tons/Yr/Mine
Underground Strip Auger
55,294 4,750
13,997 3,228 45
12,043 9,795
2,462 784
126 1,380
375
83,922 20,312 45
50,000-200,000 Tons/Yr/Mine
Underground Strip Auger
9,111 6,183 285
4,435 2,529 787
178 597
392 38
38 11
14,154 9,358 1,072
<50,000 Tons/Yr/Mine
Underground Strip Auger
3,861 5,428 979
3,089 986 866
24 160
65 29
11 4
16 1
7,066 6,581 1,854
Underground Strip Auger
68,266 16,361 1,264
21,521 6,743 1,698
12,245 10,552
2,919 824 9
175 1,395
16 376
105,142 36,251 2,971
TOTAL -144,364
Sub-Totals
SOURCE: Derived from U.S.B.M.'s manpower productivity data.
-------
Number of Mines
1973 Production (000 tons)
Mine Employment
TABLE 15
CHARACTERIZATION OF ANTHRACITE INDUSTRY (1973)
BY MINE SIZE AND MINING METHOD
UNDERGROUND
>50,000
Tons /Mine
2
243
286
<50,000
Tons /Mine
70
483
430
STRIP
>50,000
Tons /Mine
17
2,336
814
<50,000
Tons /Mine
99
943
819
CULM BANKS
>50,000
Tons /Mine
12
1,393
104
<50,000
Tons /Mine
50
991
223
u>
Source: 1973 Annual Report of the Pennsylvania Department of Environmental Resources
-------
The trend for both strip and underground mines has been one of declining
output. In 1963 strip mines accounted for 7.5 million tons of anthracite
compared with 2.3 million in 1973. This is due to the scarcity of econom-
ically strippable reserves. The decline in underground anthracite output
may be related to the fact that it is becoming increasingly more expensive
to extract anthracite by underground methods from steeply dipping seams at
greater depths. Culm and silt bank recovery is currently a promising source
of anthracite and its proportionate share is likely to decrease.
3. Coal Cleaning/Preparation
"Soft" Coal. Table 16 indicates that only about half of U.S. "soft"
coal production in 1973 had been cleaned prior to shipment to the consumers.
Ninety-five percent of the active cleaning plants were located in Northern
and Southern Appalachia and in the Central Region.
It should be pointed out that over 96% of the cleaned coal shipments
in 1973 involved "wet" processes which had the potential of generating
liquid effluents.
A more detailed breakdown of the cleaning plants by states is given in
Table 17. It is worth indicating that the metallurgical coal producing
states (Alabama, Eastern Kentucky, Pennsylvania, Utah, and West Virginia)
in 1973 accounted for a combined total of about 250 of the 382 cleaning
plants, producing 159 million tons of cleaned coal (55% of the total). In
addition, the high-sulfur coal states of Ohio, Western Kentucky, Illinois,
and Indiana contributed 81 plants and above 102 million tons of coal. Coal
cleaning is not generally practiced in the sub-bituminous and lignitic coal
regions of the Great Plains and the West.
Table 17 also suggests that jigs, heavy media separation, and water
tables are, in that order, the most popular mechanical cleaning techniques.
Their percentage contributions to the total cleaned coal output in 1973
were respectively 46%, 31%, and 12%.
"Hard" Coal. To remove shale, slate, and other contaminants recovered
along with the coal during mining, and to meet the quality specifications
set by the consuming markets, it is necessary to clean all non-dredge
Pennsylvania anthracite prior to shipment.
Table 18 is a listing of the major cleaning plants operating in 1973.
Estimated daily cleaned coal capacity is about 36,600 tons, equivalent to
an annual value, on the basis of 250 operating days per year at full capa-
city, of 9.2 million tons. Actual preparation plant output in 1973
(excluding dredge production) was 6.4 million tons, suggesting an apparent
capacity utilization in that year of about 70%.
It may be noted from Table 18 that the heavy-media, washing, and water
table techniques are the preferred methods of anthracite preparation.
32
-------
TABLE 16
1973 REGIONAL CHARACTERIZATION
OF "SOFT" COAL CLEANING PLANTS
Region
Northern Appalachia
Southern Appalachia
Central
Inter-mountain
Great Plains
West ,
Other States
Number of Cleaning
Plants
241
54
67
10
N.A.
3
7
Total 382
Cleaned Coal
Production
(000 Tons)
153,687
35,114
88,107
5,237
N.A.
3,312
3.460
288,918
Percent of Total
Coal Production
48.8
1. Includes Arizona, Arkansas, Iowa, Kansas, Maryland, Missouri,
Montana, New Mexico, North Dakota, Texas, and Wyoming
Source: U.S. Bureau of Mines
33
-------
State
Alabama
Alaska
Colorado
Illinois
Indiana
Kentucky:
Eastern
Western
Ohio
Oklahoma
Pennsylvania
(Bituminous)
Tennessee
Utah
Virginia
Washington
West Virginia
Other States
TOTAL
TABLE 17
1973 DISTRIBUTION OF MECHANICAL COAL CLEANING PLANTS, BY STATES
No. of
Cleaning
Plants
19
1
3
36
10
33
18
17
3
68
2
7
32
2
124
5
Total
Cleaned
No.
Coal Production,
(103
11
1
48
19
22
20
14
45
1
3
17
3
75
3
tons)
,705
50
,662
,091
,699
,264
,005
,588
312
,731
,145
,575
,696
,262
,672
,460
Jigs
12
—
14
5
20
88
13
1
2
16
1
42
2
of Plants
Air
Tables
_rT
—
2
—
3
2
25
1
—
8
—
18
3
Employing
Flotation
3
-Not Avail.
1
4
—
11
—
-Not Avails
13
—
1
10
—
47
1
Cleaning
Heavy-
Media
7
iV.1 n_™^
3
12
—
31
5
,vi _ ___
29
2
1
17
—
97
1
Methods*
Water
Tables
12
—
4
1
21
1
15
1
1
12
—
57
—
Washer
3
—
10
5
15
6
6
—
1
6
—
15
2
382
288,918
Clean Coal Production by each method
(thousand tons):
136
62
91
205 125
69
132,655 10,505 14,201 88,203 34,935 8,418
*A plant may employ more than one cleaning method.
Source; U.S. Bureau of Mines, 1973 Mineral Industry Surveys; 1974 Keystone Coal Industry Manual.
-------
TABLE 18
PENNSYLVANIA ANTHRACITE PREPARATION PLANTS. 1973
Company/Location
Blaschak Coal Co., Inc., Nicholas
Blue Coal Corp., Ashley
Taylor
Buckley Coal Co., Eckley
Cass Contr. Co., Marlin
Gilberton Coal Co., Gilberton
Glen Burn Colliery, Shamokin
Gowen Coal Co., Fern Glen
Greenwood Min. Co., Tamaqua
Honey Brook Mines, Inc., Audenreid
Jeddo-Highland Coal Co., Jeddo
Lehigh Valley Anthr. Inc., Swoyerville
Hazleton
Shenandoah
Manbeck Dredging Co., Tremont
Pine Creek Coal Co., Spring Glen
Reading Anthracite Co., Pottsville
St. Nicholas
Trevorton
Reidinger Coal Service, Paxinos
Rosinl Coal Co., Shamokin
Thos. W. Schenck Coal Co., Pine Grove
Sun Coal Co., Inc., Atlas
Swatara Coal Co., Minersville
Underkoffler Coal Service, Lykens
Plant Name
Blaschak
Huber
Taylor
Eckley
Marlin
Gilberton
Glen Burn
Gowen
Greenwood
Audenreid
Jeddo #7
Harry E
Hazleton Shaft
Mammoth
Westwood
Pine Creek
New St. Nicholas
St. Nicholas
Trevorton
Reidinger
Carbon Run
Breaker
Diamond
Breaker
Underkoffler
Cleaned Coal
Capacity
(tons/day)
1,050
7,500#
800
450
1,000
1,800
600
6,000
2,000
3,500#
1,625#
400
400
3,795#
350
1,000
NA
2,000
800
500
Cleaning
Method(s)*
W
HM-W
HM
HM-W
HM-W
HM-W
HM
HM-WT
HM-F-W
HM
HM-F
HM-W
HM-W
HM-W
WT
WT-W
HM-W
W
HM-W
HM
J-WT-W
HM
HM
HM-WT
HM
* J
F
HM
WT
W
= Jigs, jig washers
- Flotation, froth flotation
= Heavy media
= Water tables
= Washery
# ADL Estimate
Source; 1974 Keystone Coal Industry Manual, and ADL Estimates.
35
-------
4. Relationship of Segments to the U.S. Coal Mining Industry
Tables 19 and 20 summarize the relationship of each segment to the
total "soft" and "hard" coal industry, in terms of the number of mines,
production and employment. This information can be used to judge the im-
portance of any significant adverse impacts to a segment as a result of
compliance with Interim Final Effluent Guidelines, as it relates to U.S.
Coal Mining Industry.
G. COAL TRANSPORTATION
In 1973, 52% of all coal was moved entirely by rail, nearly 19% was
moved wholly or partly by barge, 12% by truck and lesser amounts on the
Great Lakes, tidewater conveyor belts, and pipelines. Rail freight rates
vary between 7 and 20 mils per ton-mile depending on location and distance.
It costs about $7.00 to move a ton of coal 1,200 miles.
H. GOVERNMENT INFLUENCE
Spurred by public concern, government activity has focussed on (1) pre-
serving or restoring the environmental quality of mined land and (2) en-
suring the health and safety of the mine workers. Although President Ford
recently vetoed bill HR 25, other state and federal laws regulate strip
mining.
State Strip Mine Laws. About thirty-three states have laws relating to
strip mining, with most of the current legislation enacted since 1965. All
of the state laws provide for an adminstrative agency to oversee regulatory
programs. The assigned responsibilities consist of approving permits, super-
vising mines, collecting bonds, and approving reclamation work. Three
staces, Pennsylvania, Washington, and Tennessee, require an additional per-
mit from the state water pollution control agency. Although state laws on
strip mining are fairly extensive, they are generally regarded as sensible
by the industry. Enforcement, which has been weak and spotty, is becoming
more effective.
Leasing of Federal Lands for Coal Mining. The Bureau of Land Manage-
ment under the Department of the Interior is charged with the leasing of
Federal lands for coal mining. It has proposed new regulations that will
impose rigorous land reclamation requirements on Federal lands leased for
coal mining.
Federal Air-Quality Standards. While compliance with primary standards
for the sulfur dioxide concentration of ambient air was set for July 1, 1975,
compliance with secondary standards was set for October I, 1977. Individual
air quality control regions have already submitted implementation plans,
36
-------
TABLE 19
NUMBER OF MINES, PRODUCTION AND EMPLOYMENT AS PERCENTAGES
N. Appalachia
No. of Mines
Production
Employment
S. Appalachia
No. of Mines
Production
Employment
Central
No. of Mines
Production
Employment
Intermountain
No. of Mines
Production
Employment
Great Plains
No. of Mines
Production
Employment
West
No. of Mines
Production
Employment
Note; x = <0.04%
Source: U.S. Bureau of Mines.
Large
5.3
25.0
38.3
1.4
5.7
9.7
0.9
9.3
8.3
0.4
1.4
1.7
X
0.1
0.1
OF THE
Deep
Medium
5.1
4.2
6.3
2.3
1.8
3.1
0.2
0.2
0.1
0.2
0.2
0.3
X
X
X
SOFT COAL
Small
10.4
1.5
2.7
10.0
1.3
2.1
0.1
X
X
0.3
X
0.1
0.1
X
X
X
X
X
SEGMENT
Large
1.2
5.0
3.3
1.1
3.2
2.2
1.5
16.1
6.8
0.2
2.3
0.5
0.4
5.4
1.0
X
0.7
0.3
OF THE
Strip
Medium
7.3
5.3
4.3
3.3
2.5
1.8
0.8
0.4
0.4
0.1
0.1
X
X
0.1
X
U.S. INDUSTRY (1973)
Auger
Small Large Medium
24.0 x 0.4
4.3 x 0.3
3.8 x 0.2
7.1 x 1.0
1.0 0.1 0.8
0.7 x 0.6
1.3
0.2
0.1
0.1
x
x
0.2
x
X
X
X
X
Small
6.1
0.7
0.7
7.2
0.9
0.6
x
x
X
Subtotals
59.8
46.2
59.5
33.4
17.2
20.8
4.8
26.3
15.8
1.1
4.1
2.6
0.8
5.4
1.1
0.1
0.7
0.3
-------
TABLE 20
NUMBER OF MINES. PRODUCTION AND EMPLOYMENT AS
PERCENTAGES OF THE HARD COAL SEGMENT OF THE U.S. INDUSTRY (1973)
Deep Strip Subtotals
Large Small Large Small
No. of Mines 0.8 28.0 6.8 39.6 75.2
Production 3.8 7.5 36.6 14.8 62.7
Employment 10.7 16.1 30.4 30.6 87.8
Source: U.S. Bureau of Mines.
38
-------
had them approved by the EPA, and set them into effect locally. Neverthe-
less, when these regulations will be enforced is unclear. A second uncer-
tainty is how to achieve acceptable sulfur dioxide levels in the stack-gas
when high sulfur coals are used. Since this uncertainty is enough to cur-
tail the use of high sulfur coals severely, amendments have been proposed
to extend the compliance schedules of the Clean Air Act and permit the use
of intermittent control systems under certain circumstances.
The Federal Coal Mine Health and Safety Act of 1969. This act was
passed to reduce the hazards of underground coal mining. It seeks to ensure
adequate underground ventilation at the coal face, ensure proper cleaning
and rock dusting practices, provide adequate roof support, limit the rate
of advance of continuous miners in order to keep the operator under bolted
roof, and regulate the specification of underground coal mining equipment.
39
-------
III. IMPACT ANALYSIS
In this chapter, we take a look at the sources and characteristics of
mine drainage; the proposed EPA Interim Final Guidelines and state water
regulations; and the effect of compliance with Interim Final Guidelines
based on a model mine treatment plant approach.
A. SOURCES AND CHARACTERISTICS OF MINE DRAINAGE
Water handled and discharged in coal mining and preparation may
generally be classified into two broad categories: (1) "process" water
from either coal preparation by wet methods or that used for dust and fire
protection and (2) "mine" drainage.
"Process" Water. The coal mining and preparation industry consumes
relatively little "process" water. The major usage of "process" water is
in preparation plants. A majority of wet cleaning plants recycle a major
portion of their process water. Suspended solids consisting of semi-col-
loidal particles of coal, shale and clay form one of the principal prep-
aration plant pollutants. Additionally, some minerals and salts such as
chlorides and sulfates of alkalis and alkaline earth metals dissolve easily
in water. In certain circumstances, these salts significantly change the
pH of the water.
Mine Drainage Discharge. Compared with process water discharges, the
handling and disposal of unwanted mine drainage water is a much larger
problem. The amount and nature of mine discharge is determined largely by
the mining methods and the characteristics of the mine site. Two important
mine characteristics which affect drainage properties are the geologic
history and the chemistry of the coal-bearing strata.
Mine drainage water originates from direct precipitation or from
groundwater. Surface mining areas are directly exposed to precipitation
and the nature of the exposed materials will affect the quality of the
surface runoff. The degree of groundwater discharge depends on the depth
of penetration made by cutting into the groundwater zone of the sub-surface.
In general, the topographically high surface mines will encounter the least
amount of groundwater and will provide smaller quantities of mine drainage,
unless the surface mining intersects a water-filled underground mine.
Water encountered in deep mines may come from different sources. In
mines with light cover and without a firm solid roof, rainwater may seep
directly into mine workings. This may also be true of deeper mines where
pillar falls have broken the roof to the surface. In such cases, except
where passing under a year round stream, the amount of water generated is
usually pretty closely related to the precipitation in the region—more
water during the wet months, less during the dry. The deeper a mine is,
40
-------
the longer it is before changes in rainfall are reflected in the quantity
of drainage generated. Another source of water in underground mines, not
connected with seasonal changes, is "old" water, accumulated over a period
of time in abandoned workings of the mine, or from flooded adjacent mines.
Here the water filters through coal and parting, or comes up through cracks
in the floor. Similarly, core holes drilled to prospect the coal property
can be a source of water.
Water must be disposed from the mining areas, so that mining can con-
tinue smoothly. Because of the interaction between mineral wastes from
mining and related operations and mine waters, dissolved or suspended pol-
lutants are generated. Pyrite oxidation leads to the production of acid
in mine drainage ("acid mine drainage").
One of the main characteristics of wastes from coal mining operations
is that they are generally unrelated to production quantities. The prin-
cipal treatment method involves the use of alkaline chemicals, mainly
hydrated lime and limestone and is usually combined with an aeration process
for ferrous iron removal.
B. REGIONAL DISTRIBUTION OF ACID MINE DRAINAGE
Acid mine drainage from coal mining activity is concentrated in the
Appalachian states particularly Pennsylvania, West Virginia, Maryland, Ohio,
and Kentucky. It occurs to a limited extent in Illinois.
C. INTERIM FINAL EFFLUENT GUIDELINES
The Interim Final Effluent Guidelines proposed by the U.S. Environ-
mental Protection Agency will impose a pH limitation of 6 to 9 on point
source discharges from existing coal mines and preparation plants.to
navigable waters of the United States.
D. STATE WATER REGULATIONS
Almost all the states have water quality standards which are essentially
stream standards based on the designated usage of the water. Many states
have approved programs for the National Pollutant Discharge Elimination
System (NPDES). This system requires a discharger to obtain a permit,
which specifies limitations on the pollutants being discharged. Some states
have effluent limitation based on state laws regulating waste discharges to
state waters. The pH limitation for certain states are summarized in Table
21. Usually water quality standards are stricter than effluent standards.
If there is a potential conflict, some state regulations require suitable
limitations of pollutants (usually in the writing of the permit) to ensure
41
-------
TABLE 21
EFFLUENT LIMITATIONS FOR CERTAIN STATES
State
PH
Colorado
Illinois (NPDES)
Indiana (NPDES)
Maryland (NPDES)
Ohio (NPDES)
Pennsylvania (NPDES)
Tennessee
W. Virginia
6.0-9.0 (standards for waste discharge)
5.0-10.0 (in case of violation of WQS, suitable
limitation to comply with WQS)
6.0-8.5 (WQS)
Regulation on disposal of gob and coal fines so
as create minimal acid mine drainage and minimum
deposit of coal fines in state waters. Law
similar to Illinois in that WQS cannot be violated.
6.0-8.5 (effluent limitation)
Standards on industrial waste
5.0-9.0
6.0-9.0
6.0-9.0 (WQS)
6.0-8.5 (predominantly acid streams relaxed to
5.5)
Source: Environmental Reporter - State Water Laws, The Bureau of National
Affairs, Inc., Washington, D. C.
42
-------
TABLE 22
COSTS OF MEETING INTERIM FINAL EFFLUENT GUIDELINES IN
NORTHERN APPALACHIAN MINES
Large (1,000,000 tpy)
Capital ($)
0 & M , Chemicals ($/yr)
Deep
61,250
60,600
Surface
61,250
20,000
Medium (100,000 tpy)
Capital ($)
0 & M1, Chemicals ($/yr)
3,500
5,300
13,000-26,000'
6,600
Small (50,000 tpy)
Capital ($)
0 & M1, Chemicals ($/yr)
3,500
2,900
6,000-12,000'
3,500
0 & M includes sludge removal.
The upper range represents having to build 2 treatment facilities over
the life of the mine, as surface mines are not fixed at a location.
Source; EPA, B. M. Jarrett's memo of August 27, 1975. (Effluent
Guidelines Project Officer.)
-------
TABLE 23
COSTS OF MEETING INTERIM FINAL EFFLUENT GUIDELINES IN
NORTHERN APPALACHIAN PREPARATION PLANTS
Size: 1 million tons per year, 25-year life, 350-400 tons per hour
Capital ($)
Settling Basin
Lime Feeders
Total
3,000
12.000
15,000
Operating Costs ($/yr)
0 & M 1,000
Chemicals 2.500
0 & M and Chemicals 3,500
Source; EPA, B. M. Jarrett's memo of August 27, 1975 and
discussions with him. (Effluent Guidelines Project
Officer.)
44
-------
that water quality standards are not violated.
Based on a review of the Environmental Reporter - State Water Laws
(compiled by the Bureau of National Affairs, Inc.)> a survey by the EPA
of water pollution control agencies and our telephone conversations with
state water pollution control agency personnel, we find that a number of
state agencies have jurisdiction on the control of effluents. Of the
current state laws limiting the pH of discharges, the most lenient standard
is pH 5-10.
We found that local conditions may be taken into account in the writing
of permits. For example, West Virginia allows discharge with pH of 5.5
if the receiving stream is predominantly acid. In Pennsylvania where the
effluent standards for coal mining are pH 6 to 9 effluents may be allowed
from a neutralization plant with a pH greater than 9 into predominantly
acid streams for its beneficial effect on the stream.
Our study of state water laws is not exhaustive in that we have not
looked at all agencies that might have control on the discharge of effluents.
We do not know the extent to which state laws are being enforced. An anal-
ysis of such enforcement practices is beyond the scope of this study.
E. COSTS OF COMPLIANCE WITH INTERIM FINAL GUIDELINES
The costs of compliance with Interim Final Guidelines were provided
by EPA—(B.M. Jarrett's memo of August 27, 1975, Effluent Guidelines Project
Officer, Appendix A). These represent neutralization costs, allowing suf-
ficient retention time for completion of the neutralization reaction and
stabilization of pH for model plants in the Appalachian region. We have
used these costs in the assessment of impact.
The compliance costs have been summarized in Tables 22 and 23.
F. COAL PRODUCTION COSTS
Numerous factors, often interacting complexly, affect the cost of coal
production. These factors vary between mining regions, between mines in
the same region, and even within a given mine. Of the physical factors,
seam thickness and depth below the surface dominate since they largely
determine the system used in mining the deposit. Some of the other factors
influencing coal production costs are mining technology, mine size, opera-
ting conditions and labor productivity.
Since conditions vary from one mine/region to the other, no single
production model will be applicable to all coal mines. In this section,
we have derived model mining costs by type of mining—underground or strip—
and by mine size for the Appalachian region. The actual costs experienced
45
-------
TABLE 24
SUMMARY OF ESTIMATES OF INVESTMENT AND OPERATING
COSTS FOR MODEL UNDERGROUND COAL MINES IN APPALACHIA
(December 1974)
Size (10° tpy)
Seam Thickness (inches)
Investment Cost ($/annual ton)
Capital Investment
1.0
66
26.68
Medium
0.1
48
11.42
Small
0.05
48
12.32
Operating Cost ($/ton)
Direct Costs
Indirect Costs
Insurance and Taxes
Subtotal
Depreciation
TOTAL
9.74"
0.94!
7.05
1.07*
0.18
8
8.30
1.14
10
6.18
1.10f
0.21
7.49
1.23
8
10
9.44
8.72
Average mine life - 20 years.
Average mine life - 10 years.
Based on a union labor rate $11,890 of mine life per man-year and super-
visory labor rate of $16,100 per man-year.
4
Based on a non-union labor at $9,500 per man-year and salaried rate of
$12,825 per man-year.
At 15% of labor and supplies.
6At 25% of labor and supplies.
At 2% of initial capital investment, does not include Federal Income Tax.
8
At 2% of initial mine investment, does not include Federal Income Tax.
15-year straight line depreciation of initial investment.
10
10-year straight line depreciation of initial investment.
Source; ADL estimate, Phase II Report Industry Charactrization, Economic
Impact of Proposed Effluent Guidelines on the Coal Mining Industry.
46
-------
TABLE 25
SUMMARY OF ESTIMATES OF INVESTMENT AND OPERATING COSTS
FOR MODEL SURFACE COAL MINES IN APPALACHIA
e (106 tpy)
e of Mine
(December 1974)
Large1 Medium2 Small2
1.0 0.1 0.05
Contour Contour Strip
Investment ($/annual ton)
Capital Investment
30.64
9.55
7.51
Operating Costs ($/ton)
Direct Costs
Indirect Costs
Insurance & Taxes
Subtotal
Depreciation
Total
6.29'
0.49-
5.29
0.38f
5.29
0.52*
0.61
7.39
2.049
9.43
0.19
5.86
0.9610
6.82
0.15°
5.96
0.7510
6.71
8
Average mine life - 20 years.
2
Average mine life - 10 years.
3
Based on an hourly labor rate of $9,700 per man-year and salaried at
$13,200 per man-year.
4
Based on a non-union labor at $9,500 per man-year and salaried rate of
$12,850 per man-year.
At 15% of labor and supplies.
At 25% of labor and supplies.
At 2% of initial capital investment, does not include Federal Income Tax.
10
At 2% of initial mine investments does not include Federal Income Tax.
5-year straight line depreciation of initial investment.
10-year straight line depreciation of initial investment.
Source; ADL estimate, Phase II Report Industry Characterization,
Economic Impact of Proposed Effluent Guidelines on the
Coal Mining Industry.
47
-------
by a specific mine will approach those synthesized in the model only to
the extent that its operating conditions approximate those assumed in the
derivation.
Tables 24 and 25 present a summary of our estimates for costs in the
Appalachian region for small, medium, and large underground and surface
mines. For large underground and surface mines, capital requirements were
derived from U.S. Bureau of Mines estimates with suitable revisions and
escalations to December 1974. These are presented in terms of the capital
investment to put a mine into operation (including items such as the cost
of land acquisition, exploration and development, working capital and
initial cost of equipment and their installation, preparation plants and
loading facilities).
We have hypothesized that medium and small mines operate under a
different set of coal placement, availability, and market conditions.
They are likely to lower their costs by using used and/or rebuilt equipment,
employ fewer people (doing multiple jobs) and operate in coal seams rela-
tively close to the point of entry such as into the high wall of former
strip operations. In such mines one would not probably have extensive
entries and elevators. This philosophy is also extended in the calculation
of operating costs. The nature of these operations is reasoned to be such
that they could not survive (except in unusual spot market conditions)
unless their costs are less than (or at most equal to) those experienced
by the large mines. Profitable operation would hinge on the use of minimal
equipment, the ingenuity of the operator in devising practical mining short-
cuts, the ability of personnel to perform a wide variety of jobs, and the
existence of very favorable geologic and topographic mining conditions
amenable to utilization of minimum equipment and personnel. Coupled with
these factors lower wage rates have been assumed as well as a faster de-
preciation schedule for purchased equipment.
G. COAL PRICES
In considering coal markets, we have to look at three commodities—
metallurgical, low-sulfur, and high-sulfur steam coal—and whether coal is
sold through long term contracts at specified prices or on the spot market.
Until the mid-1960's coal contracts were generally fixed price and
long term particularly for steam coal. In a market where consumption was
declining, such contracts were acceptable both to the producer and the
consumer. However, with increasing demand for coal and escalating costs
such contracts have become unacceptable to the producer. Recent contracts
are shorter term and generally include provision for pass-through of full
costs on an annual basis. Presently, 80-85% of all coal is sold on long
term contracts.
Historically, coal price levels have been based on production costs,
which vary greatly by type of mining and geography. The average f.o.b.
price for all coal was $8.53/ton in 1973; that is, $10.84/ton for under-
48
-------
TABLE 26
State
Alabama
Illinois
Indiana
Kentucky
Maryland
Pennsylv
Tennessee
W. Virginia
U.S.
F.O.B. MINE WEIGHTED VALUE
($/ton)
! Underground
30.30
13.89
11.12
-
21.25
mi a
: 13.70
da
_
OF COAL FOR 1974
Strip Average
17.84 21.79
5.33 9.38
8.70 10.00
approx. 16.00
20.58 20.81
18.00
22.05 18.02
approx. 21.00
15.00
Source; USBM, preliminary figures.
49
-------
ground coal, $6.11/ton for strip and $7.39/ton for auger coal. The average
f.o.b. price varied from a high of $13.37/ton in Arkansas to a low of
$2.82/ton in Montana. The average f.o.b. price of coal in 1974 was $15.00
per ton according to Bureau of Mines preliminary estimates. The average
f.o.b. price of coal in 1974, based on preliminary data from the Bureau of
Mines, is listed in Table 26 for selected states. These average figures
include coal sold under long term contracts and in the spot markets.
Spot prices change in response to short term supply-demand imbalances.
When demand exceeds supply, spot prices tend to rise quite quickly in re-
sponse. Contract prices on the other hand are not as quickly influenced by
such an imbalance. Should premium prices prevail in the spot market over
a period of time, producers can renew long term agreements from a position
of considerable strength.
Since the oil embargo and the lifting of price controls in the spring
of 1974, the spot price for coal has risen substantially due to shortages,
higher price levels for competing fuels, and the anticipation of a long
coal strike in November 1974.
During 1974 spot price quotations advanced 149% for metallurgical in
the low to medium volatile grades, 1562 in the high volatile grades, and
44% for utility grade coal. Around March 1975, prices for low-sulfur
utility coal were around $20-25/ton compared to a high of $35-50/ton in
1974. Prices of metallurgical grades had declined except for low to medium
volatile grades which were holding around $45/ton.
H. IMPACT ANALYSIS
We have considered the possible impact from two viewpoints:
(1) Status of Current State Regulations
(2) Impact based on model mines and treatment plants in Appalachia.
Acid mine drainage is concentrated mainly in the Appalachian region of the
country, principally Pennsylvania, West Virginia, Maryland, Ohio, and
Kentucky and to a limited extent in Illinois.
The coal industry is composed of a large number of mines that are
widely distributed geographically. It was not possible to do a mine-by-mine
analysis as costs by specific mines are not available.
We have, therefore, decided to look at the impact of Interim Final
Guidelines based on model mine/preparation plant and model treatment plants.
We assumed that such a mine is not in compliance with the Interim Final
Guidelines and would therefore have to incur additional capital expenditure
and operating costs.
50
-------
TABLE 27
EFFECT OF INTERIM FINAL GUIDELINES ON
ANNUALIZED OPERATING COST OF
MODEL UNDERGROUND MINES
Category
Size (106tpy)
PRODUCTION
Capital Investment ($) 26
Direct, Indirect, Insurance Tax ($) 11
Depreciation ($) 1
Interest Expense^- C$)
Annual Operating Cost C$) 13
Before Interim Guidelines ($/ton)
WATER TREATMENT
Capital: Mine ($)
Prep. Plant ($)
2
Depreciation, Interest ($)
0 & M, Chemicals: Mine ($)
Prep. Plant ($)
Annual Treatment Cost ($)
Annual Operating Cost After
Interim Guidelines ($/ton)
Water Treatment Cost _. inn fv*
Large
1.0
,680,000
,210,000
,780,000
711,000
,701,000
13.70
61,250
15,000
76,250
11,401
60,600
3,500
75,500
13.78
n fi
Medium
0.1
1,142,000
830,000
114,000
30,500
974,500
9.75
3,500
3,500
500
5,300
5,800
9.80
n A
Small
0.05
616,000
374,500
61,500
16,000
452,000
9.04
3,500
3,500
500
2,900
3,400
9.11
n ft
Production Cost B.I.G.
Debt to equity ratio 1:2; interest rate
2
Amortized at 8% over 10 years.
Source; Arthur D. Little, Inc. estimates and EPA estimates.
51
-------
TABLE 28
EFFECT OF INTERIM FINAL GUIDELINES ON
ANNUALIZED OPERATING COST OF SURFACE MINES
Category Large Medium Small
Size (106tpy) 1.0 0.1 0.05
PRODUCTION
Capital Investment ($) 30,640,000 955,000 375,500
Direct, Indirect, Insurance Tax ($) 7,390,000 586,000 298,000
Depreciation ($) 2,040,000 96,000 37,500
Interest Expense1 ($) 817,000 25.500 10.000
Annual Operating Cost ($) 10,247,000 707,500 345,500
Before Interim Guidelines ($/ton) 10.25 7.08 6.91
WATER TREATMENT
Capital: Mine ($) 61,250 13,000-26,OOO3 6,000-12,OOO3
Prep. Plant ($) 15.000 — —
76,250 13,000-26,000 6,000-12,000
Depreciation, Interest ($) 11,400 1,950- 3,900 900- 1,800
0 & M, Chemicals: Mine ($) 3,500
Prep. Plant ($) 20.000 6.600 3.500
Annual Treatment Cost ($) 34,900 8,550-10,500 4,400- 5,300
Annual Operating Cost After
Interim Guidelines ($/ton) 10.28 7.16-7.18 7.00-7.02
Water Treatment Cost (%) Q>3 2-1 5 1<3.1>5
Production Cost B.I.G,
Debt to equity ratio 1:2; interest rate 8%.
2
Amortized at 8% over 10 years.
3
The upper range represents two treatment facilities over the life of the mine.
Source; Arthur D. Little, Inc. estimates and EPA estimates.
52
-------
1. Status of Current State Regulations
Most of the states, where acid mine drainage is likely to occur, have
some form of regulation limiting the pH of discharges either as a result
of effluent limitations or water quality standards. The least stringent of
these seems to be a pH limitation of 5-10 in Illinois. However, in writing
permits in Illinois a more stringent standard such as pH 6-8.5 may be im-
posed if the water quality standards are likely to be violated under the
more lenient effluent standards. It is not clear if all effluents arising
from coal mining and preparation are controlled, nor do we know the extent
to which state laws are enforced. We feel that, if state laws are strictly
enforced, the additional impact arising out of Interim Final Guidelines
would be minimal. An analysis of such enforcement practices is beyond the
scope of this study.
2. Impact Based on Model Mine/Treatment Plant on the "Soft" Coal Segment
a. Effect on Mines—Annualized Operating Costs
Tables 27 and 28 summarize the effect of meeting Interim Final Guide-
lines on the annualized operating costs of model underground and surface
mines for soft coals. In addition to the cost items presented in Tables
22 and 23, the annual operating costs before interim final guidelines in-
clude interest expenses based on assumed debt to equity ratio of 1:2 and
8% interest rate. The large mine category includes a preparation plant
and therefore water treatment costs associated with a preparation plant
are included in this category. The capital costs for water treatment are
assumed to be financed by loans that are amortized at 8% over a 10-year
period.
The annual costs after compliance with Interim Effluent Guidelines
increase less than 12$/ton (1.5% maximum). These increases are not very
significant, in comparison to the average price of all coal in 1974 of
$15/ton.
b. Capital Requirements
Table 29 summarizes the capital requirements for meeting Interim Final
Guidelines. In this table, capital requirements for water treatment are
compared to the capital investment of each model mine.
We find for deep mines that the capital needed for building treatment
facilities to meet Interim Guidelines is small compared to the mine invest-
ment (less than 1%). For surface mines in the medium and small category these
ratios tend to become more significant (less than 4%).
c. Mine Profitability
In this section we have tried to estimate the profits of model medium
53
-------
TABLE 29
CAPITAL REQUIREMENTS FOR
MEETING INTERIM FINAL EFFLUENT
GUIDELINES BY MINE TYPE
Size, Category
Capital Investment($)
CI
Deep
Surface
Large
Medium
Small
Large
Medium
Small
26,680,000 1,142,000 616,000 30,640,000 955,000 375,500
Ul
Capital for ($)
Meeting Interim
Effluent Guidelines
°WT
76,250
3,500 3,500
76,250 13,000 6,000
(26,000) (12,000)
Capital for Water(%)
Treatment to Capital
Investment /C
— x 100^
0.3
0.3
0.6
0.25
1.4
(2.7)
1.6
(3.2)
Figures in parenthesis include cost of two treatment plants over the life of the mine
as surface mines are not fixed in location.
-------
TABLE 30
ESTIMATED EARNINGS OF MODEL
SURFACE MINES BEFORE AND AFTER
INTERIM FINAL GUIDELINES
Size, Category
Size (tpy)
Price of Coal ($/ton)
Sales Revenue
Annual Costs
Gross Profits
Tax (48% Gross Profits)
After Tax Profits
% Change in After Tax
Profits Due to Effluent
Guidelines (%)
Medium
100,000
16.00
Before($) After($)
Small
50,000
16.00
Before($) After($)
1,600,000
707,500
892,500
428,400
464,100
1,600,000
716,050
(718, OOO)1
883,950
(882,000)
424,300
(423,400
459,650
(458,600)
800,000
345,500
454,500
218,200
236,300
800,000
349,900
(350,800)
450,100
(449,200)
216,000
(215,620)
234,100
(233,580)
1.0-1.2
0.9-1.2
Figures in parentheses include costs of two treatment plants over the
life of the mine as surface mines are not fixed in location.
55
-------
TABLE 31
EFFECT OF COAL PRICES ON THE
AFTER TAX PROFITS OF MODEL SURFACE MINES
BEFORE AND AFTER COMPLIANCE WITH
INTERIM FINAL GUIDELINES
Value of Coal
f.o.b. Mine Medium Small
($/ton)
16.
15.
14.
13.
00
00
00
00
Before($)
464
412
360
308
,100
,100
,100
,100
After
459,
(458,
407,
(406,
355,
(354,
303,
(302,
($)
650
600)1
650
600)
650
600)
650
600)
Change (%)
1.0
(1.2)
1.
(1.
1.
(1.
1.
(1.
1
3)
2
5)
4
8)
Before($)
236,300
210
184
158
,300
,300
,300
After($)
234,100
(233,580)
208,100
(207,580)
182,100
(181,580)
156,100
(155,580)
Chang e(%)
0.9
(1.2)
1.0
(1.3)
1.2
(1.5)
1.4
(1.7)
Figures in parenthesis include costs of two treatment plants over the life of
the mine, as surface mines are not fined in location.
56
-------
TABLE 32
EFFECT OF INTERIM FINAL. GUIDELINES ON
CAPITAL REQUIREMENTS AND ANNUALIZED OPERATING
COSTS OF MODEL PREPARATION PLANTS
Size (106 tpy) 1.0
Coal Preparation
Capital, CI($) 6,700,000
Operating Cost($) 550,000
Depreciation, Interest ($) o26,000
Annual Operating Cost
before Interim Guidelines($) 1,126,000
($/ton) 1.13
Water Treatment
Capital, CWT($) 15,000
0 & M, Chemicals 3,500
2
Depreciation, Interest 2,250
Annual Treatment Cost($) 5,750
Annual Operating Cost
after Interim Guidelines($/ton) 1.13
Water Treatment Cost -,nn/<>/\ n c
Production Cost B.I.G.X 100U) °'5
Capital for Water Treatment
to Capital Investment (%) 0.2
Debt to equity ratio 1:2, interest rate 8%
2
Amortized at 8% over 10 years.
Source; Arthur D. Little, Inc. Estimates and EPA Estimates.
57
-------
and small surface mines—mines whose capital expenditure for pollution
control as a percent of capital requirements was around 1-3%.
Based on preliminary statistics from the Bureau of Mines, the average
value per ton f.o.b. mine for Pennsylvania and W. Virginia coal for 1974
was $18 and $21/ton. We estimate the strip coal value for Pennsylvania
and W. Virginia at $16/ton.
Table 30 summarizes our estimates of earnings of model surface mines.
The possible change in earnings arising out of compliance with Interim
Final Guidelines, assuming that all treatment costs are passed on, is be-
tween 0.9-1.2%. Based on estimated 1974 earnings it would not be difficult
for such operations to raise the capital for pollution control. If the
prices were $3/ton lower, the change in earnings due to compliance with
Interim Effluent Guidelines would still be small (less than 2%). The ef-
fect of price on profits is presented in Table 31.
3. Impact on Anthracite Segment
In the United States, anthracite is mined predominantly in Pennsylvania.
According to the memorandum of July 2, 1975, by Mr. B. M. Jarrett (Appendix B),
"drainage from active mines is treated to meet Pennsylvania effluent stan-
dards of less than 7 mg/1 Fe, alkalinity greater than acidity, pH6-9; or is
effectively not discharged to a receiving stream with drainage going to
abandoned mines; or the mine is located in one of ten water sheds covered
in the Pollution Abatement Escrow Fund, Pennsylvania Act 443, 1968 in
which case the mine can discharge to a receiving stream untreated mine
drainage and pay $0.15 per saleable ton mined." Consequently, there would
be no additional expenditures necessary to comply with the Interim Final
Guidelines.
4. Impact on Coal Preparation Plants
For the "soft" coal segment, the large mine category was a mine with a
preparation plant. In the analysis of this category, the cost of coal
preparation and effluent treatment cost associated with compliance with
Interim Final Guidelines was taken into account.
In this section we have examined the effect of compliance with Interim
Final Guidelines on an "independent" preparation plant (one that is not
associated with a mine), both from the standpoint of increased operating
cost and capital requirements. The results have been summarized in Table 32.
The increase in annualized operating cost is less than If/ton, compared with
a cost of preparation of approximately $1.00/ton. The capital requirements
for water treatment compared to preparation plant investment is about 0.2%.
We did not have information on effluents and treatment costs for an-
thracite preparation plants and therefore excluded them from our analysis.
58
-------
5. Summary
The analysis of model mines and treatment plants shows that the effect
of the Interim Final Guidelines would be to increase operating costs around
12
-------
APPENDIX A
60
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
SUBJECT: Coal Mine Effluent Guidelines
FROM: BM Jarrett, Project Officer
Effluent Guidelines Division (WH-452)
TO-. Gail Coad, Project Officer
Economic Analysis Division (PM-220)
DATErAUG 2 V 1975
You requested an estimate of capital expenditure to meet the
interim final effluent limitations proposed for the mining industry
subcategory which includes coal preparation plant ancillary areas.
This capital investment would only be for meeting pH limitations
6-9.
A telephone survey was made of 6 representative coal preparation
plants in Pennsylvania, Ohio, and West Virginia. These plants have
a capacity of from 225 tons/hour to 800 tons/hour clean coal.
These ranges in capacity do not reflect the total area included
in the preparation plant ancillary area. As example, a preparation
plant with a 250 ton/hour capacity reported the largest area affected:
10 acres; and a larger preparation plant with the capacity of 800
tons/hour reported a total area of less than 4 acres.
In that the interim final regulation to be promulgated has no
limitation on suspended solids, only neutralization with an alkali
would be required to meet the pH limitation of 6-9. It is recommended
that sufficient time be allowed for the reaction between the alkali
and the acid mine drainage to go to completion and for the pH to
stabilize. A stipulation in the regulation is "any untreated over-
flow from facilities designed, constructed, and operated to treat
the process waste water and the runoff from the coal preparation
plant ancillary area resulting from a 10 year/24 hour precipitation
event shall not be subject to the limitation set forth" (i-e. pH
limitation). With this consideration, any treatment facilities for
the runoff from preparation plant ancillary areas would normally be
designed for containing considerably less than the total flow re-
sulting from a 10 year/24 hour precipitation event as the requirement
is for treating and not containing this volume. Heavy rainfall
events would create a natural dilution of the pollutants associated
with the coal and coal refuse. Therefore, it would seem logical that
any treatment facility designed only for pH control of the runoff
from coal preparation plant ancillary areas would be designed to
treat a limited flow. The areas primarily affected by pH control are
the Northern Appalachian States. For the purposes of estimating flow
to be treated, the largest average rainfall in any month is used. This
occurs in June. This average monthly precipitation is something less
EPA Form 1320-6 (R.v. 6-72)
-------
than 5 inches. On this basis, there would be a requirement to treat
approximately 5,000 gal/day/acre included in the coal preparation
plant ancillary area.
Tor flow? of 50,000 gal/day, and periodic operations assuming
10 acres included in the coal preparation plant ancillary area,
the obviour. method of treatment would be with sodium hydroxide, or
lime, plus a settling basin. The cost of such a facility is less than
53000.
In a previous memo, you were furnished an estimate of $11',000
for lime feeders which might be required to treat the surface runoff
from a refuse storage area associated with a coal preparation plant
producing one million ton/year with a 25 year life and 20% reject.
This preparation plant would have a capacity of 350 ton/hour to
400 ton/hour assuming two shift operation. Estimation for larger or
smaller preparation plants can be proportioned from $12,000.
Also, in a previous memo you were furnished costs for meeting
requirements of BPT, BAT, "and NSPS as initially suggested in the
contractor's draft development document for models in your industry
segmentation.
Your request for costs to meet a BPT limitation of pH 6 to 9
only would apply to those Bituminous mines located in Northern
Appalachia primarily.
Below are costs for meeting a BPT limitation of pH 6 to 9
for the models in your industry segmentation in Northern Appa-
lechia.
The following assumptions are made: For ease in costing
a package, which can be supplied by either MSA or Butler Silo
Company, is used for estimating cost of the control building,
lime storage, lime feed and mixer, and pH controls. This package
is available at $60,000 tc $00,000. In addition to these facilities
a settling basin is required of sufficient size to allow reaction
tetween the alMli ,and the acid mine drainage to go to completion
-and the pH to stabilize. This size is based on a four hour retention
of a Mow attributable to a 10 year/24 hour precipitation event. Cost
of uikaii (lime) is a function of the total acidity in the raw mine
drainage. This cost is based on the aocui-ionted costs at. ei^glit AiC
treatment facilities in the development document. The cost used is
$8000 per year per 1000 cum/day of AMD treated. This cost is most
probably high as the eight AMD plants are treating not only to meet
a pH limitations, but also to meet total iron and an alkalinity
limitation. For mine drainage of less than 100,00- gal/day (378 cum/day),
it is assumed a sodium hydroxide feeder would be used in conjunction
with a settling basin.
-------
Northern Appalachia (Maryland, Pennsylvania, Ohio, Virginia,
West Virginia)
Mines of this region can generally be categorized as being Acidic
or Ferruginous in Maryland, Pennsylvania, Ohio, and the northern part
of West Virginia. It should be noted, howevers that 2/3 the production
of West Virginia and the mines cf Virginia can be categorized as alkaline,
which requires either no treatment for deep mines or only settling for
deep mines and settling for surface mines. This region also has over 50;x
of the total mines in the U.S. in your small deep mine (50,000 ton/yr)
category with most of these mines in the alkaline mine drainage category
requiring no treatment of mine drainage, or the mine is dry.
1. Deep Mines
a. Large Mine
(Total in category - 225, visited - 56)
Mine life - 25 years; 1 million ton/yr; 70% recovery; 60 in. thick
seam; 7000 ton/acre recoverable; 143 acres mined/year; 18137 acre
mined in 13 yrs; 400 ft of cover (below drainage); 600 gal/acre
AMD; 1,114,000 gal/day; design 1 1/2 million gal/day (5700 cum/day).
Plant $60,000
Settling Basin 1,250
WT7250
Chemicals $45,600/year
O&M $15,000/year incl. sludge removal
In that state law in the areas affected by AMD presently require
treatment of mine drainage and this universally consists of lime neutra-
lization (with or without aeration) and precipitation, additional capital
to meet Interim Final BPT v;ould be negligible.
b. Medium Mine
(Total in category - 227, visited - 3)
Mine life - J5 years; 100,000 ton/yr; 70°; recovery; 40 in. thick
seam; 42/0 ton/acre recoverable: 23.4 acre/yr; 187.4 acres mined
in 8 years; 200 ft cover (above drainage); 300 to 600 gal/acre
AMD; 113,000 gal/day; design 150,000 gal/day (568 cum/day).
$ 500 for settling basin
for either sodium hydroxide or lime
3,000 holding tank, pump.
$3,500
-------
Chemicals - $4,000/year
O&M - $l,300/year incl. sludge removal
As with large mines, existing state law requirements would
at feet no capital expenditure to meet BPT.
c. Small Mine
(Total in category - 439, visited - 10)
Mine life - 10 years;f50,000 ton/yr; 75% recovery; 36 in. thick
searn; 3920 ton/acre recoverable; 12.8 mined acre/yr; 64 acres
mined in 5 years; 200 ft of cover (above drainage); 600 gal/acre
AMD; 38,400 gal/day; design 50,000 gal/day (190 cum/day).
$ 500 for settling basin
for either scdium hydroxide or lime
3000 holding tank, pump.
13500
Chemicals - $1600/year
O&M - $1300/year incl. sludge removal
As with large mines, existing state law requirements would
affect no capital expenditure for BPT.
2. Surface Mine
a. Large Mine
(Total in category - 101, visited - 10)
Mine life - 20 years; 1/2 million ton/yr; 90% recovery; 60 in. thick-
seam; 7840 ton/acre recoverable; 64 acre/yr; 320 acres mined in 5 yrs;
design 64.5 million gal/day (1890 cum/day).
Plant $60,000
Settling Cos in J_,J?-Jl
S61.250
Chemicals HB.&OO/year
OSK t F, ,000/year incl. sludge removal
As with deep mines producing AMD, state lews require treatment
of AMD froi'i surface mints. Additional capital to meet Interiu Final BPT
would b£ minimal.
-------
b. Medium Mine (Including auger)
(Total in category - 290, visited - 13)
fvine life - 10 yrs; 100,000 ton/yr; 42 in. thicl' seam; 80'- recovery
(with auger); 4880 ton/acre recoverable; 20.b acre/yr; 5 yr in mine
area 10?. 5 acres; design 120,000 gal/day AMD.
I1! ant $12,000
Settling basin 1.000
$13,000
Chemicals $5,000/year
O&M 51,600/year incl. sludge removal
Additional capital to meet Interim Final BPT would be minimal.
c. Sinall Mine
(Total in category - 101, visited - 10)
Mine life - 5 years; 50,000 ton/yr; 90% recovery; 36 in. thick
seam; 4705 ton/acre recoverable; 10.6 acres/yr; total in mine
area 53 acres.
Plant $5,000
Settling basin 1,000
$6,000
Chemicals $2,500/year
O&M $l,000/year incl. sludge removal
Additional capital to meet Interim Final BPT would be minimal.
If you need any additional information or clarification of
information in this memo, please contact me.
-------
APPENDIX B
Excerpts from Mr. B.M. Jarrett's Memo entitled
"Coal Mining Effluent Guidelines" of July 2, 1975
66
-------
II - ANTHRACITE MINING
Anthracite mining is included with bituminous coal and lignite
mining as it was determined that rank of coal did not effect the
chemical characteristics of raw mine drainage.
Anthracite coal is found to some extent in four states:
Pennsylvania, Colorado, New Mexico, and Washington. However,
approximately 90X of mineable anthracite with present day mining
technology is found in Pennsylvania; and all current anthracite
mining operations are found in Pennsylvania.
Comments on anthracite mining are limited to mines in
Pennsylvania.
Mining methods for anthracite include deep mining, strip mining,
and culm bank. For purpose of developing effluent limitation
guidelines culm bank mining is included with strip mining.
Mining methods for anthracite are influenced to a great extent by
past mining in the area with most mines doing a second and third
pass at mining in some locations plus culm bank recovery. Mines
and seams of anthracite are most often interconnected and are
inundated. Water drainage tunnels established in the 1800's
convey large quantities of mine drainage from abandoned mines.
Currently operating mines often must handle large quantities of
drainage. This drainage from active mines is: treated to meet
Pennsylvania effluent standards of less than 7 mg/1 of Fe,
alkalinity greater than acidity, pH 6-9; or is effectively not
discharged to a receiving stream with drainage going to abandoned
mines; or the mine is located in one of ten water sheds covered
in Pollution Abatement Escrow Fund, Pennsylvania Act 443, 1968 in
which case the mine can discharge to a receiving stream untreated
mine drainage and pay $.15 per saleable ton mined.
For the purpose of developing effluent limitation guidelines only
mines discharging to a receiving stream are considered, and these
mines would be located most generally in the Northern and Eastern
Middle Anthracite Fields. Mines not discharging to a receiving
stream are not covered. Mines discharging to one of the ten
-------
watersheds are not covered as the drainage of the water shed is
treated in a state owned treatment facility.
Unlike bituminous and lignite mines where mine drainage is
fundamentally related to precipitation with side concerns from
adjacent or abandoned mines, anthracite mine drainage is
primarily from abandoned areas, seams or mines. There is
literally no relationship between mine drainage volumes and tons
mined, area mined, roof exposed, depth of cover, or permeability.
In 1973 there were 82 mining companies listed by Pennsylvania as
deep anthracite mine operations of which 12 showed no deep mine
production for the year, and 21 had a deep mine production of
less than 500 tons for 1973. Two deep anthracite mines had a
production of over 50,000 tons in 1973.
In 1973 there were 115 mining companies listed by Pennsylvania as
surface mine operations of which 9 operations were back filling
with no production; UU operations were operating in culm banks;
and 27 operations had a production of less than 500 tons in 1973.
Thirty-four surface mining companies had a production of over
50,000 ton/yr.
1. Deep Mines
a. Large (Visited 1)
One large deep mine is located in the Northern Fields, This mine
had no discharge with drainage returned to abandoned mines. The
mine visited mines approximately 90,000 ton/yr and contributes
$.15/ton to the State of Pennsylvania. In order to operate the
mine visited pumps 1500 gpm 2<4 hr/day, or approximately 2.2
million gal/day.
A primary consideration in opening a new large deep anthracite
mine is cost of pumping. This consideration is quite aside from
cost of treating AMD. Facilities to meet current Pennsylvania
effluent requirements would be adequate to meet NSPS.
b. Small (Visited 0)
Five small deep mines are located in the Northern or Eastern
Middle Field of which two had no production for 1973. A
telephone survey indicated that the remaining three mines had an
effective no discharge.
-------
As with larqe deep mines facilities for a small deep mine to meet
current Pennsylvania effluent requirements would be adequate to
meet NSPS.
2. Surface Mines
a. Larqe (Visited 2)
Included in this cateqory are 14 culm bank mines. Twelve larqe
surface mines are located in the Northern or Eastern Middle
Fields.
A mine visited in the Northern Field consists of three pits with
an annual production of 1.5 million ton/yr. This mine has no
discharge with all mine drainage going to abandoned areas and
mines.
As with deep mines, facilities for large surface mines to meet
current Pennsylvania effluent requirements would be adequate to
meet NSPS.
b. Small (Visited 0)
Included in this category are 30 culm bank mines. Twenty-five
small surface mines are located in the Northern or Eastern Middle
Fields of which 18 had no production for 1973.
As with large surface mines, facilities for small surface mines
to meet current Pennsylvania effluent requirements would be
adequate to meet NSPS.
------- |