Volume 2, No.3
Fall 1996

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Coal Mining in Illinois: Seeing Light At the End of the Tunnel

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COAL MINING IN ILLINOIS:
SEEING LIGHT AT THE END OF THE TUNNEL
By: Mike Vessell and C. Dennis Hoffman

How does an industry die? What events create the conditions that cause an industry to cease to exist? In the case of the coal industry in Illinois, still a major coal producing state, a varied series of events impacted the industry since the 1970s. The coal industy, its employees, and dependent communities have been pummeled like a boxer on the ropes who is being unmercifully jabbed by his opponent.

In the 1970s, advances in mining technology enabled mines to increase production and become safer work places. These and other considerations made coal mines an attractive investment and a target for purchase by larger corporations. Long-term contracts with users were the way to insure the future of any specific mine. But, at the same time, short-term labor contracts between the mine owners and the United Mine Workers of America allowed labor costs to rise more frequently. Consequently, some mine owners were actually willing to sell coal at a loss until user production contracts could be renegotiated or simply bought out.

SHORT-TERM USER CONTRACTS GET EVEN SHORTER

The current practice of mine owners is to pursue "spot market" contracts and to be in continual bidding interface with their users. To illustrate the rapid change in the definitions of long-term and short-term contracts, only a few years ago, a three-year contract was considered short term or "spot market." Today, a six month contract is defined as long term. What makes Illinois coal so desirable is its high BTU (British Thermal Unit) rating (producing more heat per pound). At the same time, Illinois coal's high sulfur concentration (producing more damaging emissions) is the factor that ultimately forced users to turn from Illinois coal as a fuel. In 1990, amendments to the national Clean Air Act required stricter emissions standards which caused users to reevaluate their energy use options. Despite it's lower BTU rating, western coal has low sulfur content thus enabling it to meet Clean Air Act standards. For users of Illinois coal, meeting the Clean Air Act's requirements meant installing and maintaining scrubbers--an expense they were not able to pass on to their customers. They unsuccessfully tried various alternatives, such as blending high sulfur coal with low sulfur coal, in an attempt to meet the emisssion standards. Because of the high costs and difficulties in using high sulfur coal and as a last resort, many users simply canceled coal contracts with Illinois mines and made the switch to coal mines in western states. Faced with this business crisis, both new and old Illinois mine owners usuually opted to close their mines. In 1978, 71 coal mines were operating in Illinois with nearly18,000 employees (see graph). By the end of this year, there may be as few as 22 operating mines with employment dwindling to a mere 5,000. Franklin County, the home of the Coal Mine Museum, is a good example of the decline in the coal industry. The first operating coal mine in Franklin County started in 1904; during the 1940s approximately 14 mines were in business. With the closing of Old Ben #26 at summer's end in 1996, no coal mines are operating in Franklin County!

MORE THAN LOSS OF JOBS

The loss of these mines, a severe blow to an already depressed southern Illinois economy, has far reaching ramifications. The property tax base in many small communities and school districts is heavily dependent on coal mine properties. An article which appeared in the Centralia Sentinel on July 12th, 1996, pointed out that when the Monterey Coal Mine in Clinton County closed (in August 1996), not only would 400 miners be unemployed but Clinton County would lose approximately $400,000 in property taxes. The $6.6 million assessed valuation of the Monterey Coal Mine accounted for nearly half of the total assessed valuation for the Damiansville Elementary School district. Sales taxes which support local governments are also lost as the amount of tonnage mined decreases.

When mines close, high-wage, excellent-benefit jobs are lost -- having harsh consequences for area families and communities. Often the problem is magnified because more than one family member works at the same mine. The mine closures also damage local service and trade businessees which rely on mining families and their incomes. Thus, rising unemployment and lost revenue (and often loss of population) compound the problems of a region where unemployment may be more than two times State rates (see table).

Finding alternative employment for many of these miners has been difficult. Local employment opportunities, especially at the benefit level of the mining industry, are extremely scarce in any town. In addition, most laid off miners are older ( between 40 to 60 years old) and their only work experience has been in mining. Many do, of course, return to school for training. Some may find employment in other parts of the country. Others will commute up to several hours one way just to keep a job in the mining industry. However, those who are forced to accept jobs outside mining can expect to take a significant pay cut. Many may earn approximately one-third of their previous mining wage. Miners earn anywhere from $40,000 to $60,000 annually. And it will be hard to match their previous benefit package, which includes complete health care coverage.

But change is on the horizon. In the year 2000, tougher emission standards go into effect which will remove western coal's competitive edge. Until then, laid-off miners and their families face tough choices. And local taxing bodies face severe revenue reductions. And a valuable natural resource goes unutilized. But in 2000, questions of efficiency will be asked and Illinois coal may be just the answer as the most efficient way for coal users to illuminate and fuel their operations. The mines are ready; the workers are willing.