Filling the steel gap

Metallurgical coal may be an unknown to the general population, but it’s very important to the manufacturing of steel and also valuable in the current economy.

In August 2022, Australia-based Coronado Global Resources Inc., which produces metallurgical coal, announced a $169.1 million expansion of its Buchanan Mine Complex in Buchanan and Tazewell counties, expected to create 181 jobs. 

Metallurgical coal is used to generate coke, a fuel used in blast furnaces to make steel. “That’s what we’re focused on,” says Bob Cline, Coronado’s vice president of business development and engineering.

Thermal coal, by contrast, is used to generate power — and also has generated an image problem due to its contribution to climate change.

“I would make the argument that Coronado is not an energy company; rather, it is more aptly defined by its role in the manufacturing, infrastructure and construction sectors,” says Will Payne, managing partner of consulting firm Coalfield Strategies LLC and head of business development for InvestSWVA, a public-private business attraction and marketing campaign for Southwest Virginia.

Prices for metallurgical coal hit historic highs in the last part of 2021 and the first part of 2022, according to Ben Beakes, president of the Metallurgical Coal Producers Association.

Halfway into 2022, the metallurgical coal market began to “settle,” according to Beakes. “However, the market is still fairly strong.”

Expanding the Buchanan Mine Complex in Buchanan and Tazewell counties is necessary for Coronado to remain “competitive in the international coal markets for many years,” Cline explains. The company also has active mines in Queensland, Australia, and West Virginia.

Over the next 20 years, extracting coal from the Buchanan mine will require digging out more rock than previously required. “The expansion will allow Buchanan to not only maintain current production levels but also increase the saleable tonnage produced annually,” Cline says.

As of early December, workers had begun construction at the Buchanan Mine Complex on a second set of skips, which carry raw coal from underground to the surface. “We are well on our way to getting started,” says Brett Holbrook, vice president of U.S. operations for Coronado.

The expansion will also include storage space for 60,000 to 70,000 tons of raw coal, as well as a new coal preparation plant. “The preparation plant separates the coal from the rock, thus generating a saleable clean coal product,” Cline says. Additionally, the expansion will increase the size of the coal storage stockpile facility. This will mean fewer trucks hauling coal offsite for storage and later hauling it back for shipping, he adds. 

Several factors contributed to the current demand for metallurgical coal. Coming out of the pandemic, construction projects that had been put on hold suddenly received green lights, which led to a clamoring for steel. Then Russia invaded Ukraine, and Europeans looking to wean themselves from Russian coal, including metallurgical coal, began shopping for it elsewhere.

Another factor impacting demand: China’s relations with Australia began deteriorating a few years ago. That caused China also to shop around for its metallurgical coal needs. “The United States benefited quite a bit from that shift,” says Michael Quillen, founder of Abingdon-based coal producer Alpha Natural Resources and chair of the Energy DELTA Lab and the Southwest Virginia Energy Research and Development Authority.

As part of its plan to satiate some of that demand, Coronado had hired about 40 of the promised new workers as of December 2022, bringing the total number of employees at the Buchanan complex up to 615, according to Cline. The company plans to fill an
additional 141 positions over four years. 

The expansion plan for the mine complex came together quickly over the summer of 2022, according to Payne, who collaborated closely with Coronado executives and state and local officials on the expansion.  “Zooms and phone calls every … day for 10 weeks,” Payne recalls.

Gov. Glenn Youngkin approved a $3.5 million grant from the Commonwealth’s Opportunity Fund to Buchanan and Tazewell counties for the expansion. The money will be used primarily to relocate less than a mile of Route 632 to make room for expansion, according to Cline.

Payne describes Youngkin and Virginia Secretary of Commerce and Trade Caren Merrick as being “incredibly hands-on” during negotiations. “They closed the deal.”