US coal miner Murray Energy Corp., one of the top producers in Northern Appalachia and the Illinois Basin, is suing the Obama administration over new ozone standards it says will harm the coal industry.
The new standards, which decrease the threshold for ground-level ozone to 70 parts per billion, set the levels so that even some of the country’s national parks will be out of compliance, the Ohio-based company claims.
“For the past seven years, the Obama Administration has waged a regulatory rampage against the United States coal industry, and the thousands of high paying, well-benefitted jobs which it provides,” said Robert E. Murray, chairman, president and chief executive officer of Murray Energy, in a statement. “This Ozone Rule is yet another illegal and destructive action aimed at killing these jobs.”
The move follows a lawsuit filed last week by 24 states, which are challenging President Obama’s climate change plan in federal court.
It also comes on the heels of a new study published by the National Mining Association that claims the costs of a so called “Stream Protection Rule,” proposed in July, will take away between 40,038 and 77,520 mining jobs and between $14 billion and $29 billion in annual value of coal lost to production restriction.
Coal markets have collapsed over the last few years due to a perfect storm of factors.
U.S. producers first faced increasing competition from shale gas in America’s electric power sector as fracking took off about a decade ago. Several coal plants shut down as a result of cheap gas and the fresh regulatory crack down from the federal government —including restrictions on greenhouse gases.
Thermal coal prices are currently down to six-year lows of around $42 a tonne, far from the US$150 per tonne the commodity was fetching in 2011.
Analysts estimate around a fifth of the thermal coal industry is losing money based on current prices — a position that is usually unsustainable in commodity markets.
“When you are that far into the cost curve, the downside is pretty limited,” Tom Price, commodities strategist at Morgan Stanley, said in a March note. “Price buoyancy is already indicating that this is the case.”
And while there is talk of supply cuts and rising Indian demand, China continues to be the main factor to tip the seaborne thermal coal market one side of the other.
Late last year, Beijing introduced a series of measures to help protect its domestic coal mines from competition and reduce pollution at the same time.