One of the most controversial industries of our time, the U.S. coal industry has been the target of climate change activists for a while now, but regardless, still enjoyed a bumper 2022. Before we discuss 2022, let’s discuss some of the trends in the past several years, going back to two decades, which have had a huge impact on what was once one of the biggest industries in the country.
After climate change started to be taken seriously by most governments in developed countries, laws and regulations aiming to incentivize renewable energy companies and discourage fossil fuel consumption started to be passed, which is also why the most advanced countries in renewable energy are dominated by developed nations. In 2019, coal production had fallen 40% from the peak achieved in 2008, while in the last century, coal employees have fallen from nearly 900,000 to just 43,000. Because of these regulations, several coal giants, including some corporations which were among the largest coal mining companies in USA, had to file for bankruptcy. In 2015 alone, four listed coal companies filed for bankruptcy, including the fourth-largest such company at the time in Alpha Natural Resources. By 2016 alone, around a quarter of all coal companies had filed for bankruptcy or were in the bankruptcy process as mining downturn hit the industry severely. Between 2011 to 2016, the price of coal had fallen by 50% and the industry overall was heavily in debt to the tune of billions of dollars.
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In the U.S., coal production is heavily focused in a few states, with Wyoming being the biggest coal producer in the country by a mile, accounting for over 41% of total production, while Wyoming, Pennsylvania and West Virginia combined account for over 60% of the company’s total coal production. One of the main reasons behind the decline of coal has been the focus on alternative sources, both renewable and non-renewable. While the biggest growth is easily witnessed by some of the largest renewable energy companies by market cap, even natural gas electricity production increased to 38% of the country’s total electricity production in 2022, 1% up from 2021 and will then fall back to 36% in 2023. Meanwhile, coal electricity production fell from 23% in 2021 to 20% in 2022 while the decline will continue in 2023, falling to 19%.
While the last several years have not been very positive for the coal mining industry, 2022 was a bumper year for the industry overall, after oil prices increased significantly and an energy crisis gripped Europe due to Russia’s invasion of Ukraine. Russia is among the biggest oil and gas exporters in the world, and after its war with Ukraine, sanctions were imposed by Western nations and European nations looked elsewhere for energy supplies, all of which was a boon to the coal industry. According to the International Energy Agency, global coal consumption reached a new high in 2022 even though the increase has been expected to be temporary. Global coal consumption in 2022 exceeded 8 billion tonnes in 2022, which was a boon to some of the largest coal mining companies in USA. Hallador Energy Company (NASDAQ:HNRG) saw 1 year returns of 72.2%, CONSOL Energy Inc. (NYSE:CEIX) saw a one year share price increase of 31% and Alliance Resource Partners, L.P. (NASDAQ:ARLP) saw a return of 30.7% in the same time period, just to give a few examples of how coal companies profited in 2022.
As mentioned earlier, this boon is expected to be temporary, and the World Bank has stated that coal prices are expected to decline in the medium term but prices are still much higher than the 2017 – 2021 average. China and India led record global consumption while exports were increased by Colombia and South Africa. Meanwhile, in Australia and South Africa, benchmark coal prices fell by around 50% from peaks earned in September 2022 and April 2022 respectively. Coal future prices have also declined considerably in 2023 as compared to 2022 but if gas prices rise further in 2023, this could create more demand for coal and hence, lead to a price increase there. Further risks to the coal industry include global growth falling below forecasts and China’s economic revitalization after its abandonment of the nation’s zero-Covid policy fails to materialize. One of the largest coal mining companies in the USA, Peabody Energy Corporation (NYSE:BTU) mentioned in its Q4 2022 earnings call “So for 2023, we have a solid sales book, as we stated. We are completely sold out both in the PRB and our other U.S. thermal mines. So we have a really strong hand there. And so far, the shipments have been going. The nominations have been there and the demand has been there. Our customers, particularly our PRB customers are still short of their target inventories even though they’re burning less coal are still short of their inventory. So the demand is there. The challenge we’re having is with rail service in the PRB, which was a challenge we had last year and has continued into the start of this year, still with crew shortages, but also there’s been some tough weather in the PRB. We are expecting to see that turn around here in the coming months, both railroads have additional crews coming on in February this month. So we’re expecting to see some improvements in the rail performance. And at the moment, that really, Lucas, is nothing that I would say that we’re seeing from the customer side. It’s more of a transportation issue, which is a carryover from last year.”
The top two largest coal mining companies in the USA alone account for over 30% of all production in the country. To calculate our ranking, we have considered their coal production in 2021 based on data from the International Energy Agency, and market cap as at 20th April 2023, with data taken from Yahoo Finance. For companies which aren’t listed, we have ranked them based on coal production alone. So, let’s now take a look at the coal giants reaping the benefits of an unexpected surge in the industry, starting with:
12. Kiewit Corporation
Coal production in 2021 (thousand short tons): 10,639
Market cap as at 20th April 2023 (in billions): N/A
While primarily a construction company, Kiewit Corporation is also heavily involved in mining. Headquartered in Nebraska, it is considered to be one of the largest private construction and engineering organizations in the entire country.
11. Vistra Corp. (NYSE:VST)
Coal production in 2021 (thousand short tons): 10,857
Market cap as at 20th April 2023 (in billions): 9.25
One of the largest coal mining companies in Texas, Vistra Corp. (NYSE:VST) is a retail electricity and power generation company which also owns Luminant, a utility company which is also engaged in coal mining. In 2020, Vistra Corp. was termed to be the biggest CO2 emitter among all companies operating in the U.S.
10. Foresight Energy Labor LLC
Coal production in 2021 (thousand short tons): 17,767
Market cap as at 20th April 2023 (in billions): N/A
Foresight Energy Labor aims to use modern mining technology to produce low-cost electricity in the U.S. The Missouri based coal mining company is currently seeking $106 million from insurers against damage caused by mine fires in the previous year.
9. NACCO Industries, Inc. (NYSE:NC)
Coal production in 2021 (thousand short tons): 27,852
Market cap as at 20th April 2023 (in billions): $0.28
NACCO Industries, Inc. (NYSE:NC) operates in three segments, and one of its biggest segments is coal mining, which is why it is among the largest coal mining companies in USA. Over the past three years, shareholders of NACCO Industries, Inc. have enjoyed a CAGR of 9.7%, while in its Q4 2022 results, NACCO Industries, Inc. announced that its profits were 43.7% higher than Q4 2021.
8. Alpha Metallurgical Resources, Inc. (BYSE:AMR)
Coal production in 2021 (thousand short tons): 15,835
Market cap as at 20th April 2023 (in billions): $2.55
Alpha Metallurgical Resources, Inc. (BYSE:AMR), which was formerly known as Contura Energy, owns and operates mining complexes in Northern and Central Appalachia. Currently, Alpha Metallurgical Resources, Inc. (BYSE:AMR) has nearly 4,000 employees. In the past one year, Alpha Metallurgical Resources, Inc. (BYSE:AMR) saw its share price improve by 6.8%, while the past 6 months have been even better as the share price rose by 12.6%.
7. CONSOL Energy Inc. (NYSE:CEIX)
Coal production in 2021 (thousand short tons): 23,963
Market cap as at 20th April 2023 (in billions): 2.1
CONSOL Energy Inc. is another one of the largest coal mining companies in USA to have enjoyed a stellar past year, with its share price jumping by nearly 27% in the same period. CONSOL Energy Inc. is a Pennsylvania based coal mining giant recently saw insiders sell stock worth $8.4 million which could indicate signs that the share price might fall in the near future.
6. John Mcnab Petri E Koivula Mike Jamison
Coal production in 2021 (thousand short tons): 27,999
Market cap as at 20th April 2023 (in billions): $2.7
According to the Political Economy Research Institute of the University of Massachusetts Amherst, the company, which operates just two mines, was one of the biggest greenhouse gas emitters in the coal industry, responsible for nearly 40 million metric tons of CO2 emissions in 2020.
5. Alliance Resource Partners, L.P. (NASDAQ:ARLP)
Coal production in 2021 (thousand short tons): 32,218
Market cap as at 20th April 2023 (in billions): N/A
Alliance Resource Partners, L.P. operates a business model where it earns and generates operating and royalty income from low-cost mines in addition to oil & gas basins. Alliance Resource Partners, L.P. is one of the top-performing coal stocks in the last year, gaining over 23% in share price in the same period.
4. ACNR Holdings
Coal production in 2021 (thousand short tons): 40,153
Market cap as at 20th April 2023 (in billions): N/A
American Consolidated Natural Resources, or ACNR, claims to be the biggest underground coal mining company in the U.S. The company changed its name to ACNR after undergoing bankruptcy in 2020. Previously, it was known as Murray Energy.
3. Navajo Transitional Energy
Coal production in 2021 (thousand short tons): 51,736
Market cap as at 20th April 2023 (in billions): N/A
One of the largest coal mining companies in USA, Navajo Transitional Energy recently earned two awards in mining safety and stewardship. In December 2022, the company also sued BNSF railway, one of the largest infrastructure companies in the U.S., after the latter failed to timely deliver and handle coal shipments.
2. Arch Resources, Inc. (NYSE:ARCH)
Coal production in 2021 (thousand short tons): 71,854
Market cap as at 20th April 2023 (in billions): $2.53
Arch Resources, Inc. (NYSE:ARCH) is a coal mining and processing company and like many top coal companies, is headquartered in Missouri. Arch Resources, Inc. is involved in the mining of sub-bituminous and bituminous coal.
1. Peabody Energy Corporation (NYSE:BTU)
Coal production in 2021 (thousand short tons): 105,383
Market cap as at 20th April 2023 (in billions): $3.74
Easily topping the list of the 12 largest coal mining companies in USA is Peabody Energy Corporation, which has dominated the industry for many years. Not only is Peabody Energy Corporation involved in coal mining, but is also involved in its sale and distribution. Taking advantage of a stellar 2022 for the coal industry, Peabody Energy Corporation saw its share price increase by nearly 12% in the last year alone.
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This article is originally published at Insider Monkey.