As the first full month of Donald Trump's presidency begins, the coal industry is more optimistic about its prospects than it's been since before his predecessor took office, fueled by promises to bring back thousands of lost coal miner jobs and reboot the industry.
Coal companies are looking forward to a combination of legislation in Congress and executive actions by Trump to undo damage inflicted by the Obama administration that led to lower production and employment, according to Luke Popovich, a vice president of the National Mining Association, a top coal lobbying group.
"I think there is much the Trump administration and 115th Congress can do to revive the industry," Popovich said.
Turnaround management consultants and coal industry analysts, however, are less hopeful, asserting that the industry is facing strong headwinds for more failure and its impending demise is approaching.
Coal industry advocates claim Trump's presidency provides an opportunity to reverse Obama administration measures that they say were detrimental to the industry and led to lower coal production and more lost jobs.
The top priorities of the coal industry, Popovich said, include lifting an Obama administration moratorium on new leases for coal mined from federal lands that was signed in January 2016, rolling back the new Stream Protection Rule meant to prevent and minimize impacts to surface and groundwater from coal and dismantle the Clean Power Plan that is being challenged in federal appellate court.
"By spring, we'll see these actions played out, and we'll see the regulatory burden on the industry relieved," Popovich said. "Our hope is that we'll begin to see the job picture stabilize and production stabilize."
Stabilizing the coal industry might be a tall order for Trump and Congress as overall coal production has suffered an eight-year decline through 2016 from its recent peak, according to statistics from the U.S. Energy Information Administration.
U.S. coal production declined by 158 short tons to 739 million tons in 2016, which is about 18% smaller than 2015 and its lowest level since 1978, according to EIA statistics.
The EIA attributed the decline in production to lower gas prices that promoted more gas-fired electricity generation, warmer than normal temperatures in the 2015 to 2016 winter that reduced electricity demand, retirements of some coal-fired generators and lower international coal demand.
Gas-fired electricity generation also surpassed coal-fired electricity generation in 2016 for the first time in the U.S., accounting for 35% of electricity generation to 30% for coal-fired generation, according to a Moody's Investor Service 2017 coal outlook. In 2015, coal and gas each generated 33% of U.S. electricity generation.
Moody's expects the trend toward gas-fired generation to continue into 2017, projecting gas-fired generation to account for 34% of electricity and coal-fired to generate 31% of electricity.
The employment situation is even bleaker for the coal industry. The industry has lost 60% of its workforce, or about 36,000 jobs in the past five years, as employment fell from 89,800 workers in January 2012 to 53,800 in December 2016, according to the U.S. Bureau of Labor Statistics. A combination of closed mines and coal-fired plants and automation of the industry have contributed to the job losses, industry experts say. This trend will continue unless the industry can reverse the years of distress.
EIA projects some better news for the coal industry as an increase in natural gas prices in 2017 could in turn spur an increase in coal production by as much as 7% if electricity buyers turn to the less expensive coal-generated electricity.
Moody's in its 2017 coal outlook changed its outlook on coal prices from negative to stable, with met coal prices remaining flat in 2017 and 2018 at $90 to $120 per ton and thermal at $90 to $100 per ton.
Moody's, however, projected in the outlook that natural gas and renewable energy would capture longer-term growth in electric energy generation, port constraints would stymie potential growth in coal exports and regulatory pressures, and uncertainty with the Trump administration would limit coal investments.
"I'm sure Trump will do much for the coal industry on the short-term basis, but not much for the long term," said William Brandt Jr., chairman of turnaround management firm Development Specialists Inc.
Brandt said a proliferation of other energy sources, such as wind, solar, and other renewable energy, nuclear and natural gas will continue to derail the coal industry.
"The price of solar panels and wind energy is coming down," said Brandt. "Renewables have kicked off and they are coming fast. China is building nuclear and gas plants to get away from coal. That tells you where the future is.
"Most of the coal plants here are old and at the end of their useful lives. It would be too expensive to put them back online once they're shut down," Brandt said. "The coal industry was a mainstay of American industrial development for years. Unfortunately, the industry has jumped the shark," Brandt said.
Peabody Energy Corp., the world's largest independent coal producer with about 19% of the market's production, is heading for a confirmation hearing on March 10 for its Chapter 11 reorganization plan. The St. Louis-based company, which filed for bankruptcy on April 13, 2016, reported a $133.7 million net loss on $1.2 billion in revenue for the quarter ending Sept. 30, according to its Securities and Exchange Commission filing.
Arch Coal Inc. (ARCH) - Get Report , the second-largest coal company with about 14% of the market's production, emerged from Chapter 11 on Oct. 5, 2016. The St. Louis company, with $4.6 billion in assets and $6.3 billion in liabilities, reported a $51.4 million loss on $550.3 million in revenue for its quarter ending Sept. 30, according to its SEC 10-Q report filed on Nov. 9. The company's shares, traded on the NYSE, fell .11% to $73.65 on Jan. 27.
Cloud Peak Energy Inc., (CLD) - Get Report , the third-largest coal company with about 8% of the market's production, reported a $4.2 million loss on $217 million of revenue in its quarter ending Sept. 30. The Gillette, Wyo., company reported $1.7 billion in assets and $799.6 million in liabilities. The company's shares, traded on the NYSE, rose .86% to $5.89 in after-hours trading on Jan. 27.
More information on TheStreet's guide to trading in the month of February can be found here: