King Coal's Comeback

By Underhill, William; Flavelle, Christopher | Newsweek International, May 26, 2008 | Go to article overview
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King Coal's Comeback


Underhill, William, Flavelle, Christopher, Newsweek International


Byline: William Underhill; With Christopher Flavelle in New York

The Welsh coal-mining industry was all but dead, until booming global demand sparked a revival.

In its early-20th-Century heyday, the valleys of South Wales boasted more than 600 coal mines, and employed some 200,000 men in a region that ranked as the world's largest coal exporter. But amid mounting industry losses, postwar governments--most notably, Margaret Thatcher's--shuttered the state-owned mines, and by the end of the '90s, only a handful remained. To a generations of miners, a way of life seemed over for good.

Now, for the first time since the Thatcher era, British entrepreneurs are reopening those old Welsh mines, hoping to supply nearby power plants and steelworks with coal while undercutting foreign competitors on prices. Two mines are already back in operation. More may follow, with the prospect of a few hundred jobs--welcome news in an area where government attempts to lure new high-tech industries to replace the dirty old coal business have met with limited success. Unemployment in some of the worst hit mining areas remains stubbornly high at 10 percent or more, with few jobs for the young in many of the old pit communities.

The reopening of Welsh mines reflects the booming global demand for energy, as well as high oil and natural-gas prices. Compared with gas or oil, coal, once thought to be out of favor, is plentiful and relatively cheap to find and extract, and now accounts for 25 percent of the world's energy consumption, up 2 percentage points since 2001. Result: prices are expected to triple this year, to more than $300 a tonne for the costliest coal. Coal ports in Australia and South Africa are facing bottlenecks trying to meet the rising demand from the biggest consumers, China and India. The demand is also reviving the fortunes of other coal businesses worldwide, including larger export mines in the United States.

But regulatory and start-up costs are too high for a small businessman to start reopening old pits in Pennsylvania or West Virginia. Not so in Wales, where there is little local opposition and a ready supply of labor in a region that never quite managed to overcome the loss of the industry decades ago. Much of the available work is low-paying, in call centers or stores.

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