US coal companies are struggling to ramp up production to meet rising demand, as labor shortages and aging equipment leave some of the mines largely sold out for the rest of the year.
Producers have said a lack of capital, a tight labor market and uncertainty over coal's medium-term outlook are limiting output gains.
Domestic demand for thermal coal has grown this year as coal-fired power generation mostly held above year-earlier levels in all the major US power grids. Coal power in the country is expected to climb by 10pc to 715.2bn kWh for 2025, according to US Energy Information Administration (EIA) projections.
But attracting and retaining coal miners remains challenging because the industry's long-term prospects remain uncertain. The number of people employed as coal miners in the US fell in August to 40,300, the lowest level in over three years, according to the US Labor Department's latest data. Employment for the first eight months as a whole averaged 41,000, also the lowest for January-August in nearly three years. The agency stopped releasing updated data during the US government shutdown but the coal mining employment figures had been trending flat-to-lower on a month-over-month basis since December.
Some US coal producers were trying to hire more workers, according to market sources, but the Labor Department figures suggest at least some coal producers have been unable to make significant additions to their workforce.
The coal miner job numbers fell despite production climbing by 3.6pc in the third quarter compared to a year earlier. Higher output from eastern mines more than offset declines at Powder River Basin (PRB) properties in the third quarter, according to EIA data.
Output from US mines also totaled an estimated 405mn short tons (st) (367.4mn metric tonnes) from 1 January-31 September, 5.4pc higher than revised figures for the same months of 2024. EIA in its latest Short-Term Energy Outlook from 7 October projected total US coal production to rise to 531.3mn st in 2025, up by 3.8pc compared with 512.1mn st for all of 2024.
Rail, equipment challenges
Rail service at most US carriers has improved this year, but fundamentals in the coal market have been volatile, which can make it hard for railroads to match crew availability to demand.
Some market participants told Argus they are starting to see "finger pointing" between coal producers and railroads over delivery delays — similar to what was seen in 2022. Some of the delays could be blamed on railroads, but not all of it, one buyer told Argus.
Another big challenge is difficulty in quickly adding newer and more reliable equipment, market participants said. Output from some PRB mines was heard to have possibly been hampered by rain over the summer months due to the lack of proper upgrades at some of the properties, which include drainage systems.
Combined production in Montana and Wyoming, which primarily yield PRB coal, dipped in the third quarter to an estimated 59.6mn st from 60.7mn st a year earlier, EIA data show. The agency's preliminary data showed Montana coal output is up by 6.9pc for the first nine months of the year from 2024, and Wyoming coal production was up by 0.9pc.
