Mining companies that produced at least 50% of their coal from Central Appalachian strip mines between January and September of 2008 are shown in red. Use the tools to see the proportion this represents of all Central Appalachian production (default) and Central Appalachian strip mine production. Production data supplied by the Mine Safety and Health Administration (view sources)
In late 2008, Bank of America (BoA) released a coal policy that included a groundbreaking commitment to phase out their financing of “companies whose predominant method of extracting coal is through mountain top removal.”
The fact that the language leaves a lot of room for interpretation was not lost on environmentalists, reporters or coal industry critics. For instance, does “predominant” imply a majority (more than 50% of total coal production), or a plurality (e.g., a company whose largest share of coal production is from mountaintop removal)?
Soon after the policy was announced, the National Mining Association (NMA) criticized the policy as a “PR Ploy” that would affect few if any companies. In all the confusion, groups ranging from Rainforest Action Network to NRDC to Appalachian Voices were bombarded by questions from reporters and allies about precisely which companies would be affected by the new policy. Since we didn’t have a ready answer, Appalachian Voices decided to hasten the development of a new coal database that is now available on OpenSourceCoal.org. The chart at the top of this page demonstrates how we used this database to provide answers to the BoA question.
To Whom does BoA’s Coal Policy Apply?
To answer this question using the most up-to-date data available, we conducted the analysis using MSHA Part 50 production data for the first 9 months of 2008. These data go back to 1983 and generally provide the core of the “Coal Production” module of OpenSourceCoal.org. The other data set used in this analysis is a table, produced by Appalachian Voices, that associates US counties with various coal producing regions such as Central Appalachia, where most mountaintop removal occurs. MSHA’s coal production data is broken down into 5 categories:
– Underground – All operations below the surface of the ground.
– Strip – (type of surface mining)
– Auger (type of surface mining)
– Culm Bank (production of “gob” or waste coal)
– Dredge (operations conducted from a platform floating on water)
One of the most useful things about these data is that MSHA separates out “strip” mining from other types of surface mining. Since almost all modern strip mining in Central Appalachia involves the removal of mountain tops and ridge lines (which is the conventional definition of mountaintop removal), the “strip” production in Central Appalachia is virtually equivalent to mountaintop removal production. In fact, compared to industry estimates, this estimate may even be conservative. While the National Mining Association says that mountaintop removal accounts for 130 million tons/year of coal production, MSHA data on OpenSourceCoal.org show only 115 million tons of Central Appalachian strip mining in 2007. If Northern Appalachian strip mines are included, the MSHA data show 136 million tons – it may be that this is how the NMA’s estimate was derived. Regardless, using Central Appalachian “strip” production as a proxy for mountaintop removal appears to provide a conservative and uncontroversial estimate of mountaintop removal production.
In order to address various definitions of “predominant” in the BoA policy, we looked at all companies producing coal in the U.S. between January and December of 2008 and determined which of them meet the “majority test” (produced more than 50% of their coal from mountaintop removal), and which met the “plurality test” (produced more coal from mountaintop removal than from any other mining method).
Of the 245 companies and mine owners producing coal in Central Appalachia in 2008, 111 were engaged in strip mining. Of those, 87 (or 80%) met the majority test of the BoA coal policy.
In addition, there were two major producers that did not meet the majority test but did meet the less stringent plurality test. The results are summarized in the table below and details of how the analysis was conducted are provided at the end of this post.
Companies Meeting the BoA Coal Policy Criteria in 2008
The results in this table are ordered by total Central Appalachian strip mine production. The top producers meeting the BoA policy criteria include a number of the usual suspects: Massey Energy and Magnum will be familiar to anyone involved in the fight to end mountaintop removal or protect water quality in Appalachian streams. There are also a number of controllers that may not be familiar to those outside the Appalachian Coalfields, though local residents are intimately familiar with their operations. For instance, the 4th largest producer , Jeffrey A. Hoops, and the 10th largest producer, Jerry Wharton, own Frasure Creek Mining and A&G Mining respectively, outfits that have been the scourge of communities across southern West Virginia, eastern Kentucky and Southwest Virginia.
Another interesting observation is that most of the controllers outside the top 20 or so producers, were “all or nothing” when it came to percentage of strip mining; i.e. the vast majority of these controllers got either 0% or 100% of their production from mountaintop removal. These smaller companies are rarely diversified in the methods of mining they employ, and therefore, those who get 100% of their production from mountaintop removal will be the most affected by the coal policies of financial institutions such as Bank of America’s.
But the most important result of this analysis is that BoA’s policy appears to be far from toothless, as coal industry critics of the policy have contended. Here is a summary of the results from this analysis:
Companies affected by the BoA policy account for:
- A third, or 87 of all 245 coal companies operating in Central Appalachia in 2008
- 80% of the 111 companies that were engaged in Central Appalachian strip mining in 2008
- 48 million of the 86 million tons (or 56%) of mountaintop removal coal produced in the first nine months of 2008
- More than a third of all Central Appalachian coal production and about 8% of total US coal production
So… which companies are NOT covered by the BoA Policy?
While the BoA includes a lot of companies, it does exclude some big players on the Central Appalachian strip mining scene. Most notably, Alpha Natural Resources (now owned by Cleveland-Cliffs after a recent wave of buy-outs by big steel companies) produced 5.6 million tons of coal through mountaintop removal in the first 9 months of 2008, but did not meet the BoA policy because they produced about 8 million tons of coal through underground methods over the same period. TECO energy and Ashland Coal company are two others that barely escape the BoA policy criteria but produce millions of tons of coal through mountaintop removal every year nonetheless.
Other big players that are excluded from the BoA policy are in the category of those that the policy was almost certainly and specifically intended to exclude. For instance Arch Coal Co., the third largest U.S. coal company, produces just under two million tons of mountaintop removal coal per year, but that is a drop in the bucket compared to the 100 million tons they produce in the Powder River Basin each year. Foundation Coal is another company in this category, while Peabody Energy, the nation’s top coal producer, did not produce any coal at all from mountaintop removal mines in 2008.
The fact that few of the biggest coal companies in America would be affected by this policy was not a fact that was likely to have been lost on BoA executives.
Of the top 10 US coal producers in 2008, only Massey Energy would be disqualified for financing under Bank of America’s new coal policy.
Conclusions
The upshot would seem to be that BoA’s coal policy is meaningful – provided that some companies that meet the “predominant” standard are actually financed, or likely to be financed, by BoA. There are no data on Open Source Coal to track bank financing at this point, though the point of making this an “open source” project is that we’re hoping someone who’s reading this might be inclined to track down those data…
The fact that Massey Energy was the only one of the top 10 domestic coal producers that would be affected by BoA’s policy may indicate that critics of the policy such as the National Mining Association are right about one thing: there are probably minimal repercussions for BoA’s bottom line.
Addressing the other looming question about BoA’s policy – what is meant by “phasing out” their financial relationships – is also beyond the scope of Open Source Coal at this time. But as always, we’re all ears if you have a lead on the database that will provide answers to that question.
A Do-It-Yourself Guide to the BoA Analaysis
The chart at the top of this post is an example of the functionality that we intend to build into Open Source Coal that will allow anyone to conduct sophisticated queries to the database – and create custom query tools for their own websites or blogs. It’s going to take some time and resources to create those tools, and we regret that we can’t yet make them generally accessible, but with the help of a lot of talented people that we hope will come together on this open source project, we’ll get there pretty soon.
In the mean time, here’s a lower-tech methodology for anyone with access to Microsoft Excel. The first step is to go to the Coal Production module of the OpenSourceCoal database. The initial query is shown in the image below:
The steps involved are:
- Check the “Region” checkbox and select “Appalachia – Central”
- Leaving the “View” checkbox and the “Sort” radio button selected in the “Production” options at the top of the sidebar on the right, select “strip” from the drop-down
- Set the query to show 1000 rows in the field above the submit button
- Make sure the “Controller” and “Year” view options are checked and “Year” is set to 2008
- Click Submit
This query provides a list of all 111 companies operating strip mines in Central Appalachia in the first 9 months of 2008, ordered by the amount of coal they produced by that method.
Query #1 Results
Because we want to look at the ratio of Central Appalachian “Strip” coal relative to all coal produced by a given company (regardless of whether it was from Central Appalachia or not), a second query with the “Coal Region” selection turned off is required.
Author’s note: the immediacy of our need to make data accessible that are not currently available elsewhere precludes us from trying to reproduce all of the functionality of Microsoft Excel in a web form. However, we do plan to release a feature that will allow users to generate customized tools to query the database in the near future, so hopefully one of you will create a more elegant way to conduct the analysis.
Our approach was to select the entire first table and paste it into an MS Excel spreadsheet and then conduct a second query that removes the “Region” selection and changes the “Production” selection from “Strip” to “Total” – see below:
The results of this query are shown in the window below:
Query #2 Results
Now, one can copy and paste this table directly below the first in the Excel worksheet, shift the columns of the second table so that they line up with the first (“Coal Region” is not included in the second table), and filled the blank spaces in the “Coal Region” column from the second query with “US Total.” This results in a table with 530 rows and 4 columns.
The next step is to select all of the cells in the table and choose “Pivot Table Report” from the “Tools” menu of Excel. Once the Pivot Table is created, drag “Coal Region” from the floating palette to where it says “Drop Column Fields Here,” drag “Controller” to where it says “Drop Row Fields Here,” and drag “Tons” from the palette to where it says “Drop Data Items Here.” This yields a table of all 530 US coal companies operating in 2008, with both their overall production numbers for Jan-Sep. 2008, and their production from Central Appalachian strip mines.
The final step was to create a new column called “Percent” to the right of the pivot table and apply a formula to divide Central Appalachian Strip Production by Total Production, yielding a number between 0 and 1. Because sorting columns both inside and outside a pivot table is difficult in Excel, I copied the entire worksheet and pasted it into a new blank worksheet using the “Values” option of the “Paste Special” selection in the Edit menu. It was then a simple matter to sort the table by the “percent” column in descending order to find the 87 companies with a value higher than 0.5 in the “Percent” column.
And that’s it – sort of. We actually did another analysis looking at all of types of coal production to see which companies meet the “Plurality” criterion, but this should provide enough information to get anyone started using the database and replicating this analysis.
And if you think there is something wrong or missing in this analysis, please leave a comment.
Data sources
All of the coal production data were drawn from Address/Employment files of the MSHA Part 50 data, available at http://www.msha.gov/STATS/PART50/P50Y2K/AETABLE.HTM
The Coal Region information was drawn from a table produced by Appalachian Voices that associates US counties with major US coal basins. That table is available here.
For more information or to contact the author, email: matt@appvoices.org
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