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. Since the mines where shuttered, thousands of young people have left in search of work elsewhere. But Welsh miners can now earn far above the national minimum wage of $12 per hour. Brian Thomas, an industry veteran, earns $1,200 a week—at least double what his salary would be in the retail industry. “If I didn’t have this job I would probably be stacking shelves in the supermarket,” he says.
Still, production costs in Wales are as much as twice that of some foreign competitors, like Colombia. But in the coal industry, transport makes up a hefty and rising share of the total price. Over the past few years, the price of shipping a tonne of coal from Australia to Britain, for instance, has more than quadrupled to $45 a tonne, due in large measure to higher oil prices. By contrast, the transport cost of supplying local customers in Wales could be as low as $6 a tonne. Gerywn Williams, a former miner who has invested $14 million to reopen a South Wales mine called Unity, hopes to produce 1 million tonnes of coal per year, and figures he will be able to sell it at $90 to $120 a tonne, matching or undercutting overseas rivals. “If coal is going to come back anywhere, it’s going to be in South Wales,” he says. He has already hired 50 miners at Unity, where full production is expected to begin this summer, and is now pushing ahead with plans to restart work at four others to exploit the rich Welsh reserves of high-grade anthracite.
Within the next 10 years, total British coal production—exclusively for local use—is expected to rise from 16 million tonnes to 20 million tonnes, with Wales contributing a small share. But that’s still far below Britain’s peak production of 292 million tonnes a century ago—and a tiny fraction of global production—and even some of Welsh coal’s staunchest proponents admit to only cautious optimism, largely because it is simply too risky to make any sort of massive investment in the midst of what could be a temporary boom. “Investors would have to be confident that [today’s] prices are going to be maintained,” says David Brewer of CoalPro, which represents Britain’s coal producers. Indeed, King Coal may have been resurrected in Wales, but his kingdom will never recover its old glory.
