A newly-released academic study by one of Alabama’s foremost economists determined the coal industry has a tremendous positive impact on the state’s economy, and the financial gains are expected to continue.
Download the report here: Economic Impact Study of ALs Coal Industry
The report illustrated that metallurgical (met) coal, the valuable type of coal used to make steel and not involved in electricity generation, is primarily what drives the Alabama coal industry. Met coal, exported around the world to various steel mills, accounts for 80% of the coal mined in Alabama, and this segment of the mining industry is on track to keep growing. M. Keivan Deravi, Ph. D., of Economic Research Services, Inc., performed the study for the Alabama Coal Association.
“Currently, the coal industry in Alabama directly employs more than 3,000 people and generates $370 million in annual payroll, for an average salary of more than $100,000 a year,” Deravi said. “Coal jobs are among the highest-paid positions in the state, around 1.6 times the average annual salary for workers in Alabama. The industry also generates approximately $69 million in taxes for the state.”
The study examined the effects of each coal job on local economies, including direct, indirect and induced. The direct effect is the economic impact of the regular operation of a company. Indirect effects include impacts on suppliers, vendors, or associated materials industries. Induced effects result from positive changes to an economy that happen when a worker’s spending enhances a local economy.
Using those multipliers, the coal mining industry in Alabama has a total output impact of $2.9 billion, a total earnings impact of $1.2 billion and a total economic impact of 15,000 full-time-equivalent jobs.
“Alabama is blessed with abundant natural resources,” said Patrick Cagle, president of the Alabama Coal Association. “From the high-quality met coal we ship to steelmakers around the globe to thermal coal that fuels local manufacturers and power production, the coal industry continues to responsibly use our resources to create high-paying jobs, strengthen our economy and build better lives for hardworking Alabama families. We are pleased this report objectively quantified through real data the positive things we see every day in our business.”
Alabama Senate Majority Leader Greg Reed (R-Jasper), who represents all or parts of Walker, Winston, Fayette, Tuscaloosa and Jefferson Counties — where most coal in Alabama is located — said the state has a “long historical tradition of being blessed with hard-working coal miners.” Reed proudly calls himself “the coal senator.”
“Today, these miners are making high wages – starting at an average of around $85,000 a year – to support their families, which in turn helps boost local economies,” Reed said. “The coal industry fuels the growth of many suppliers and vendors and is pouring revenue into state budgets to help provide roads, bridges, schools and first responders.”
Additionally, the report highlighted the differences in met coal, used to make steel, and thermal coal, which is typically burned for energy production. The met coal seams in Alabama are some of the highest quality in the world for steelmaking. The majority of met coal mined in Alabama is shipped around the world to customers in South America, Europe and Asia, thus driving economic activity at the Port of Mobile. The McDuffie Coal Terminal generates approximately 50% of the total annual revenue earned by the Alabama State Port Authority. In 2018, the Mobile seaport ranked fourth in the nation for shipping coal exports.
The state of Alabama holds about 4 billion tons of economically recoverable coal reserves, 85% of which is met coal. At the current rate of production, Alabama’s coal resources will last more than 300 more years, making it the state’s most lasting fossil fuel resource. Approximately 13.5 million tons of coal were mined in 2018 in Alabama.
Dr. Deravi developed the Alabama Economic Forecasting Model and the Alabama input/ output model, used for 35 years by Alabama elected officials to generate state budgets. He is a retired professor of economics at Auburn University Montgomery. The complete report is attached to this release.