Coal Slump Hurts State Docks

The Alabama Port Authority is experiencing some tough times and the issues can be traced back to an economic downturn in China.

Coal amounts for about half of all products handled at the State Docks. Most Alabama-mined coal that finds its way to the port is not used in energy production. It is metallurgical coal and it is used to make steel.

That’s why a slump in construction in China and other places in Asia is impacting business and jobs at the State Docks.

“The health of the metallurgical coal market depends on the health of the global steel industry and quite honestly the global steel industry is not very health right now,” said Port Authority Director Jimmy Lyons.

Thanks to a decline in demand, the selling price of metallurgical coal right now is about a third of what it was three years ago.

The amount of coal exported from Mobile was down 16-percent this year from 2014.

As a result the Port Authority has shut down its coal facility on the north end of the State Docks.

The McDuffie Terminal remains open, but in the last six months 60 jobs have been eliminated thru lay-offs and attrition. That’s about 10-percent of the State Docks total employment.

“It’s a terrible thing for me as a manager to have to make these kinds of decisions understanding the importance to the families that are involved,” said Lyons.

A slumping coal business is bad news for the entire State Docks, impacting the bottom line. Lyons says that cuts profits that can be reinvested elsewhere at the port. He says there’s little that can be done as the terminals are unique to coal-handling and not easily or cheaply re-purposed for other commodities.

It’s a startling change of events. Just five years ago, Walter Energy was planning to build another coal terminal at the port. Walter Energy is now in bankruptcy.

“It was a different market, a different day,” said Lyons.

This week, Cliff’s Natural Resources, another major coal customer of the State Docks, laid off 220 workers – about half its work force.

Most of the coal in Alabama is mined in Walker County outside of Birmingham.

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