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Illinois Coal Assn. president sees stronger markets for his state's coal

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Phil Gonet, executive director of the Illinois Coal Association, is in Europe this week to find new markets for that state's coal.

Coal from the Illinois Basin is supplanting coal from Central Appalachia in the thermal (power plant) markets. Just as Central Appalachian producers are counting on the export markets to keep them going, so, too, are Illinois producers.

"Our industry knows full well what Central Appalachia is going through now," Gonet said in an interview with The State Journal.

The Clean Air Act amendments of 1990 damaged the state's coal industry. Air pollution laws limited what could come out of power plant smokestacks. This was before power companies spent billions of dollars installing scrubbers, so they turned at first to low-sulfur coal. Illinois coal is high-sulfur, so it saw its markets wither.

In 1990, the state mined about 62 million tons of coal, Gonet said. By 2011, that had dropped to 37.4 million tons. Last year, as Illinois coal began replacing Central Appalachian coal in the thermal markets, it had climbed to 48.5 million tons.

"Earlier in the year I thought we would be in the mid-50s, but we'd be lucky to crash 50 right now. A couple of our mines shut down," Gonet said.

According to the Energy Information Administration, Illinois mines produced about 40.6 million tons through Oct. 5. That was up 6.1 percent over the same period last year.

For the 52-week period that ended Oct. 5, Illinois' production was up 8.3 percent to nearly 51.1 million tons, according to the EIA.

Although Illinois produces coal, the state's power plants tend to burn low-sulfur coal from out of state, in particular from the Powder River Basin in Wyoming and Montana.

The reason: Few coal-burning power plants in Illinois have scrubbers, so they must burn coal that is low in sulfur, Gonet said.

The electric power market in Illinois is deregulated, so it's difficult for either of the two large power companies to justify the expense of adding them when they can meet environmental regulations by shipping coal in from Wyoming, Gonet said. The coal that is mined in Illinois mostly goes to domestic thermal markets in states where power plants is scrubbed, and it goes to the export markets, he said.

From a transportation perspective, it helps that the Mississippi and Ohio rivers provide easy access to ocean ports in Louisiana, Gonet said.

"If we can get our coal to the river, we can ship it anywhere in the world," he said.

When the Panama Canal expansions open in the next few years, shipping Illinois coal to East Asia will be more affordable, he said.