German Hard-Coal Production to Cease by 2018
Monday, July 30, 2007
VOERDE, Germany -- About a half-mile under the Earth's surface here, dozens of soot-faced miners scrape coal from some of the richest seams in the world, just as their forebears had done for generations. Conveyor belts funnel the shiny black rock through crushing machines and up to the surface, where it helps to power the globe's third-biggest economy.
Germany's 500-year-old tradition of hard-coal mining, however, is dying out. With domestic coal long unprofitable because of cheap imports from Africa and Asia, the German government this year decided to gradually withdraw expensive subsidies that have kept its mines open for nearly a half-century.
Today, only eight hard-coal mines are in operation, down from more than 100 at the industry's peak in the late 1950s. The last of those is set to close by 2018, when the subsidies dry up. And with that, there will be no more German hard-coal miners, who once numbered more than 500,000.
"This region lives for mining. When it closes, there won't be much to keep it going," said Richard Hold, 46, as he surfaced from an elevator shaft at the end of a recent shift in the Walsum mine here, which opened in 1933. Hold followed his father underground as a teenager and hopes to keep going until he can retire. But he'll have to look for coal somewhere else after next year, when the Walsum mine is scheduled to shut down.
All but one of Germany's hard-coal mines are located in the Ruhr, a rust-belt region along the country's western border. Coal production soared in the Ruhr during the 19th century and propelled Germany through the Industrial Revolution. It fueled the nation's steel mills and armaments factories during both world wars. After the defeat of the Nazis, coal rebuilt the tattered country, underpinning the Wirtschaftswunder, the postwar economic boom in the former West Germany.
Since then, German hard coal has lost its competitive edge. Thanks to relatively well-paid miners and supplies that are hard to reach because they are so deep underground, German coal today costs 2 1/2 times as much to produce per ton as imports from Australia or South Africa.
For decades, German lawmakers have propped up the industry, unwilling to risk massive layoffs and reluctant to eliminate a reliable energy source as gas and oil supplies become scarcer.
But after spending more than $200 billion in subsidies since the 1960s, the federal government this year decided that the practice had become unaffordable. The 2018 sunset for the hard-coal industry was set.
Economists and free-market lawmakers have long decried the subsidies as handouts to the politically influential coal industry and powerful trade unions. This year, for instance, Deutsche Steinkohle AG, the owner of the remaining eight mines, will receive more in government subsidies ($3.3 billion) than it will from selling coal ($2.9 billion).
With just 32,000 miners left, that's the equivalent of more than $100,000 in annual subsidies per worker.
"Among economists, it's certainly well agreed that this is impractical," said Christoph Weber, an economics professor who studies the energy industry at the University of Duisburg-Essen. "But politicians in Germany don't always look at the laws of economics."
The long phaseout will enable Deutsche Steinkohle to reduce production without disrupting supplies. The German government has also agreed to review its decision in 2012 in case coal prices skyrocket or a global shortage develops, though economists doubt either will happen.