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Coal's comeback

"As far as the social acceptability of coal, I like to think I'm part of supplying the cheapest energy in America," he says.

Taking the plunge

Investors are applauding coal's comeback. After tumbling 84 percent in five months from June to November 2008 as the financial crisis gutted growth, the Stowe Global Coal Index of stock prices rebounded. The index rose 295 percent from its low on Nov. 20, 2008, through Oct. 11 of this year - more than five times the rise of the Standard & Poor's 500-stock index in that period.

Cline says mining rights to his 4 billion tons of Illinois coal are worth at least $3 billion. Dennis Kostic, president of Weir International, a Downers Grove, Ill.-based consulting firm, puts the value at $4 billion.

Illinois was still a big bet when Cline went "all in" in 2002. An EPA crackdown to limit acid rain, starting with the Clean Air Act of 1990, had cut the state's coal output to its lowest level since the Great Depression. Exxon Mobil, which mined coal in addition to drilling oil, was closing mines from West Virginia to the Rocky Mountains and joining Chevron and others in abandoning Illinois.

"Chris was willing to take more risk than we were," says Robb Turner, co-founder of Boston hedge fund ArcLight Capital Partners. Turner purchased West Virginia mines from Cline but declined to invest in Illinois because he expected meager profits.

Cline is buying locomotives, building a port on the Ohio River and designing his own oceangoing ships to serve his coal empire. He already exports 40 percent of his haul, mainly to Europe. As China and India gobble up half of world production, he is in talks to ship to them, too.

Cline is exploiting coal's big advantage: It's a bargain compared with most forms of green energy.

"Coal is the backbone of reliable, low-cost power," says Bartow Jones, managing director of Riverstone Holdings, a New York-based Carlyle Group affiliate that invested $600 million in Cline's operations in 2007.

Power-plant coal such as Cline's sold for $47.25 a ton on Oct. 11, about two-thirds cheaper than wind power and three-quarters the cost of solar. In the second quarter, the cost of electricity per megawatt hour from coal was $59.51, including capital and operating expenses, compared with $176.37 for power from offshore wind and $240.55 for electricity from thin-film photovoltaic cells.

At a cost of $19 a ton to mine coal last year at Pond Creek, Cline spends even less than competitors. Coal from central Appalachia averages $57 a ton to mine, Schwartz says.

Impact on people, land

Miners still bear coal's most immediate and deadly risks.

Methane and coal dust may have sparked the blast that killed 29 workers at Massey Energy's Upper Big Branch mine in Montcoal, W.Va., on April 5 - the worst U.S. mining accident in 40 years. Massey's much-criticized chief executive, Don Blankenship, who unlike Cline has had no qualms about grabbing the spotlight, said in July that excessive regulations can imperil miners.

Cline describes Blankenship as one of the coal industry's most talented leaders.

"Don thinks his convictions are morally correct and follows them," Cline says. "In some ways, people should admire it. They should also think, 'Maybe there's a way to not be a bull in a china shop.' "

On a July day, while flying in his helicopter, Cline points to West Virginia mountaintops that Arch Coal, Massey and others have sliced off to remove coal. He says he's amazed that gutting mountains can be profitable.

"We have less environmental impact," he says of his underground Illinois mines.

Looking to the future

Foresight Energy's newest mines are taking shape in Illinois. On a June day, Cline parks his pickup at the bottom of the slope for his Sugar Camp mine, 12 miles northeast of Pond Creek. He points upward in a room as big as a cathedral. He describes how workers suspended 19-ton rollers for the coal conveyor from the ceiling and lowered them into place.

Sugar Camp may have four long-wall machines mining 30 million tons annually. The first one will arrive in the fourth quarter of next year. Cline's Hillsboro mine, 100 miles northwest, may deliver 25 tons per man-hour when finished in 2011, says Dwayne Francisco, the operation's president.

Even with his yacht, plane and 34,400-square-foot Palm Beach mansion, Cline says he remains a miner at heart. He goes underground to inspect his operations twice a month. While flying over his Macoupin County, Ill., site in June, he told Foresight chief executive Michael Beyer to remove trash and to ship off a pile of coal that was hot enough to release steam in the bright sunshine.

Cline says he may reach top speed in eight years, when his sons Christopher, 16, and Alex, 15, will be old enough to join the firm. He says he has no plans to sell, especially if Foresight becomes a public company that trains his boys.

"There's a good possibility they'll be the fourth generation," Cline says. "I'm hoping they will."

Cline says he introduces his children to miners and shows them videos of when he started out. He also wants them to learn what it may take in the future to overcome forces aligned against a black rock that - despite outrage over its environmental, health and safety history - has proved its staying power as the world struggles to go green.


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