COAL SALES DOWN; FUEL STILL IMPORTANT TO ILLINOIS ECONOMY

Coal still has a future in the Southern Illinois economy despite news of declining tonnage and sales over the past five years, a state commerce official says.

The Illinois Coal Development Board, which submits an annual "coal report" to the Illinois General Assembly, reports a decline in the production and sale of coal by more than 4 million tons in 1995. The decline was blamed on increased competition with Western low-sulfur coal.

The switch to the lower-sulfur coal was brought on by Phase I of the Clean Air Act Amendments of 1990. Phase I of the CAAA regulations call for sulfur dioxide emission limitations mandating more than 260 units to reduce emissions.

At least two-thirds of the plants were coal-fired and used to burn medium- and high-sulfur coal from Illinois. Starting in the early 1990s, more and more of the plants started switching to low-sulfur coal.

Illinois' total coal production fell to 49.5 million tons in 1995, a decrease of 4.5 million from 1994 levels and a decrease of more than 10 million tons from the 1970-1992 production that averaged 60 million tons a year.

"Contrary to widespread opinion, Illinois coal is not dead," said Daniel E. Keefe, of the Illinois Department of Commerce and Community Affairs. But the industry is in the midst of a painful evolution.

The possibility of more stringent regulations has emerged as an important issue, the coal report said. More than 80 percent of the state's coal is sold to utilities.

Missouri utilities are among those in a dozen states that purchase coal produced from Illinois mines.

In 1995, utility companies in 12 Midwestern and Southeastern states purchased more than 41 million tons of Illinois coal.

Illinois and Indiana utilities purchased more than half of the 41 million tons, but Missouri ranked fourth with 4.2 million tons, ranking behind Florida utility companies, which purchased 5.1 tons.

Missouri's Union Electric bought more than 3 million tons in 1995. During the early 1990s, UE bought more than 7.5 million tons. Other Missouri buyers were Associated Electric Coop of New Madrid, more than 19,000 tons; Sikeston Board of Municipal Utilities, more than 330,000 tons; Springfield Water and Light, 18,000 tons; and Southeast Missouri State University, which purchases Illinois and Western coal.

Last year's figures have not been compiled, but production and sales have been consistent with those of 1995, said Keefe.

Illinois could rebound in the future, said Keefe. When Phase 2 of the CAAA regulations goes into effect, switching to low-sulfur coal may not be enough. Some utilities that switched to low-sulfur coal may have to install more emission control devices.

"When this happens, they may go back to higher Btu coal, such as that produced in Southern Illinois," said Keefe.

Illinois lost nearly half of its mining jobs between 1990 and 1995, largely due to the regulations discouraging the use of high-sulfur coal.

There has been some positive news for Illinois coal.

Catlin Coal Co. started production at a new Vermilion County Mine in 1995; The Western Fuels Association announced it planned to double production at the Brushy Creek Mine in Saline County and Consolidation Coal recalled 76 workers to its Rend Lake Mine. Peabody Coal's Marissa mine has increased production each of the past three years.

After the Illinois Central Railroad announced the establishment of a new export terminal in Louisiana, state coal exports increased tenfold, and two mines recalled laid-off workers. Illinois coal officials are also looking to improve exports. A number of coal mining companies have contracts with utilities into the next century.

In the early to mid-1920s, Illinois produced 100 million tons of coal and employed 100,000 workers.

The coal board will ask the Legislature to explore incentives that would encourage the acquisition of allowances by Illinois coal consumers and adopt a position that maintains coal's prominent use in electricity generation.

The coal industry got a $2.5 million tax break in mid-1996 that boosters hope will save many mining jobs. The law removed the 6.25 percent sales tax on purchases of coal-mining equipment and spare parts worth less than $250.

The law, Illinois Coal Association Vice President Taylor Pensoneau said, could be the difference in one mine staying open and some miners keeping their jobs.

State United Mine Workers President Joe Angleton said the tax break should help state mines compete with cheaper, cleaner-burning Western coal, adding that the law would save Peabody Coal Co.'s Marissa mine about 10 cents a ton.

The report also recommends that the Legislature:

-- Maintain a dialogue with the coal industry;

-- Play a lead role in the development of coal gasification and clean coal technologies.

-- Assist with international efforts of power companies as they expand into international markets.

-- Investigate opportunities to reduce coal transportation costs.

Another report on the coal industry found that last year was one of the safest years in American coal-mining history.

Thirty-eight coal-mining fatalities were reported, breaking the previous record low of 45 fatalities in 1994, according to the U.S. Mine Safety and Health Administration.

Kathy Snyder, USMSHA spokeswoman, said mining experts credit safety training programs, new technology and fewer small coal operations for the decline in fatalities.