Equipment shortage slows US coal output growth-CEO

NEW YORK, June 27 Sat Jun 28, 2008 12:41am IST

NEW YORK, June 27 (Reuters) - The cost and lead time involved in acquiring new equipment are among the impediments to raising coal production in the United States, a coal company executive said on Friday.

The cost of both machines and supplies has risen sharply, and manufacturers need lead times of as much as 36 months to deliver equipment, said Paul Vining, CEO of Magnum Coal.

"The price of poker has gone up," Vining told the 2008 McCloskey Coal USA conference.

U.S. coal producers are trying to increase production because export demand is skyrocketing due to the Asian economic boom and delivery problems in producing countries.

So far, although exports are up sharply, total output is up only modestly, analysts said.

For example, the cost of roof bolts, the long rods driven into mine ceilings to secure tunnels, has risen 60 to 80 percent in three years due to higher steel prices, Vining said.

Tires, explosives and other supplies are in short supply and more costly, he said.

As for lead time, it takes 18 to 24 months to get a new mining machine and up to 36 months to get a big coal-hauling truck. Even tunnel tram cars take 15 months, he said.

The equipment and supply issues come atop tighter government safety and environmental regulation, a shortage of qualified labor and declining reserves, Vining said.

He said productivity in the key Central Appalachian area -- the amount of coal produced per worker -- is down 15 percent in the past three years due to the various challenges. (Reporting by Bruce Nichols; editing by Jim Marshall)

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