PITTSBURGH _ Armed with 700,000 tons of Pennsylvania coal, a privately held Pittsburgh-area company has stepped into the deepening fray of the tit-for-tat chess match between the United States and Russia.
Xcoal Energy & Resources, in a deal brokered by the U.S. government, has agreed to send coal shipments to one of the largest power companies in Ukraine to meet demand during the coming winter.
Energy production in the Eastern European country, which has historically relied heavily on Russia for stable energy production, has become fraught since Russia defied the West and invaded the Crimean peninsula in 2014.
Officials with the Trump administration praised the deal as a win on two fronts: supporting the American coal industry and sending a strong signal to Russia that aggression in Ukraine will not be tolerated. It is the first U.S. shipment of coal to Ukraine specifically to be burned for electricity.
"In recent years, Kiev and much of Eastern Europe have been reliant on and beholden to Russia to keep the heat on. That changes now," Energy Secretary Rick Perry said in a press release shortly after the Ukrainian government announced the deal.
"This administration looks forward to making available even more of our abundant natural resources to allies and partners like Ukraine in the future to promote their own energy security," Perry added.
The Trump administration approached Xcoal, one of the largest U.S. exporters of coal, to meet with a Ukrainian delegation coming to the United States to search for a coal supplier, company officials said. The deal was in the works for a "few months" before Xcoal won the contract, a company spokesman said.
The company expects the first shipments to leave the Port of Baltimore next month at a cost of $113 per metric ton. The coal will arrive in time for Centrenergo PJSC, the Ukrainian power utility, to begin stockpiling the fuel for the winter.
"Everyone at Xcoal is proud to be a part of this historic moment," Ernie Thrasher, the company's chief executive officer, said in a statement. "During these times of geopolitical tensions and challenging trading regulations, U.S. origin coal provides a secure, reliable, and competitive energy source for Centrenergo and its electricity customers."
The deal comes as the coal industry struggles to find buyers in America. In recent years, U.S. power plants have shunned coal in favor of cheaper, cleaner-burning natural gas. The Trump administration has said it sees exports as a way for coal mines to stay open and even expand, feeding a growing demand from developing countries.
According to the U.S. Energy Information Administration, U.S. coal exports have increased by nearly 60 percent since Trump took office.
Coal analysts say although the shipments, on their own, won't alter the U.S. coal market, it will mean more work at Pennsylvania's coal mines.
Ukrainian officials have publicly expressed a preference for anthracite coal, a type of coal that has a higher carbon content and is harder than the bituminous coal mined in southwestern Pennsylvania. Xcoal has anthracite mines in northeastern Pennsylvania, in addition to mines of different types in the rest of the state and West Virginia.
Pennsylvania produced 7.6 million tons of anthracite coal in 2016, down 12 percent from 2015, according to figures compiled by the Pennsylvania Department of Environmental Protection. The output planned for Ukraine would account for nearly 10 percent of that total.
"It's a significant deal," said Jim Thompson, director of North American coal research at IHS Markit. "It's a meaningful shot in the arm to Pennsylvania coal production."
The company did not release details of the order, but Ted O'Brien, manager of capital markets and marketing for Xcoal, said there will be an "anthracite component."
"It certainly means expanded output," O'Brien said in an interview. "Mines are going to have to ramp up to fill this order ... This deal is very important for us, very important to the entire U.S. coal industry."
Pennsylvania's coal operators are encouraged.
"Providing one of our most abundant natural resources to the Ukraine promotes the country's energy security during a time of conflict and attests to the need for coal as a reliable and resilient fuel source," said Rachel Gleason, executive director of the PA Coal Alliance, a Harrisburg-based trade group.
