Questioning the rebirth of Welsh coal

Malcolm Prowle argues that open-cast mining should not have a major role in the future of our economy






Open-Cast-mining

Open-cast mining has always been a part of the UK coal mining industry but with the virtual dis-appearance of deep mining it has come to hold a dominant position. In Wales as in other parts of the UK, there has been something of an upsurge of open-cast mining in recent years. Currently there are three active sites, at Fros y Fran, Nant y Mynydd and Tower, with several other possible sites at various stages of approval.

Some see this situation, somewhat mistakenly, as a rebirth of the Welsh coal industry which so dominated economics and politics in Wales for more than a century. We have a long and proud history of coal mining and it is tempting to see these jobs as a return of the coal miner. In reality, however, jobs at an open-cast site are more akin to construction than mining. Developments such as this are not going to lead to the resurrection of the Coal Board in Wales or the rebirth of the National Union of Mineworkers.

Proposals to establish a new open-cast mining site are usually highly controversial with strong opposition from residents in the area close to the mine. On the other hand, proponents of open-cast mining make huge claims for the benefits of such developments. So where does the truth lie. What is needed is here is rationale analysis.  I want to address four main themes.

  • Benefits of open-cast developments
  • Impacts of open-cast developments
  • Contribution to Welsh economic strategic goals
  • Legacy issues

Benefits of open-cast developments

The key benefit of open-cast developments is largely to do with new jobs in the area. Typically a new mining development will result in 200+ new jobs in areas where there are often high levels of unemployment and so they are rightly seen as being of great benefit to the area. In addition, of course, the creation of such new jobs will have a multiplier effect in the area since these many of these new employees will spend money in shops, restaurants etc in the area thus creating yet more jobs. However, the magnitude of this multiplier effect will vary from case to case according to a range of factors.

A number of comments need to be made about the jobs created by open cast mining sites:

  • The numbers are often exaggerated by developers in their planning application and there is no mechanism for enforcement at a later stage.
  • A proportion of the jobs will be temporary concerned with site construction.
  • The bulk of the jobs will be for men.
  • A substantial proportion of jobs will be filled by transfers from elsewhere in the company, or from other areas, and may not constitute new jobs in the site area.

Finally, concern must be expressed about the viability of the open-cast developments. Usually such projects aim to extract coal over a period of 15-20 years, but this depends on the commercial viability of the operation. Looking at the current and projected state of the energy market, and the environmental pressures on the use of coal, there are concerns that coal can sustain its current price over the long term. A significant drop in the price of coal would mean that such open-cast operations could become unsustainable and may have to be curtailed early with the subsequent loss of jobs. Indeed, this may be already happening with employees at Aberpergwm being warned that jobs may be lost because of the market position of coal.

Impacts of open-cast developments

Many of the actual and proposed open-cast sites in Wales now lie in quite picturesque surroundings where the landscape has been recovered after coal tipping took place in the heyday of mining. The reality is that, whatever degree of care is taken by the mining companies the site of the open-cast operation will cause large scale and long term visible damage to the environment. This has a number of implications including noise, dust and a poor visible outlook.

In some cases, the impact of the new opencast operation can be a loss of existing jobs. This would be the case if the open-cast mine was in proximity to existing factories and the dust produced posed a risk (or is perceived to pose a risk) to their operations. This would be the case in companies in fields such as the biosciences, precision engineering, and medical devices. In such cases there is a very good chance that those companies would be forced to relocate or go out of business. Furthermore, in some cases the open-cast development may also cause those companies to defer any planned expansion in the existing location. The impact of these events could be a loss of local jobs many times the numbers of new jobs created by the open-cast.

Another economic issue is inward investment. Historically, Wales has had a good record of attracting inward investment largely through the effectiveness of the former Welsh Development Agency. However, a recent report by the Commons Welsh Affairs Committee argued that the abolition of the WDA has reduced Wales’s visibility in the global market place. The chair of the Committee stated that, “Wales is now one of the worst performing areas in the UK in terms of attracting inward investment”. If these are the difficulties faced by Wales as a whole then the difficulties of attracting inward investment in deprived south Wales valleys and towns, where many open-cast sites are located, are even greater. We know from experiences of Valleys-based companies such as Rechem in Ponytypool and the Phurnacite Plant in Aberdare that such unpleasant manufacturing operations are a strong deterrent to inward investment. Open-cast mining can be added to that list.

Some open-cast operations transport the mined coal via railheads located close to the site. Others have to rely of fleets of heavy lorries transporting the coal by road. Aside from noise and vehicle pollution these lorries will cause largescale road damage the costs of which will have to be borne by the local council and not the mining company – a classic economic externality.

Finally there are the impacts on the local population of the area who have to live with the dust and the noise with the consequent impacts on physical and mental health, and general well-being. These impacts will fall on individuals in their homes but also on other organisations such as schools, colleges and hospitals.

Contribution to Welsh economic strategic goals

The expansion of open-cast mining operations needs to be considered in the context of the Welsh economic strategy. It is to be hoped that any such developments would support and not inhibit achievement of that strategy.

In 2011, the Welsh Government published The Implementation Plan for Economic Renewal: a new direction which outlined five main priorities, two of which were:

  • Making Wales a more attractive place to do business
  • Targeting business support in certain key sectors

The business support referred to was to be targeted on the following sectors where, it was felt, Wales could gain competitive advantage and benefit from growing markets:

  • ICT
  • Energy and environment
  • Advanced materials and manufacturing
  • Creative industries
  • Life sciences
  • Financial and professional services

Expansion of open-cast mining hardly aligns with any of these priorities. In the first place the damage to the physical environment is unlikely to encourage companies to invest (as has already been referred to) or for their managers and workers to wish to reside in the area. Indeed, at least three of the sectors are likely to be significantly negatively affected by the dust in which they would have to operate. And, in relation to the energy and environment sector the Welsh Government’s policy statement gives little emphasis to coal and rather more to producing low carbon energy in an environmentally friendly manner.

It is difficult to see, therefore, how open-cast development can be seen as ‘fitting in’ with Welsh economic strategy. Furthermore, the essence of an economic strategy is to chart a path for the longer term and it would be folly to undertake something contrary to that strategy for very uncertain and short-term economic gains.

Legacy issues

It is a well-known fact that deep coal mining left large scars on the physical environment of the south Wales towns and valleys which took many decades to remove. Although open-cast mining will undoubtedly damage the physical environment of Wales once more it is to be hoped that this will be a temporary phenomenon. Planning approval given to mining companies will undoubtedly contain measures designed to force the companies to restore the landscape to its former state at the end of the period of mining.

However, there is a legacy which is less obvious to the eye but is just as problematic, indeed even more so. This is the erosion of the social and economic well-being of the population of the areas where open-cast is developed. Open cast will have negative impacts on the health, (physical and mental) status, poverty levels and general well-being of the population. In particular there will be an impact on children and could easily lead to a ‘lost generation’ as has happened in other parts of the country. At a time when concerns abound about inter-generational equity, this is a key point to bear in mind. Also the costs to Government of dealing with the social problems created will vastly outweigh any benefits produced.

The conclusion must be that any such open-cast development should be subject to an independent cost-benefit analysis.. A cursory analysis suggests that open-cast has no major role to play in the Welsh economy of the 21st Century. Nonetheless we must always be aware of politicians taking short-term decisions to gain popularity in time for the next election.

Professor Malcolm Prowle is a professor at Nottingham Business School and visiting professor at the Open University Business School. For twenty years he worked for two large international consulting firms where he led a number of evaluations of large scale projects. He has published many books and papers on the issue and has been an adviser to a House of Commons Select Committee. He was born in and resides in the South Wales valleys.