This story got huge play everywhere from the Lexington Herald-Leader to the New York Times – Gov. Steve Beshear announced on Aug. 15 that Eastern Kentucky’s troubles were over.
We’d be selling all our coal to a state-owned entity in India, the Abhijeet Group, which just couldn’t get enough of that dirty energy source.
Beshear ally State Rep. W. Keith Hall told the Appalachian News-Express in Pikeville a coal mining partnership between a Kentucky group and the Indian government would lead to Kentucky shipping six million tons of coal to India each year.
The partnership, Hall said, was for 25 years, or until our coal ran out, whichever came first.
We started looking at the map, and we couldn’t help but notice that Russia, which is the world’s largest coal exporter, is a lot closer to India than Kentucky.
As is China, which is the largest producer.
Yet, India is going to buy coal from Kentucky!
(Abhijeet Group had a similar deal with South Africa, which is at least in the same hemisphere.)
Apparently, the whole thing was a scam.
We have to give credit where credit is due.
Erica Peterson at WFPL sussed this out from the beginning:
Stevenson says he’s not sure why the Abhijeet Group would look towards Appalachian coal supplies to fill the void in India. There are much closer places to get coal, like South Africa, Indonesia and Australia. Appalachian coal is higher quality—it has a higher BTU—but it’s costly to mine thanks to the topography of eastern Kentucky and West Virginia.
But this means it’s the most expensive coal you can buy. Central Appalachian coal is currently selling at about $60 a ton, compared to about $47 a ton for coal from the Illinois Basin. And that’s before you add on transportation costs.
Here’s what’s really going on, courtesy of the Hindustan Times today, which is calling the Abhijeet deal “Coal Gate.”
The impact of the CBI’s Tuesday crackdown—raids in 30 cities and five FIRs —is likely to be felt as far as the US. On August 15, Indian flag was hoisted and national anthem played at the mansion of Kentucky’s governor, celebrating a $7bn ( Rs. 39,200 crore) agreement between Nagpur-based Abhijeet Group and New Jersey-based FJS Energy LLC for purchase of 9 million tonne of coal annually for 25 years to feed energy-starved India.
After the CBI registered cases against three companies related to the Manoj Jayaswal-led group for irregularities in coal-block allotment, the US deal is under cloud with ministry of external affairs sensitising its mission in Washington about the controversy and its possible fall-out.
The story hints at some sort of “criminal conspiracy,” but is short on details. Still, the implication is those rubes in Kentucky got played.
How, and who made money off this, should provide entertaining stories for months. Though not so entertaining if you’re a Kentucky coal miner, looking at an uncertain future as coal consumption decreases due to increasing use of natural gas.
At any rate, the first big shipment of Kentucky coal to India via New Orleans – think about that for a moment – was scheduled for the end of this month.
But the Hindustan Times reports that’s unlikely to happen.
More as we know more.