The Mineral Industry

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Current Mineral Economy (continued)

Although the output of most mineral commodities in Appalachia was small in terms of the national mineral economy, that of a few commodities was of national significance.  In 1964, Appalachia supplied 98 percent of the value of anthracite produced in the United States, 76 percent of the bituminous coal, 52 percent of the fire clay, 24 percent of the zinc, and 21 percent of the dimension stone (table 8).

Table 8.  Comparison of Appalachian output with national output
of selected mineral commodities in 1964.  (Source:  U. S. Bureau of Mines)

The bulk of the $2.5 billion of minerals produced in Appalachia in 1964 was composed of relatively few commodities; the four most important represent 87 percent of the total value as shown below:

Mineral fuels constituted 80 percent of the total value of 1964 Appalachia output.  Mineral construction materials, such as sand, gravel, clay, and stone, were next in importance with 10 percent. The remainder comprised other commodities including metals, although zinc was the only metallic element produced in nationally significant amounts in Appalachia in 1964.  This output was principally from Tennessee and represented 24 percent of the national total.  Tennessee was the leading zinc producing State in the country.

The production of several commodities originating in the Appalachian States, but not necessarily from the Appalachian parts of those States, ranks among the highest in the Nation.  All anthracite production in 1964 originated in Pennsylvania and of the 10 leading bituminous-coal producing States, 7 were Appalachian.  West Virginia ranked first nationally with 29 percent of the quantity produced, all of which was from Appalachia.  Kentucky was second, Pennsylvania third, Ohio fifth, Virginia sixth, Alabama eighth, and Tennessee ninth.

In the output of stone (crushed and dimension), Pennsylvania was the largest producer in the United States in 1964, and Ohio ranked fifth.  New York was the leading Appalachian sand and gravel producing State, ranking third nationally; Ohio was fourth.  In the output of clay, Georgia ranked first nationally, providing 31 percent of the total value of clay sold or used, whereas Pennsylvania was second and Ohio third.

In addition to mineral raw materials, Appalachia contains many large primary mineral-processing complexes, the most important of which involve iron and steel.  All or part of the Pittsburgh, Valley (Youngstown), Upper Ohio River (Wheeling), South Ohio River, and Southern iron and steel districts lie within Appalachia.  Of 239 blast furnaces producing pig iron and ferroalloys in the United States at the beginning of 1965, 70 percent were in Appalachian States and 37 percent were in Appalachian counties.  Table 9 shows the distribution of these blast furnaces.

All the pig iron output of Alabama, Kentucky, and West Virginia, as well as a substantial part of the output of Tennessee and Pennsylvania, comes from Appalachia.  More in 55 percent of total national pig iron production in 1964 was from Appalachia; Pennsylvania lone furnished one-fourth of the national total.Vast quantities of mineral raw materials are needed to support this industry.  The iron ore consumed, however, originates from outside of Appalachia, except for a small amount produced and consumed in the Birmingham, Ala., area.  Other mineral raw materials essential to the manufacture of pig iron, principally coal and limestone, are for the most part from Appalachian deposits.  The ready availability of high-quality coking coal and limestone were principal reasons for locating iron and steel complexes in the Appalachian area.The manufacture of cement and lime also consumes large quantities of nonmetallic minerals, principally limestone.  In 1964 there were 23 portland cement plants and 31 lime plants operating in Appalachia, distributed as follows:

The 23 cement plants had a combined capacity of 49.5 million 376-lb. barrels in 1964, or 10 percent of the national total.  Pennsylvania had the largest capacity followed by Alabama, Tennessee, Ohio, West Virginia, Virginia, Maryland, and Georgia, in descending order.  Capacity data are not available for the lime plants.

The manufacture of coke is another of Appalachia's major primary mineral-consuming industries.  In 1964, output of the Appalachian States (excluding New York and Maryland where all output is outside of Appalachia) totaled 33 million tons of oven coke valued at $569 million and 1.2 million tons of beehive coke valued at $19 million.  These totals represented 54 percent of the domestic oven coke produced and all of the beehive coke, as shown in table 10.  To achieve this output, some 49 million tons of coal valued at $396 million (all from Appalachian States) was carbonized at 62 plants.

Table 10.  Coke production in selected Appalachian States, 1964
(Source:  Data from U. S. bureau Mines, Minerals Yearbook, 1964)

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Relationship of Mining to Other Economic Sectors

By Albert E. Schreck, Edward E. Johnson, and
Richard Fullenbaum, U.S. Bureau of Mines

While the importance of natural-resources-based industries has declined, the other segments of the Appalachian economy have been growing, as shown in table 11.  This growth, with a few exceptions such as services, has occurred at a slower rate than the national average.  Even in the services group the payroll has increased at a substantially slower rate than for the United States as a whole, although the rise in receipts and number of establishments entering this group has been close to or above the national growth rate.

Table 11.  Growth in the nonmineral sectors of the Appalachian economy and national economy, 1954-63.

In other businesses, where the increase in number of establishments has approached the U.S. average, the rise in sales and payrolls has been substantially less.  In manufacturing, the payroll and value added have grown at a somewhat lower rate than for U.S. manufacturing, and even the increment in capital expenditures, which presumably will be the generator of future income, is somewhat less than the Nation as a whole experienced.

The low growth rates experienced by various industries in Appalachia have further contributed to the economic problems by inhibiting creation of sufficient new jobs to absorbed those unemployed in the mining and agricultural industries.  Had growth in other sectors of the Appalachian economy been near that of the national average, additional job opportunities would have been created for the region's unemployed.

Employment is generally considered a key indicator of economic activity inasmuch as a high level of employment is normally associated with a high level of income and output.  Changes in the level of employment may be used as a barometer of regional economic activity, whereas changes in the patterns of employment indicate shifts in product demand, technology, and worker preference.

The latest comparable series of county employment statistics by industry indicate that the Appalachian area has undergone a period of economic and social transition.  The economic base of the area has shifted from agricultural and mining to manufacturing and trade, as indicated in table 12.  Between 1950 and 1960, population and labor force in Appalachia increased 2 percent while total employment declined slightly.  Increases were registered by most other sectors of the economy, but these were insufficient to counteract the decline in employment in the resource industries.  The major employers were manufacturing and miscellaneous industries which together accounted for two-thirds of the third of the total labor force in 1960 compared with 60 percent in 1950.

Mining employment between 1950 and 1960 declined 56 percent and was 3 percent of the Appalachian labor force in 1960 compared with 8 percent in 1950.  Coal-mining employment (table 13), which constitutes 80 percent of total mining employment, declined 60 percent during this same period.

The rate of increase or decrease of mineral production and attendant employment varies from region to region in Appalachia.  In the metropolitan areas the impact of declining coal production has not been as serious as in the more rural areas where mining and a few mining-oriented industries were the principal employers.  In the urban areas, when coal mining began to decrease, limited employment was available in other industries.  However, in the more rural areas when mining declined, other supporting industries also declined, for they were generally dependent upon mining for their survival.  Therefore there were fewer alternative job opportunities.

Table 12.  Population and composition of labor force in the Appalachian Region, 1950 and 1960.
(Source:  U.S. Bureau Census)

Table 13.  Appalachian bituminous coal and lignite employment and productivity, 1947-64.
(Source:  U.S. Bureau Mines)

Harlan, Leslie, and Letcher Counties in Kentucky and Wise County in Virginia are illustrative of areas where a declining economy accompanied a decline in mining.  As shown in table 14, each of these counties has experienced a significant decline in total population between 1950 and 1960, coupled with a sharp rise in the proportion of older persons in the population and a drop in percent of population employed.  Mining ranked first in the number of lost jobs.  Virtually every other sector of the economy experienced a decline.

Table 14.  Economic Indicators, selected Appalachian counties.
(Source:  U.S. Bureau Census)

This drop in employment, resulting from increased productivity brought on by automation and improved mechanical mining methods, had a profound effect upon the Appalachian economy.  The loss of thousands of mining jobs caused economic contraction to spread over much of the area and resulted in large out-migration, particularly from the coal mining regions of Pennsylvania and West Virginia.

The propensity to migrate appears to be a function of age, education, and skill, and consequently a large percentage of the older miners remained in the area.  These miners form a large part of the chronic unemployed because they find it difficult to adjust to mechanization in the mining or manufacturing industries and because the number of jobs available to marginally skilled labor is insufficient.

The shift to mechanization not only reduced the size of the mining labor force, but also changed its composition.  The average miner is becoming more skilled, and usually a more skilled worker requires more service and trade workers to support his needs.  This requirement may partly explain the rise in the latter sections of the economy.

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Economic Impact of the Mineral Industry

By Alvin Kaufman, U.S. Bureau of Mines

A useful tool in a discussion of the mining industry's impact on the Appalachian economy is input-output analysis.  Such an analysis can be considered as an accounting system showing the shipments and purchases needed to support the economy at a given level.  In effect, this system describes the economic relationship between the various parts of the economy.  This analysis is accomplished by measuring both the purchases required from all other industries by a given industry in order to produce a dollar of output and the direct and indirect sales of that industry to all other industries.  In preparing these input-output tables not only are direct purchases and sales traced, but purchases and sales required by secondary, tertiary, and other industries are also computed after eliminating duplication.  For example, the coal industry has a direct requirement for timber; the timber producer needs saw blades, the saw-blade manufacturer needs steel, and so forth.  The requirements to produce a dollar's worth of coal will, therefore, include forest products, manufactured steel products, and other materials  (Wang and Kokat, 1966).  Inasmuch as this total will include the requirements of all industries supplying the coal industry, as well as those supplying the suppliers, the total requirement will have a value larger than that of the coal industry's output.

Table 15 shows the total requirements for the coal and petroleum and natural gas industries and for minerals for the construction industries.

In preparing table 15 the national input-output coefficients were assumed to be relevant to Appalachia.  In view of the substantial proportion of national output contributed by Appalachian coal, this assumption would appear to be logical for coal but because Appalachia's petroleum and natural gas and construction minerals make up a smaller part of the national output, the assumption may be less valid for these products.

Table 15.  Total requirements of Appalachian mining, 1958. 
(Based on Goldman and others (1964, p. 26-29, table 3)

The table indicates that $2.5 billion output from Appalachia's mines will generate $3.8 billion in total goods and services.

The total mining output also requires $615 million in manufactured products, primarily from such industries, as iron and steel, chemicals, petroleum refining, rubber, and plastics.  It would thus seem that the goods and services needed to produce Appalachia minerals are selective and that the Appalachian mining industry may be a rather minor market for the output of other industries.  Consequently, it is unlikely that manufacturing industries dependent on mining as a customer will locate in Appalachia in significant numbers.  There is a possibility, however, that those industries requiring the mineral raw materials produced in Appalachia will be attracted to the area.  To evaluate this possibility, however, that those industries requiring the mineral raw materials produced in Appalachia will be attracted to the area.  To evaluate this possibility, one must examine the output side, for output distribution is something of a measure of the inducement to other industries to locate in a given area because of the availability of the required raw materials.  U.S. Department of Commerce data show that 23 percent of the coal, 5 percent of the petroleum and natural gas, and 7 percent of the construction materials are required by the ultimate consumer (such as coal burned for household use).  The remainder is distributed to various processing or manufacturing industries for use in preparing other products.  These mineral industries therefore apparently serve as an excellent attraction for mineral-based activities, providing other location factors such as transportation are suitable.

Eighty-three percent of the petroleum and natural gas is required as an input by the petroleum-refining industry, and two-thirds of the construction materials are needed by the construction industry or stone and clay products manufacturers.  Coal output is distributed between coal mining, primary iron and steel manufacture, electric-power generation, and miscellaneous producers.  These industries may also attract others.

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The Future:  The Appalachian Economy in 1975

By Barbara S. Lloyd,
U.S. Bureau Mines

Projections for the Appalachian economy shown in table 16 assume no change in circumstance or shift in trend, and thus are indicators of what may happen rather than indicators of what will happen.  These projections demonstrate continuing growth in the area, although at rates considerably less than the average for the United States unless the trends are modified by some corrective actions.

Table 16.  Projections of selected demographic, economic,
and mineral data for the Appalachia Region for 1975, based on past trends.

Accuracy of the projections for the Appalachian economy are limited by the data available.  These estimates are not predictions and can change as the assumptions about future economic and technologic activities are modified..  (Please note:  The information on these activities will not be reproduced in this document.)

Therefore, even without corrective action the overall Appalachian economy will experience a slow but steady growth.  The extractive mineral industry is, however, expected to contribute a declining proportion of total regional income as is evident from the projected employment data which indicate that both overall mining employment and coal employment in particular will be declining, while total area employment is increasing.  The value of mineral production (in constant dollars) is expected to increase between 1964 and 1975 because the output per man-hour will increase and only anthracite and fire clay will lose ground in absolute value of production.  The estimated 33 percent increases over the 11-year period in the value of minerals production will, however, be less than the increase expected for the total Appalachian economy; a declining relative importance of the extractive mineral industries is thus indicated.  Most of the economic growth in the region is expected to come from the manufacturing and service industries.

This shift away from dependence upon a mineral base reflects the growing maturity of the Appalachian economy.  As income increases and as the economic system develops, the significance of the minerals industry relative to the total economy declines.  The fact that this trend is already apparent in Appalachia indicates that the economy is becoming more diversified, more in line with the national economy, and less sensitive to changes in the demands for minerals.

 

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[1] Mineral Resources of the Appalachian Region, 1968, pg. 20, footnote 1:  Other than natural gas and natural gas liquids for which data are unavailable. (3)Other than petroleum, natural gas, and natural gas liquids for which data are unavailable.

[2] Ibid., page 18, footnote 1:  Other than petroleum and natural gas for which data are unavailable.

[3] Ibid., page 18, footnote 2:  Other than petroleum, natural gas, and natural gas liquids for which data are unavailable.

[4] Ibid., page 19, footnote 1:  Other than petroleum and natural gas for which data are unavailable.

[5] Ibid., page 19, footnote 2: Other than petroleum, natural gas, and natural gas liquids for which data are unavailable.

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