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Iowa Coal Industry Rises From The Depths

October 16, 1985

LOVILIA, Iowa (AP) _ The harvest continues year-around in the hilly farm land around this tiny southern Iowa town, with men taking to the fields in expensive machinery to bring in the yield.

But when the day’s work is done, there is no grumbling about crop prices or federal farm policies. This is Iowa coal country, home to a small industry whose dramatic success in recent years has been overshadowed by the slump of agriculture in the rest of the state.

Star Coal Co. of Lovilia, the dominant coal miner in Iowa, currently mines and sells about 500,000 tons of coal annually to Iowa industries and utilities. The coal is selling for about $28 a ton, said geologist Randall Luwe of Star Coal, putting the company’s annual revenues at about $14 million.

″In the three years since I’ve been here, we’ve tripled our business,″ Luwe said.

Star Coal is now the largest employer in Monroe County, with 150 workers. In 1977, when concerns about pollution from the relatively high sulfur content of Iowa coal had virtually eliminated the industry in the state, the company had seven employees.

But technological advances now allow Iowa coal to be burned cleanly and economically. The result has been a boon for this area, where the land for farming was long considered inferior to the flat, fertile land just miles to the north.

According to Iowa Energy Policy Council figures, coal production in Iowa increased more than 40 percent from 1983 to 1984, to a total annual mining output of 547,000 tons.

″At current production levels, we will see production in the 900,000-ton range at the end of this year,″ said Phil Svanoe, an official at the council. ″We feel the Iowa coal industry is on its way back up.″

Much of the industry’s future growth will be due to a technological innovation called the fluidized bed boiler, which uses a bed of limestone to absorb sulfur and other impurities from coal as it is burned.

The University of Iowa and Iowa State University plan to have such boilers in place by 1989, each creating a demand for up to 100,000 tons of Iowa coal a year, Svanoe said.

In addition, Svanoe said Archer Daniels Midland Co. plans to install a fluidized bed boiler at its Cedar Rapids plant that will be the second largest such boiler in the world. It will use up to 600,000 tons of coal a year, Svanoe said.

Firestone Tire & Rubber Co. is also considering installing a fluidized bed boiler at its Des Moines plant, Svanoe said.

Huyser said Star Coal has a good chance of landing contracts at plants with the new boilers.

″We’ve satisfied our customers that the coal is good, and we’ve satisfied them that we’re cost-competitive,″ he said. ″Companies like ADM and Firestone have now invited us to make presentations.″

Luwe said the annual coal mining output in Iowa could rise to 1.5 million tons annually as the fluidized bed boilers come into operation. He said almost all of that coal will be mined in the southern part of the state, where it is most abundant and easily accessible.

″We feel there are vast reserves,″ Luwe said. ″The market could be incredible for us.″

Three other coal companies operate in the area, but Luwe said Star Coal produces about 80 percent of the state’s annual coal output.

The company, while well-known to the Iowa utilities and large industries it serves, is not a high-profile outfit. It operates out of offices alongside a gravel road west of Lovilia, near its central facility for handling and washing coal shipped in from land leased in a three-county area. After the coal is washed, it is shipped to customers in a 150-mile radius.

″Probably the biggest impediment to the Iowa coal industry has been, and continues to be, that nobody knows we’re down here,″ said Star Coal President Jim Huyser, whose family has operated Star Coal for more than 35 years. ″We’re stuck in a rather isolated part of the state.″

The company usually gets its coal through strip-mining - removing the top layers of soil to reach the coal underneath, then replacing the soil according to strict federal and state standards. But recently Star Coal opened the first underground coal mine in Iowa in more than 20 years.

Huyser said Star Coal’s main competition comes from mining companies from nearby Illinois and from Wyoming, where coal contains less sulfur.

″I don’t think if Iowa has this kind of resource, we should let our dollars go to Wyoming and Illinois,″ he said.

Landowners, particularly farmers, have been joining in the success of the Iowa coal industry. Star Coal leases coal rights to land, with the landowner paid $1 for each ton of coal mined. Luwe said 40 acres of land in the area might yield 200,000 tons of coal for the company - and $200,000 for the landowner.

That arrangement has proved to be quite attractive to area farmers, who are usually happy to let the company drill test holes to determine if coal can be easily mined.

″They’re driving me crazy trying to get me to mine it,″ Luwe said.