By Steve Fiscor, Editor-in-Chief
In an effort to understand coal industry compensation levels, Coal Age commissioned a survey of its readership during March 2010. A total of 800 questionnaires were e-mailed to readers who worked for coal mining companies and 439 completed surveys were returned. One of the more difficult tasks in assembling the data was to merge all of the various mid-level management titles into a quantifiable group. In fact, a significant number of well-compensated individuals were not sure of their exact titles. Setting an industry benchmark based on such a small sampling would not be wise, but the responses to the Salary Survey do shed light on the differences in compensation based on location and the type of mining.
If one were to generalize based on the results of the survey, the typical middle manager working for a medium to large size coal company is an older, well-educated male. During his 30-year career, he has worked for two coal companies. He earns a base salary of at least $100,000 and receives an annual bonus of $10,000 or more. Those with more specialized skill sets and experience earn quite a bit more and vice versa.
Executives earn the most money. The salary levels for top-level executives working for publicly-held coal companies are disclosed in financial statements. The limited number of executive responses to the Salary Survey (Table 1) do not compare with those levels at all. It’s safe to assume these executives are working for small- to medium-sized coal mining companies and the average responses were treated as a base level.
Managers working at underground mining operations typically earn more than their counterparts at surface mining operations. That being said, there is also difference on a regional basis as one would expect. For example, a production manager at a large western surface mine makes more money than his counterpart in the East.
Survey Demographics
The Salary Survey divided the coal mining business into four sectors. The responses were fairly representative of business, with 33.1% working at underground mining operations, 35.5% working at a surface mine, 10.8% managing the prep plants, and 20.5% administrative covering all three of the areas. On a regional basis, 49.6% said they worked for mining operations in the East, 15.8% worked in the Midwest, 26.6% worked in the West, and another 8% had responsibility for mines in multiple regions. That makes sense considering the highest concentration of coal mines is in the Appalachian region.
To quantify the scale of the operations, the survey asked about production levels and the raw feed capacity at the prep plant. A majority of the responses were from medium- to large-scale mines, more than 10 million tons per year (tpy), 33.2%; 5 to 10 million tpy, 21.2%; 1 million to 5 million tpy, 30.4%; 500,000 to 1 million tpy, 9.4%; and less than 500,000 tons, 5.8%. The responses broke out evenly across the field of coal preparation with 1,500 tph or greater (26.4%), 1,000 to 1,500 tph (23.1%), 500 to 1,000 tph (25.3%), 250 to 500 tph (17.6%), and 250 tph or less (7.7%).
Coal mining is a business dominated by older men, however, the age levels are getting ready to change. The majority (95.6%) of the respondents indicated they were male. A large portion (30.9%) said they were 55 years old or older, while a similar amount (32.2%) said they were 39 years old or younger. The mine managers hired during the 2004-2008 rally are gaining experience while their older counterparts are retiring.
Similar to the age demographic, most of the respondents have a lot of experience. Many of the respondents (38.8%) have worked in the coal business for 30 years or more. Likewise, the experience levels dip and then grow with diminishing amounts of experience.
Mine managers are notoriously loyal, but that has changed or will probably change with more competitive compensation packages and perks. The majority of the respondents (50.1%) have worked for no more than two coal companies during their careers—more than a quarter (26.6%) have worked for only one company. Nearly a fifth (19.6%) of the respondents, however, have worked for five or more coal companies.
Most of Coal Age readers started as mine engineers, geologists, and metallurgists, and then progressed through the ranks to mine and plant manager positions, and even on to executive level positions. So, it should come as
no surprise that 63.9% of the respondents have at least a four-year college degree.
Compensation Plans
Underground mining pays the most. Considering the specialized skill sets and the relative risk with working underground, base salaries would naturally trend higher. Mine managers in the East were reporting salary levels in the low 200s (See Table 2). Compensation levels drop significantly to the superintendent level, which averages $130,000. Maintenance managers and chief electricians are making similar base salaries. The base salary for mining engineers working at an underground coal mine averages $92,833. Depending on the region, a general mine foreman and a mine foreman earn about the same amount of money.
Surface mining pays an equally respectable amount of money, especially in the West. A western mine manager earns an average base salary of $156,667 (See Table 2). His counterpart in East earns a much lower base salary, and probably works harder to mine less coal. There is a similar relationship with the base salaries for the superintendents.
Engineers command a premium at the prep plant. On average, they earn a base salary that ranges between $140,000 to $150,000. They are also very specialized in the nature of their work. Base salary levels drop steeply to less than $100,000 for plant managers. Plant superintendents and maintenance managers earn base salaries of $85,000 and $70,000 respectively.
On the administrative side, base salaries break out as one would expect with the vice president-operations earning an average base salary of near $143,000 (See Table 5). The base salaries for sales and marketing managers varies greatly by region with those in the East earning the most. That probably reflects the influence of higher value and variety of coal products, especially considering metallurgical grade coals.
More than 70% of the respondents had received a salary adjustment in the last year and many of the respondents (30.1%) had just received one. Representing the difficult economic period, not all of the adjustments were increases. While most said they received an increase, a small group (15.5%) said their adjustment was a decrease. The most popular increase was 1%-5%.
A majority of the respondents (69%) said they received a bonus. Roughly one-quarter (26.9%) received $5,000 or less. Another one-quarter (24.6%) said they received $5.000 – $10,000. Another group (17.6%) said they received more than $25,000. Bonuses were typically based on multiple incentives, including safety, production, profits, and performance. A few respondants mentioned that bonuses were tied to compliance and a reduction in violations. Others mentioned receiving a truck and fuel allowance.
The final question in the 2010 Salary Survey asked about job fears. The respondents were given a fairly long list of subjects to choose from and also afforded the opportunity to write in a subject in case the survey inadvertently overlooked an important area. Safety concerns, coal sales, job security, maintaining production levels, and diminishing coal quality barely registered with the respondents. Three subjects dominated the field: environmental activists, government regulations, and the economy. The write-in’s followed a similar, tighter pattern of: the Obama administration, the Mine Safety and Health Administration (MSHA), and the Environmental Protection Agency (EPA), which are one in the same—federal regulators.
Taking a few liberties and reading between the lines, what they are saying is that they can handle all of the internal issues at the mine sites, but the external forces beyond their control may impact their careers. Depending on the mining method and the region, they are either arguing a citation from an MSHA inspector or trying to interpret the EPA’s next move on permits. Meanwhile, the sagging economy affects coal demand and 401-K performance, extending that elusive retirement date.
