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The survey also asked them to rank issues affecting the industry. A similar open-ended question, designed to identi- fy possible overlooked issues, elicited an overwhelmingly similar set of respons- es that singled out the Obama admin- istration, the EPA and other federal agencies as anti-coal. They are hostile toward the Obama administration and they are saddened by Washington's cur- rent energy policy. Reducing Costs Coal Age contacted 500 coal executives and received 79 completed surveys. The demographics largely resemble the U.S. coal industry. The majority of them (65%) produced bituminous coal. Subbitumi- nous, lignite and anthracite accounted for 18%, 8% and 9%, respectively. As far as production capacity, most of the respon- dents represented large mine operators (more than 5 million tons, 41%), followed by small (less than 1 million tons, 26%) and medium (1-5 million tons, 23%); 33% described themselves as surface coal oper- ators exclusively, while 29% said they only operated underground mines. The remainder (38%) said they worked for a company that mined coal using both sur- face and underground techniques. Similar to years past, most of the respondents said their coal went to electric utilities (77%). The remainder said their coal was des- tined for steel mills (15%) or industrial boilers (8%). Power generation remains the overwhelming use for the majority of U.S. coal production. Going into 2016, the survey revealed that coal operators are more pessimistic than ever before. A total of 71% (vs. 54% last year) described their attitude as neg- ative, while fewer were more optimistic (10% vs. 18%). Last year, 28% said they were ambivalent, and that number declined to 18%. The overall mood in coal country has grown considerably darker in one year's time. Confirming that feeling, 68% of the respondents thought their coal produc- tion would decrease in 2015, compared to 33% last year. Equal numbers (16%) believed their coal production would increase or remain the same, compared with 30% and 37% last year, respectively. Coal mining is a capital-intensive business. For 2016, more than half of the respondents (59%) said their capital bud- gets would decrease, which was up slight- ly from last year (54%). Only 16% reported a capital budget increase, another negative sign compared to 26% last year. A quarter of the respondents said their budgets would remain the same, compared to 21% last year. Looking at the data from a glass-half-full perspec- tive, one could say 41% see their capital budgets staying the same, with some see- ing an increase. When asked how they would spend the money, they said equipment upgrades (59%), new equipment (41%), mine devel- opment (33%), permitting and bonding (32%), and used equipment (31%). Equipment upgrades have remained a pri- ority for five consecutive years now. When asked how their money would be allocated on a percentage basis, the majority of the respondents (32%) said their money would be spent on equipment rebuilds (see Figure 6). Spending on new mine/plant construction and plant additions fell to low single digits of 3% and 4%, respectively. When asked about their capital bud- gets, 51% of the respondents reported they would spend less than $10 million this year. A total of 13% said they would spend more than $100 million; 24%, $10- $25 million; 5%, $25-$50 million; and 7%, $50-$100 million. Those that are going to f o r e c a s t 2 0 1 6 c o n t i n u e d January 2016 www.coalage.com 19 Figure 4 — Current Spot Prices for Coal ($/ton) Btu/lb lb SO 2 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Northern Appalachia 13,000 3.0 $73.30 $63.00 $68.00 $65.30 $48.95 Central Appalachia 12,500 1.2 $76.30 $68.15 $63.58 $56.10 $43.50 Illinois Basin 11,800 5.0 $50.00 $47.90 $46.15 $44.70 $32.60 Powder River Basin 8,800 0.8 $12.50 $10.45 $11.50 $11.55 $10.90 Western Bituminous 11,700 0.8 $41.00 $35.75 $35.95 $37.75 $40.65 Source: EIA/Platts Coal Outlook Weekly Price Survey Source: Energy Information Administration Figure 5 — On a scale of 1 (not very important) to 5 (extremely important), how do the following concerns rate? 1. Politics and policy (4.7) 2. Power plant regulation (4.7) 3. Prices (4.4) 4. Economy (4.0) 5. Bonding & permits (3.8) 6. Retiring workforce (2.6) 7. Limited capacity (2.9) Figure 6 — Average Expenditure Allocation Figure 3 — U.S. Coal Production, 2005-2015 (million short tons)