Coal Age

JAN-FEB 2019

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22 www.coalage.com January/February 2019 forecast survey 2019 continued tic. A total of 55% (vs. 63% last year) described their attitude as positive, and only a few more were less optimistic (11% vs. 7% in 2018). This year, 34% said they were ambivalent, compared to 8% last year. The overall mood in coal coun- try remains upbeat. Confirming that feeling, 47% of the respondents thought their coal produc- tion would increase in 2019, compared to 51% last year. A large portion (42%) said production would remain the same, compared to 33% last year. Fewer re- spondents (11%) foresee production de- creasing, compared to 16% last year. A majority of the industry (89%), however, sees production remaining the same or growing in 2019, which is about the same as last year (84%). Coal mining is a capital-intensive business. For 2019, 54% of the respon- dents said their capital budgets would increase, which was the same as last year. The number of respondents saying their capital budgets would decrease was 12%, which was higher than the 8% re- sponse in 2018. More than one-third of the respondents (35%) said their budgets would remain the same, compared to 37% last year. That is an important point for coal marketers: most of the industry (89%) sees their budgets either staying the same or increasing over 2018. When asked how they would spend the money, they said equipment up- grades: new equipment (18%) and mine development (16%). After fi ve years in the doldrums, new equipment purchases may have fi nally overtaken the decision to upgrade the existing equipment. In 2019, coal operators will invest in operations and equipment to produce more coal cost effectively. When asked about their capital budgets, an equal amount (17%) said they would spend more than $100 million, $50-$100 mil- lion, and $25-$50 million; 21%, $10-$25 million; and 29%, $10 million or less. This year, 51% of the Coal Age survey respondents said they would spend $25 million or more. When asked about what specific is- sues will affect the coal industry most in 2018, power plant regulations registered the highest score (4.37/5) as the leading concern. This was followed closely by Politics & Policy and Prices. Coal prices remained ahead of the economy. Read- ing between the lines, the miners are saying that prices and the economy do not matter if their customers are not al- lowed to burn coal. Limited production capacity and a retiring workforce were the least of their concerns. Figure 4 — Current Spot Prices for Coal ($/ton) Btu/lb lb SO 2 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Northern Appalachia 13,000 < 3.0 $65.30 $48.95 $45.75 $46.20 $63.75 Central Appalachia 12,500 1.2 $56.10 $43.50 $48.05 $59.85 $81.40 Illinois Basin 11,800 5.0 $44.70 $32.60 $35.50 $32.60 $38.95 Powder River Basin 8,800 0.8 $11.55 $10.90 $11.00 $12.10 $11.95 Western Bituminous 11,700 0.8 $37.75 $40.65 $40.90 $41.10 $40.40 Source: EIA/Platts Coal Outlook Weekly Price Survey Figure 5 — On a scale of 1 (not very important) to 5 (extremely important), how do the following concerns rate? 1. Power Plant Regulation (4.37) 2. Politics & Policy (4.33) 3. Prices (4.24) 4. Bonding & Permits (3.89) 5. Economy (3.86) 6. Retiring Workforce (3.34) 7. Other (3.15) 8. Limited Capacity (2.60) Figure 6 — What will be the single most expensive item the mine purchases in 2019? ............... What will it cost, in round fi gures? Electric Shovel ......................................................................$100 million Hydraulic Excavator ................................................................$75 million New Facilities ................................................................. $30-$50 million Relocating Infastructure .........................................................$20 million Overland Belt Conveyor (4 miles) ............................................$11 million Ventilation Shaft ............................................................. $10-$20 million Infrastructure ...........................................................................$5 million Consulting Services ...............................................................$2.5 million Large Mobile Equipment ...........................................................$2 million Continuous Miners (2) ...........................................................$1.8 million Dozer/Tractor (2) .............................................................. $1.4-$3 million Longwall Roof Supports ............................................................ $700,000 Water Treatment Plant .............................................................. $400,000

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