0:00
[BLANK_AUDIO]
So let's take a look at some of the data from this sector.
[BLANK_AUDIO]
So let's, let's take a look maybe just to
kind of work through a bit on the fly here.
Little bit of thinking about where the sector's been, and to some
extent maybe that helps us think about where the sector is going.
0:31
So first let's look at coal for electrical generation, so we have two
charts here from, well two pieces of
information both from the Energy Information Administration.
The top chart is the average price of coal delivered for these particular end uses.
Electrical power generation, other industrial applications, coke production,
which is, goes into making steel, and then commercial and institutional uses.
1:02
so, the and then the bottom data is some data I took also from
the EIA which just to try to match the time period in the chart.
This is end use in millions of short tons in 07 and 2012.
So, if we look at, at coal for electrical generation.
1:32
over 5 years, they ended just up above 40 it
looks like, but you know, they basically went up a little bit there, okay?
It turns out that they went up about 5% per year
[BLANK_AUDIO]
Over that five year period.
1:55
Production, on the other hand, has remained relatively constant.
Up or down so it's kind of going in the other direction.
This is down about 4% per year.
Okay?
So what might explain these movements in this sector?
So we've got let's, let's model our market here.
[BLANK_AUDIO]
Okay?
So here's our market.
[BLANK_AUDIO]
And what we know looking at this data, we had in 07 some quantity
[BLANK_AUDIO]
and some price.
[BLANK_AUDIO]
okay?
And what we know is that, the
quantity actually went down in percentage terms by as much as the price went up.
So basically moved over here.
My question is how did we get there?
[BLANK_AUDIO]
Okay?
3:29
Now, remember, you only have two options.
You can move a supply curve and move a demand curve.
We know in 07, we basically hadd a supply curve here,
[BLANK_AUDIO]
and in 07 we had a demand curve and we'll get to that in a moment.
We don't know if the demand curve was like this.
Or was it like this?
Or was it like
this?
If the demand curve actually was right there then
essentially what we are saying is that to move
to this next point we must have had a
shift back in supply and we can tell a story.
We can do some research and
4:24
understand why exactly the supply curve moved back between 07 and 12.
If that was the only thing that
happened, because we think demand didn't change much.
And we can kind of use what we learned from
understanding the, the factors that drove supply to move in a
certain way between 07 and 012 to maybe think about
how supply is going to continue to move over the coming years.
Demand, on the other hand, is a little harder.
We either, so we know that supply went up or went down.
5:13
You can see it would have moved back to form the new equilibrium, but actually, if
demand was initially over here, it would have
had to move out to form the new equilibrium.
5:27
So we really don't know which way demand moved, but we're pretty sure that supply
moved back, so that's, you know, one way that you can make use of this data.
Let's take a look at another sector here,
which is the coal used for coke production.
Here
[BLANK_AUDIO]
our quantity is down about 2% a year.
So down a little bit less, the quantity.
And then,
[BLANK_AUDIO]
our
[BLANK_AUDIO]
price, however, is up from under 100 to like, $190 a short ton.
You know, this is
6:10
just under 20, this is under 20% a year.
It's over 18%.
We'll just call it 20 to use some round numbers.
Okay?
So if we think about this market for coking coal,
[BLANK_AUDIO]
we know quantity really didn't move much, maybe a very slight bit.
But price moved quite a bit.
[BLANK_AUDIO]
Okay, it's basically moved from something like that to maybe you
know, maybe back a little, or maybe not back much at all.
Okay?
So here again we're going to be able to conclude that we had,
[BLANK_AUDIO]
probably,
[BLANK_AUDIO]
somewhat significant shift back in supply.
[BLANK_AUDIO]
Okay?
Now because of the relative lack of change in quantity,
it's really unless demand is completely inelastic.
8:04
I would certifiably you can't theoretically move conclude
that it had to be a move out, but what you would want to do is you want to maybe do
some estimates of the elasticity for the demand of coking and coal, but it
seems more likely was what we had was an increase
or drop in supply but actually probably an
increase in demand in the market for coking coal.
So that's just one way that we can use this data to understand a little
bit more about where the business has been
and possibly where, where the business is going?
Where the market is going and what that means for our business?
So I'd to take one
8:55
And this slide shows the top ten occupational
subsectors, of a total of 85 different subsectors,
occupational subsectors in the coal mining industry that
are, that are employed in the coal mining industry.
This is data taken from the Bureau of Labor Statistics, and I'd encourage you to
maybe go get familiar with some of these resources that we are tapping into here.
But what this, this BLS
document actual provides, occupational, employment, employment
projections by occupation and, it breaks it down by these different industries.
So it's interesting to look at a, where, what types
of occupations are employed in large numbers in this sector.
And also based on the Bureau of Labor Statistic estimates, which
occupations are likely to grow in employment in the coming years.
So we see that, you know, some of the big occupations employed here, unsurprisingly,
or, you know, operations engineers and other construction equipment operators.
10:06
Here's a very specific to the
mining sector, continuous mining machine operations.
That's, you know, the kind of technology
we're talking, we were talking about earlier.
10:25
Bolters employed in mining, supervisors, excavation
and loading machine operators.
And then electricians are a relatively generic group that we
will see employed in very large numbers in, in this industry.
10:47
Each, on, onee thing I think is important to take away from
here, frankly, is that there's not any growth in any of these occupations.
It doesn't really matter where you look across the spectrum.
10:59
In these occupations, we see the kind of little growth here.
So, and we see no change in the order of each of the occupations.
So, you know, operating engineers are kind of a large
Number 1 and they'll be the large Number 1 later.
11:20
And electricians are kind of in the middle here in
the top ten and they'll be in the middle later.
So the lack of growth tells you, you know, that least the forecast be
it less is not for a lot of climate growth in the sector, obviously.
11:36
In fact, the, I think the only occupational group and it's not, I don't
think it's depicted here, which shows even a, any kind of increase there is a minor
increase for maintenance workers, which you know to some
extent could could
be based on some projection that line
operators are going to try and extend the
life of their equipment or something like that.
But that's one of the only occupational groups within
the, the coal mining sector that shows any growth.
All the rest are basically flat or down.
The other thing I think you can glean out of this is that if there's no juggling of
the order of the occupations that are employed here,
it tells you that the technology is probably pretty stable.
It's not like you know all of a sudden
there's a certain type of worker that's not used
a lot in this industry this industry that all of a sudden is going to be used a lot,
which would probably be some kind of indication that,
that those skills particularly valued which would mean maybe the
underlying technology of the industry is evolving and changing,
we don't see either of those things in the sector.
But those are a couple of the things that you could look at in the sector to kind of
get an idea or an understanding of where the coal,
the, the business of coal, is headed into the future.
[BLANK_AUDIO]