Economic Impact of Coal Industry

NOTES ABOUT IMPACT (ANALYSIS) MODEL The following observations should be noted about the model that has been used for conducting the analysis in this study. • The Input-Output model used for this study deals with readily available quantifiable impacts such as dollars of . spending or employment. The model does not consider social costs or benefits of economic activities. • The model used is a static process that does not take into effect changes over time in a dynamic economy. This suggests that the relationships between economic sectors are fixed, as of the date of the model’s underlying data base, and does not account for adjustments that may take place over time. • The model assumes that the relationship between changes in demand for products and services and the resulting changes in income and employment are linear. That is, it does not consider the changes in productivity over time. • The model assumes that a response to any incremental changes in demand for goods and services is at the aver age rather than the marginal rate. • Finally, the model does not take into consideration the additional capital expenditures required to support indirect and induced effects on the local economy. DIRECT DATA Direct data for conducting this study was collected from the primary sources and through conducting a survey of the Alabama Coal Association membership. More specifically, direct production and employment figures for fiscal year 2018 were collected from “The Annual Report Statistical Supplement of the Department of Labor, Mining and Reclamation Division, Mine Safety and Inspection Section, FY 2018, State of Alabama”. Based on this report and as reported in Table 1, in 2018, there were six active met coal and 15 active thermal coal mines in Alabama. These mines produced 13.5 million tons of coal and employed 2,578 FTE employees. Met coal accounted for 11 million tons or for 82% of the production and the thermal coal production totaled 2.5 million tons or 18% of the total production. The dollar value of met coal and thermal coal productions are estimated at $2 billion and $190 million, respectively, in 2018. The total dollar value of production is estimated at approximately $2.22 billion which constitutes about 1% of Alabama’s total Gross Domestic Product (GDP). In terms of FTE employment, met coal was responsible for 80% of the employment and the remaining 20% were employed in thermal coal mining activities. Table 1: Total Mining Production and Employment, Fiscal Year 2018 Year Employment Production in Tons Underground 2018 2,050 11,033,902 Surface 2018 528 2,453,276 It is important to note that the figures presented in Table 1 account for direct aggregate coal mining production and employment only and do not include any detailed spending or any information regarding industries that directly support production or transportation of coal in Alabama. In order to obtain this information, we conducted a survey of the members of the Alabama Coal Association and their affiliated (supporting) firms. The results are reported in Tables 2 through 11. ECONOMIC IMPACT OF THE COAL INDUSTRY ON THE STATE OF ALABAMA 13