GM spending $760M to convert Toledo factory to make EV parts

GM converting for EVs

General Motors says it will spend $760 million to renovate its transmission factory in Toledo, Ohio, so it can build drive lines for electric vehicles.

It's the first GM engine or transmission plant to begin the long transition from internal combustion engines to electric vehicles. The company has a goal of making only electric passenger vehicles by 2035.

The move will keep the jobs of about 1,500 hourly and salaried workers at the Toledo plant, which now makes four transmissions used in pickup trucks and many other GM internal combustion vehicles. No new hiring is expected.

“This investment helps build job security for our Toledo team for years to come, and is the next step on our journey to an all-electric future,” Gerald Johnson, executive vice president of global manufacturing for GM, said in a statement Friday.

Electric drive lines take power from the batteries and convert it to motion at the wheels.

The 2.8 million-square-foot Toledo plant, built in 1956, will make drive lines for future electric trucks including the Chevrolet Silverado and GMC Sierra pickups, along with GMC Hummer EVs.

The announcement Friday at the plant is good news for the workers in Toledo, who have worried about the future of their plant. GM employs about 10,000 workers at engine and transmission factories across the U.S., and their futures are uncertain as the switch to electric vehicles picks up momentum.

“Of course there's always worry,” said Jeff King, shop chairman for the United Auto Workers union local at the plant. “I think it reflects on the workforce that we have here, the quality of product that we build.”

Most workers gathered for the announcement Friday were happy to hear details that their plant would live on.

“This is great news for our individual plant because we’re going to get a new product,” said worker Kim Hunter Jones of Adrian, Michigan. But she said she’s concerned about workers at other GM engine and transmission plants that don’t yet have assurances that they’ll build electric-vehicle components.

GM's Johnson, though, said the company wants to bring all of its employees along during the transition. “Our goal is to make sure everybody who is with General Motors today has an opportunity to move into the all-EV future,” he said.

Another worker, Patrice Harris of Toledo, said the announcement means she won't have to move from her hometown. Other GM workers have been forced to move when their plants closed or didn't get new products to make.

“It's a big deal for me because that means I still have work," she said. “I'm born and raised. I don't want to relocate.”

Johnson said he suspects the $760 million investment will qualify for some tax incentives in the Inflation Reduction Act, but said that hasn't been worked out yet.

GM says the factory will continue to make transmissions for internal combustion vehicles, as it gradually switches to electric drive lines. Work on the renovation will start this month, with EV component production beginning early in 2024, Johnson said.

GM CEO Mary Barra has pledged to unseat Tesla as the top seller of EVs by the middle of this decade.


Mortgage rates expected to remain high in B.C.: BCREA

Mortgage rates to stay high

A new mortgage rate forecast from the British Columbia Real Estate Association (BCREA) expects mortgage rates for British Columbians to stay high and potentially get higher by the end of the year.

The report, released Sept. 22, highlights the volatility in financial markets that occurred over the course of the third quarter. Findings show that bond yields were on a “rollercoaster” but mortgage rates remained flat.

In addition, the Canadian yield curve has inverted, which means that long-term interest rates, 10-year bond yields, are lower than short-term borrowing.

According to Brendon Ogmundson, chief economist with the BCREA, this indicates that the economy is going to slow.

“It has had some false positives, but generally, when the slope of the yield curve is negative it is taken as a sign of perhaps an impending recession,” Ogmundson said.

He says some key takeaways for Canadian homeowners are that they won’t see a lot of relief on mortgage rates in the coming year, and that there will remain a lot of uncertainty about the state of the economy in 2023.

Despite volatility in government bond yields, five-year fixed rates have remained relatively calm. They are currently at around 5.19 per cent with the expectation that they will rise to 5.3 per cent for the remainder of the year, “with the possibility of falling should recession fears amplify next year,” the report stated.

In the case of variable rates, the report said they are expected to increase to 5.55 per cent in the fourth quarter as the Bank of Canada continues its tightening cycle.

“A lot is pretty uncertain, except for I think, rates are going to be pretty high for a while. This is where the recession part comes in, that the bank has a very difficult problem ahead where it has to thread the needle of bringing inflation down to its two per cent target,” Ogmundson said.

“What the yield curve is telling us is that financial markets don't believe the Bank of Canada can pull that off.”

The BCREA report also notes that the unemployment rate in Canada has “ticked higher” in recent months.

“The Canadian labour market has shed about 115,000 jobs over the past three months, a potential sign the economy is slowing,” the report said.

This slowing will likely continue in interest rate-sensitive markets like housing as the Bank of Canada continues with tightening.

“How much further the bank will go and how long rates will stay above neutral depends entirely on the trajectory of inflation going forward,” the report said.

It is expected that the Bank of Canada will raise its policy rate one more time this year, and settle on a rate somewhere between 3.5 per cent and 3.75 per cent.

The question is whether the bank can engineer a soft landing back to two per cent. Ogmundson says that the Bank of Canada does not have the best track record and historically has not been able to get inflation down from high levels without a recession.

“There's a chance they could get inflation back to target without significantly damaging economic growth. It's just that the track record is not strong. So usually, it's taken a recession to bring inflation back down,” he said.

End to Monday print edition of nine papers by Postmedia an 'important moment': expert

Loss of editions 'important'

One expert at the intersection of journalism and policy says Postmedia Network Inc.'s decision to end the Monday print edition of nine of its urban daily newspapers next month is an "important moment" for news media in Canada.

Edward Greenspon, CEO of the Public Policy Forum, says it's "more breadcrumbs" about the lack of viability of physical newspapers in the long run, but hopes it does not signal a lack of viability of news itself.

The Vancouver Sun and the Province, Calgary Herald and Calgary Sun, Edmonton Journal and Edmonton Sun, Ottawa Citizen and Ottawa Sun and the Montreal Gazette will all be affected when the move takes effect on Oct. 17. Postmedia said no jobs will be cut in its announcement earlier this week.

EPaper versions of the affected newspapers – a digital replica of the print edition – will be published on Mondays and each outlet's websites will still be updated with stories and news content.

Postmedia said it is making the move as reader habits continue to change.

Greenspon notes that Monday has always been a weak day for newspaper revenue in general, adding that physical newspapers might eventually become a "luxury item" reserved for weekends.

Colette Brin, director of the Center of Media Studies, says 13 per cent of Canadians still read a daily newspaper in print format, down from 32 per cent in 2016, and three per cent of Canadians consider it their main source for news, down from seven per cent in 2016.

While physical newspapers have been disappearing for years, the COVID-19 pandemic added flame to the fire, with fewer people subscribing to daily print editions, fewer shops willing to sell them, and print and distribution costs no longer making sense, Brin explains.

"I find it sad because we don’t read news online with the same attention as a printed paper," she says.

Greenspon agrees that people tend to read newspapers differently compared with online news.

"Print newspapers offer you a hierarchy of stories and the ability just to scan. Some people think it offers more serendipity because most people read it page by page by page or at least they turn to a section and read it page by page by page," he says. 

"I find online that you run into serendipity as well, but it might be a different thing because it may be out of left field, it might be disinformation."

Greenspon says the loss could be quite difficult for the dwindling group of people, mostly skewing older, who rely on the Monday newspaper out of habit.

"A lot of people are not accustomed to eating cereal without having a newspaper. And for readers who've been doing it for a long time, it's a habit that maybe they've had for four, five, six decades," he says.

In a tweet posted Wednesday, Calgary Chamber of Commerce CEO Deborah Yedlin called it a "sad day." 

"Local newspapers serve a vital role in linking communities — and are important to our democracy. Forcing readers online is a way to entrench polarization as readers 'playlist' what they choose to read," the tweet said.

In July, Postmedia announced chairman Paul Godfrey would be stepping down from his role at the end of the year, with current board member Jamie Irving stepping into the job at the start of 2023.

And in February, the company reached a deal to purchase all of the daily and weekly newspapers owned by the Irving family for more than $16 million in cash and shares.


Temporary EI measures set to expire with no timeline for program reform

EI measures set to expire

Workers applying for employment insurance benefits will have to qualify based on pre-pandemic rules starting Sunday, when temporary measures are set to expire.

The Liberal government has pledged to reform EI and address gaps in the program, but temporary measures that were put in place during the pandemic will expire before any reform is implemented.

Labour advocates as well as NDP and Bloc Québécois members of Parliament have been calling on the federal government to extend the temporary measures, which expanded access to more workers.

During question period in the House of Commons on Wednesday, Bloc Québécois MP Louise Chabot asked Employment Minister Carla Qualtrough to extend the measures until a full reform of the program is implemented.

"The minister received a mandate to implement a full reform of EI this summer but she didn't do it," said Chabot. "Will the minister at least extend the temporary measures?"

In response, Qualtrough said the temporary changes made to EI were pandemic-related measures and were no longer necessary.

"I can assure (Chabot) and everyone that by the end of the year, you'll know what the vision for EI is," Qualtrough said.

Under the temporary measures, workers qualify for EI based on a national requirement of having 420 insurable employment hours, whereas workers would normally need between 420 and 700 hours depending on the regional unemployment rate.

Many experts support moving toward a national requirement and say variable requirements are unfair to workers who are laid off in a region with a low unemployment rate.

Additionally, under the temporary measures, pay received on separation from a job, such as severance, is not deducted from benefits.

On Thursday, the National Council of Unemployed Workers held a joint news conference with Chabot, NDP deputy leader Alexandre Boulerice and other labour leaders on Parliament Hill about the expiration of the measures.

Qualtrough met with the labour leaders on Thursday and promised to extend EI sickness benefits from 15 to 26 weeks by the end of the year, a change that was promised in the 2022 budget.

Milan Bernard, an organizational adviser with the National Council of Unemployed Workers, said Qualtrough expressed commitment to reforming EI but no timeline.

"We don't really know what's going to happen," said Bernard.

Experts and advocates say EI reform has been needed for years, however, it was the COVID-19 pandemic that magnified gaps in the program.

Faced with a major disruption to the economy at the onset of the pandemic, EI couldn’t deliver benefits to the staggering number of people who suddenly found themselves out of work as lockdowns came into place.

In a report published in August 2020, Jennifer Robson, a Carleton University associate professor of political management, found EI failed to cover enough Canadians while also failing on the administrative and technological front.

The shortcomings led the federal government to introduce the Canada Emergency Response Benefit to provide quick relief to Canadians.

In 2021, the Liberals campaigned on a promise to modernize EI and pledged to expand the program to cover self-employed workers and address gaps, including those highlighted by the COVID-19.

Qualtrough's mandate letter from Prime Minister Justin Trudeau asked the minister to "bring forward and begin implementing a plan to modernize the EI system for the 21st century" by summer 2022.

Employment and Social Development Canada concluded its last round of public consultations on EI reform in July. However, there are no details about when legislation on EI reform will be presented.

The list of complaints about the current structure of the program is a long one, from eligibility requirements to financing to administrative technology.

A central concern of labour advocates and experts is that too few can access the program.

According to a Statistics Canada report published in 1998, the proportion of unemployed Canadians receiving EI benefits peaked at 74 per cent in 1989. That number sharply declined in the years after, partly because of reforms made to the program in the 1990s.

While the temporary changes expanded access to EI, before the pandemic, about 40 per cent of unemployed Canadians received employment insurance.

Unifor president Lana Payne, who has been advocating for the temporary measures to be extended, said "we can't go back to a broken system."

"(If) we revert back to pre-COVID requirements, you're going to have a lot of people who potentially will fall through the cracks," said Payne.

July travel on upward trend, but still fraction of pre-pandemic levels

Travel on upward trend

Statistics Canada says the number of Canada's international arrivals increased in July but has yet to recover to pre-pandemic levels.

The agency says the number of trips by U.S. residents in July was 2.2 million, 11 times the number of trips taken in July 2021 but still about 60 per cent of the trips reported in July 2019.

Residents from countries other than Canada and the U.S. made 10 times more trips to Canada in July 2022 compared with July 2021 but remains half of the number of international travellers in 2019.

Statistics Canada says Canadians made about six times more trips than a year earlier. Like U.S. visitors, however, that number was still below July 2019 levels, with about 64 per cent of that month's volume.

The figures include the period when random mandatory COVID-19 testing for fully vaccinated travellers paused in June before resuming later in July for travellers arriving in Canada by air to the four major airports.

As air travel in July increased, labour shortages contributed to flight cancellations, long security queues and lost luggage, impacting major airports says the agency.

Federal government posts $6.3B surplus for April-to-July period

Feds post $6.3B surplus

The federal government posted a surplus of $6.3 billion for the first four months of its 2022-23 fiscal year.

The Finance Department says the result for the April-to-July period compared with deficit of $47.3 billion in the same stretch a year earlier.

In its monthly fiscal monitor, the government says revenue for the fiscal year so far totalled $143.1 billion, up from $118.5 billion a year ago.

Program expenses, excluding net actuarial losses, were nearly $122.2 billion for the fiscal year so far down from $152.9 billion during the same period a year earlier.

Public debt charges rose to $11.2 billion for the period, up from $7.8 billion.

Net actuarial losses totalled $3.4 billion for the period, down from $5.1 billion a year earlier.

S&P/TSX composite down nearly 500 points in early trading, oil below US$80 a barrel

TSX plunges 400+ points

Canada's main stock index was down nearly 500 points in early trading as the price of oil fell below US$80 a barrel and U.S. stock markets also fell deep into the red.

The S&P/TSX composite index was down 479.71 points at 18,522.97.

In New York, the Dow Jones industrial average was down 375.12 points at 29,701.56. The S&P 500 index was down 61.51 points at 3,696.48, while the Nasdaq composite was down 197.31 points at 10,869.50.

The Canadian dollar traded for 73.73 cents US compared with 74.18 cents US on Thursday.

The November crude contract was down US$4.21 at US$79.28 per barrel and the November natural gas contract was down 30 cents at US$6.90 per mmBTU.

The December gold contract was down US$24.40 at US$1,656.70 an ounce and the December copper contract was down 12 cents at US$3.35 a pound.

Statistics Canada says retail sales fell 2.5% to $61.3 billion in July

Retail sales fall 2.5%

Statistics Canada says retail sales fell 2.5 per cent to $61.3 billion in July, the first drop in seven months as sales at gasoline stations and clothing and clothing accessories stores decreased.

However, the agency says its initial estimate for August pointed to a gain of 0.4 per cent for the month, but noted the figure will be revised.

Statistics Canada says the July sales were down in nine of the 11 subsectors it tracks, representing 94.5 per cent of retail trade.

Sales at gasoline stations fell 14.2 per cent for the month as gasoline prices fell 9.2 per cent and sales at gasoline stations in volume terms decreased 7.0 per cent. Sales at clothing and clothing accessories stores dropped 3.3 per cent.

Core retail sales — which exclude gasoline stations and motor vehicle and parts dealers — fell 0.9 per cent.

In volume terms, retail sales fell 2.0 per cent in July.

Dye & Durham walks away from proposed deal to buy Australian company Link Group

Walks away from Link deal

Dye & Durham Ltd. says it has called off its proposed acquisition of Australian company Link Administration Holdings Ltd.

Dye & Durham CEO Matthew Proud says the company is disappointed after the significant time and resources it invested in the deal.

Questions about the future of the deal were raised earlier this week after a U.K. regulator assessed a 50-million-pound penalty against Link Group in addition to a potential restitution payment of up to about 306 million pounds.

Toronto-based Dye & Durham said the draft notice from the U.K. Financial Conduct Authority (FCA) triggered a condition in its takeover agreement.

It had sought to revise its takeover agreement after the FCA said it would not approve the deal unless it covered any shortfall, up to a maximum of 306 pounds million, related to any payments the FCA might levy in its probe into the collapse of a fund that was managed by Link Fund Solutions Ltd.

However, Link Group rejected the proposed changes to its agreement with Dye & Durham.

UK slashes personal, corporate taxes in bid to spur growth

UK slashes taxes

Britain’s new government on Friday announced a sweeping plan of tax cuts it said would be funded by borrowing and revenues generated by anticipated growth, as part of contentious moves to combat the cost-of-living crisis and bolster a faltering economy.

But Treasury chief Kwasi Kwarteng offered few details on the cost of the program and its impact on the government’s own targets for reducing deficits and borrowing. The government’s two-pronged approach offers short-term help for homes and businesses struggling with soaring energy costs while betting that lower taxes and reduced red tape will spur economic growth and increase tax revenues in coming years.

“We need a new approach for a new era, focused on growth,” Kwarteng told lawmakers in the House of Commons.

Friday’s statement was billed as a “fiscal event” rather than a budget, because it wasn't accompanied by an analysis of its cost from the independent Office for Budget Responsibility. Opponents said the government was dodging scrutiny.

The plan was immediately attacked by the opposition Labour Party for favoring the interests of business over working people and failing to provide any analysis about the impact on the government’s fiscal targets.

“It is a budget without figures, a menu without prices,’’ said Rachel Reeves, Labour’s spokeswoman on Treasury issues. “What has the chancellor got to hide?”

Many economists have expressed concern that the government’s policies will lead to a sharp increase in borrowing, undermining confidence in the British economy. The pound on Friday fell below $1.12 for the first time since March 1985.

The program announced Friday reverses many of the initiatives announced by former Prime Minister Boris Johnson, another Conservative. The center-right party has led Britain for the last 12 years.

For example, Kwarteng annouced that he was reversing a hike in national insurance taxes introduced by Johnson’s government in May to boost spending on health and social care. Kwarteng said the government would maintain expected funding for the National Health Service — but he didn’t say how.

He also said the government would cut the basic rate of income tax to 19% next year, from the current 20%. The top rate will drop to 40% from 45%. He also canceled a planned six percentage point increase in the corporate tax rate, leaving it at 19%.

“This was the biggest tax-cutting event since 1972, it is not very mini,” said Paul Johnson, director of the Institute for Fiscal Studies, an independent think-tank that scrutinizes government spending. “It is half a century since we have seen tax cuts announced on this scale.”

The announcement comes just three weeks after Prime Minister Liz Truss took office. She has said the Conservative government’s core mission is lowering taxes to drive economic growth and declared this week that she was ready to make “unpopular decisions” such as removing a cap on bankers’ bonuses to attract jobs and investment.

The plan runs counter to the view of many Conservatives that governments shouldn't rack up huge debts that taxpayers will eventually have to pay.

Reeves criticized the government for expecting taxpayers to foot the bill for its initiatives, rather than increasing a tax on the windfall profits of energy producers benefiting from soaring prices for oil and natural gas.

A cost-of-living crisis driven by steeply climbing energy costs and slowing economic growth are the biggest challenges Truss faces.

Inflation stands at 9.9%, near the highest Britain has seen since the 1980s, and is predicted to peak at 11% in October.

The government denied it was gambling the economy on a “dash for growth,” but many economists said it was taking a huge risk by allowing borrowing to balloon while the economy is weak and inflation is high.

The Bank of England said Thursday that the U.K. may already be in recession, defined as two consecutive quarters of economic contraction. It expects gross domestic product to fall by 0.1% in the third quarter, below its August projection of 0.4% growth. That would be a second quarterly decline after official estimates showed output fell by 0.1% in the previous three-month period.

In the past two weeks, the government has announced th at the government would cap gas and electricity bills for households and businesses, amid fears that the poorest won’t be able to afford to heat their homes and companies will go bust this winter. Kwarteng said this initiative would be funded by borrowing.

Kwarteng also announced new “investment zones” across England where the government will offer tax cuts for businesses and help create jobs. He will also give details on how the government aims to accelerate dozens of major new infrastructure projects, including in transportation and energy.

Truss — who is inspired by Margaret Thatcher’s small state, free market economics — has insisted that growing the economy and tax cuts for businesses will benefit everyone in the country.

But critics say Truss’s right-wing instincts are the wrong response to the U.K. economic crisis.

Revamped Detroit auto show now also features new flying tech

Auto show roars, soars

The Detroit auto show has returned after a three-year absence with a roar. And a soar.

Visitors to the prestigious North American International Auto Show, which kicked off last week, can lay eyes on the latest offerings from some of the world's biggest automakers, as they've been able to in years past.

But this time around, they also can check out what organizers are calling “the show above the show.”

The Air Mobility Experience features displays and demonstrations from six air mobility innovators — representing five countries — that include electric vertical takeoff and landing aircraft, a hoverbike, a hoverboard and a jet suit.

“Feels like the future,” said John George, chief creative officer of the Air Mobility Experience. “We've all asked this question — I know I have, since I was a kid: ‘When was that future going to arrive?’”

“And the answer is: ‘Now,’” he said.

Show-goers can see some air mobility conveyances on display on the show floor, while others have been visible in the skies above the city.

That includes the ICON A5, a two-seat, amphibious, light-sport aircraft with retractable wings that enable owners to haul it in a trailer behind a truck, SUV or other vehicle.

Pilots from Vacaville, California-based ICON Aircraft provided demonstration flights along the Detroit River that featured landings on the waterway that separates Detroit and Windsor, Ontario.

“The reaction (of passengers) landing on the water is always my favorite," said Suzanne Clavette, ICON's marketing manager and a pilot who flew some of the A5 demo flights that passed by the downtown Huntington Place convention center that hosts the auto show.

NAIAS last was held in January 2019. It returned last week on a smaller scale with fewer new model debuts and journalists, and less-glitzy displays.

But hosting the show in September has allowed carmakers — including Ford Motor Co., which debuted the new Mustang at downtown's Hart Plaza — and the air mobility companies to make use of the great outdoors.

“Honestly, I think this is the future of shows. It's no longer just an auto show. It's a mobility show, which gives you a glimpse of all of those vehicle types, including the ones that fly," George said.

The show runs through Sunday.

How long can coal’s renaissance last?

Will coal's renaissance last?

Over the last year and a half, the renaissance of coal – both kinds – has been gobsmacking.

No one saw coal prices of US$400 to US$600 per tonne coming, including those in the coal industry.

“If, a year ago, fifteen months ago, you had said to people thermal coal could be $440, and coking coal could be $600, they’d call the ambulance and recommend a nice doctor,” Neil Bristow, managing director of H&W worldwide Consulting, said Thursday at day two of a three-day Coal Association of Canada conference.” Who would believe it?”

While Russia’s invasion of Ukraine has roiled energy markets and driven up coal prices, the reality is that thermal coal prices had been surging months before the invasion, as Europe was already in a self-induced energy shortage and resorting back to coal power.

Five or six years ago, thermal coal sold for about US$60 to US$80 per tonne, Bristow said. Even before Russia invaded Ukraine, thermal coal prices had soared to around US$200 per tonne.

“The fundamentals that caused those prices to increase in Q3 and Q4 of 2021 are still there, and they’ve only been exacerbated by the sanctions on Russian coal,” said Ernie Thrasher, CEO of Xcoal Energy and Resources.

Never in Bristow's lifetime has he seen thermal coal (burned to produce power) worth more than metallurgical coal, which is used to make steel, but it is now.

Metallurgical coal (also called coking or steelmaking coal) briefly touched US$600 per tonne, Bristow said, but has since settled down to about US$270 per tonne. That’s still a high price, but less than thermal coal at the moment, which is well above US$300 per tonne.

The usual market forces of supply and demand that would normally see producers responding to high prices with increased production simply isn't happening with coal.

In the U.S., the coal mining industry is half the size it was a couple of decades ago, and simply can’t suddenly reverse coarse. Australia’s coal production peaked in 2016 and it seems unlikely it can respond to the sudden demand for thermal coal either. B.C. is a major producer and exporter of metallurgical coal, but Canada exports little if any thermal coal.

Xcoal estimates the UK and Europe alone will need to find 47 million tonnes of coal that used to come from Russia. It’s unlikely to come from the U.S.

“There’s just not much the U.S. can do,” Thrasher said. “We’ve basically dismembered our coal industry."

Even if American coal mines could increase production, there is limited coal terminal capacity for exports, which is why coal produced in Montana and Wyoming is shipped through B.C. export terminals. And right now, one of those terminals -- Westshore -- has been paralyzed by a strike.

“There is just no elasticity in the supply chain that’s allowing people to respond to these prices, and the old adage of the best thing for high prices is high prices is not holding true," Thrasher said.

In total, Xcoal estimates the global coal supply gap at 96 million tonnes.

“These high coal prices are occurring at a time when the Chinese economy is just dead flat on its back,” Thrasher added. If China’s economy were to suddenly recover and grow, that would put even more pressure on both thermal and coking coal prices.

“Who can supply 96 million tonnes to fill that gap?" Thrasher wondered. "It’s probably only China and India. There’s just not a lot of other countries in the world where there’s the ability to produce the coal that needs to fill this gap.”

As for steelmaking coal, which is B.C.'s second most valuable export, a global recession might cool demand and temper prices somewhat. But Bristow predicts prices will remain high over the next few years, as there simply not enough new metallurgical coal mines being built.

“My models do not show enough coking coal to meet the demand in the world after about 2027, 2028,” Bristow said. “We desperately need new mines.”

“I’m going to be bold and say it will not stay $400 or $500 a tonne for very long,” Thrasher said of coking coal prices. “But I think the days of seeing sub-125, 150 dollars per metric tonne of coking coal for any period of time are in the rear-view mirror, and it’s because the coal simply is not being produced.”

Thrasher said he can envision stagflation resulting from the shortage of coal, if there is a global recession.

“If we get into a major global economic slowdown, it certainly is going to put a damper on our products,” Thrasher said. “The question is, if you go back and look at those supply shortfalls, will a 5% global economic slowdown be enough to solve the problem if you’re 10% short in energy supply? You basically have a stagflation environment where the global economy is crashing but you still need energy and the energy prices stay high.

“It will affect thermal more than coking coal. It could be something we haven’t seen in 40 or 50 years.”

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