The Power Hungry Podcast

Joe Craft: President and CEO of Alliance Resource Partners

January 25, 2022 Robert Bryce & Joe Kraft Season 1 Episode 89
The Power Hungry Podcast
Joe Craft: President and CEO of Alliance Resource Partners
Show Notes Transcript

Joe Craft is the CEO of Tulsa-based Alliance Resource Partners, the second-largest coal producer in the eastern United States. In this episode, he talks about why coal demand in the US and Europe has rebounded, how the pressure on banks to conform with ESG rules is affecting his company’s access to capital, his philanthropic efforts, and why we “can’t take energy for granted.”

Robert Bryce 0:04 
Hi, everyone, welcome to the power hungry Podcast. I'm Robert Bryce. I'm pleased to be joined today by my friend who haven't seen a long time Joe craft. He is the president and CEO of Alliance resource partners LP, they are the second largest coal miner in the Eastern US, Joe, welcome to the power hungry podcast.

Joe Kraft 0:22 
Great to see you again.

Robert Bryce 0:24 
Now, I didn't warn you, but I have my guests introduce themselves. So imagine you just arrived somewhere you don't know anyone. And you have say, Oh, I don't know, 30 or 60 seconds to introduce yourself, please do so.

Joe Kraft 0:35 
Okay. Well, as Robert said, I'm the current CEO for Alliance resource partners, which is a publicly traded energy company on the NASDAQ. We've been public company since 1999. Our corporate headquarters is in Tulsa, Oklahoma. We also have an operating headquarters in Lexington, Kentucky, been the founder of the company when it went public in 1999. We were previously part of Mapco Inc. and Tulsa, Oklahoma, I joined them in 1980 spent a long time, our company today we're primarily in the coal business. But we're also in the oil and gas business. In 2014, we began buying oil and gas minerals, in which we lease to EMP companies. So we do have a growing segment. So we continue to invest in that on an annual basis anywhere from 50 to $100 million a year. So we've got a sizable amount of oil and gas reserves that we lease. And so we're both in the coal business as well as the oil and gas business. So all hydrocarbons. Yeah, that's where we are today. But everybody in fossil fuel business also has a transition arm, trying to look for opportunities in the transition, to see what we can do to continue to provide product services to our customers that we've had for 40 years. So for our utility customers, if they want to transition to something other than coal, we're telling them, we're not just a coal company, we've got a lot of resources, people access capital, and relationships, that there's no reason why whatever fuel you choose, or whatever process you want to invest in to provide low cost energy to your customers. That's what we're here to provide. And on the oil and gas side, the same thing. I mean, if electric vehicles are going to be a growth area, then why not participate with our consumers for our products. So if we had the auto sector, primarily using our products, or the old business, then why not continue to partner with them, to try to help them provide whatever the customers are, are desiring. So we're in business to to provide low cost energy, and to try to make America as competitive in a global economy as possible.

Robert Bryce 3:15 
And tell me your annual revenues, what your what your run rate will be then in 2021, God no that,

Joe Kraft 3:20 
let's see, let me just look that up. I just got these numbers. Again. So we're right at $1.4 billion would be our revenue revenue this year. Gotcha. 20.1.

Robert Bryce 3:36 
So now I've had someone I think, you know, to call analysts, John Hannah camp on the on the podcast, talk to different people around the coal business. But coal has had a big resurgence lately. Just publishing a piece that last year in the US coal consumption was up 17%, which is a remarkable increase. So tell me what's going on. If you you know, a couple years ago, coal was out of fashion, nobody wanted to talk about coal. And yet coal use last year in the US was up 17%. Utilities in Europe, utilities and in India, China are all scrambling to get coal, coal prices are up what's going on?

Joe Kraft 4:13 
There's two things primarily, Robert one, you know, we're coming off of a very disruptive year 2020 with the virus with COVID. A lot of governments were shutting down their economy. And as a result, energy demand, you know, fell off quite precipitously in early 2020. Coal was impacted just as much as other sectors. And as a result, when you're comparing 21 numbers to 2020 numbers, you have to factor in we lost about one quarter production in 20 that we were able to when we got back to running in mid year 2020. We had a run rate that allowed for some of that growth. The other major factor are natural gas prices. Natural gas prices have grown significantly year over year in the international markets especially, right but even in our domestic markets. So we've seen natural gas double 21 in 2021 versus 2020. In for our primary customer, which is the electric utility industry, if you get $4 gas, then the economics favor coal over natural gas in, in providing power for their customer base is that

Robert Bryce 5:31 
$4 Number is that is that the real the dividing line then above four is

Joe Kraft 5:36 
different for each region. It's different for each region. And it depends on transportation. So there are some areas of the country if if gas is 250, coal can compete efficiently. There's some areas where you need a little higher gas price for coal to compete. So there's various factors. We're an Eastern co producer. So when I've talked to you I'm looking in more on the eastern markets, whether Eastern Mississippi, right, so our primary competitor is natural gas. Renewables are not as prevalent in the eastern United States as they are in the western United States. So sometimes people can get tripped up with national numbers. So a lot of my thought process really revolves around our primary markets, which are the eastern United States and Sure. $3 natural gas price, coal can be competitive for our cost structure and the markets that we target. So we will see more growth in demand with gas prices $3 and higher.

Robert Bryce 6:43 
So then you're expecting a good year in 2022, then if that because gas is firmly above three now?

Joe Kraft 6:49 
Yes, we are. And what we found, I think coal would have been even better in 2021, had the utilities communicated earlier, that they would be buying more tons that they would have more demand, or our product? They did, you know, for whatever reason, they were projecting lower natural gas prices, I guess. And they did not come to the producers and say, we need you to produce more times and until it's too late. So this past quarter, the fourth quarter of 2021, we saw many of our customers that even though coal was more competitive, they were buying natural gas, because they just could not get the supply because we as an industry had anticipated a certain production level based on what they said their needs were. And we just can't turn on a dime, especially in a country that for whatever reason is very short labor. So anybody and everybody in the manufacturing sector, we're having hard time finding people. So people is the primary constraint. For

Robert Bryce 7:59 
how many? How many workers? Are you sure, Joe? Cuz I've heard this. I've traveled all over the country the last few months. And I've heard this in Arkansas. I've heard it in, in Pennsylvania, how many? How many more people could you put to work if you had them right now?

Joe Kraft 8:11 
Well, if you look at our capacity, so we produce right at 32 Point 2 million tons in 2021. In 2020, we were right at 27 million times, I think. So we shot saw that much growth. If we could hire the people, we have enough capacity that we could produce 36 million tons on an annual basis without adding any new major capital to expand or other operations. So

Robert Bryce 8:42 
So you're right your footprint right now. So you could go up and almost another 20% Somebody 15 20%, that's a big

Joe Kraft 8:48 
run rate, I run re the last two quarters, is right at a 34 million tonne run rate. And so what I said on my last earnings call and is still consistent 21 to 22, we think will be six to 12% growth. And that would take if we go to the 12% that would take us close to that 36 million tonne threshold to where we would be at full capacity.

Robert Bryce 9:14 
So So you're back to your labor shortage show is that mainly people were willing to work underground? Is that the miners? Is that the above ground?

Joe Kraft 9:21 
No, who isn't? Well, it would be the coal miners. Yes. And we are all underground. So it would be underground coal miners. But the key is we need to have utilities or the market signal to us that they want us to be a reliable supplier for multiple years. Right? We don't want to just go out and hire people for a quarter. Right? I gotcha goes it's hard to recruit somebody unless you're offering them some job security and job stability. They're not going to want to come and work with you just for two or three months. So we're constantly asked Getting our domestic utilities to give us some long term contracts. So we can give our lenders certainty and we can give our employees certainty that they've got a long term future. And that we've got the resources to give them a career like for the last 40 years, we've done with all the news. Sometimes you have to break through that soundbite of the day to let people know that you like you said a few minutes ago, you know, two years ago, nobody wants to talk about us. But the reality is, America needs coal for the next 20 years. Because we're the lowest cost provider of fuel to the electric utility industry, we got power plants that were designed to last that long, they've already been paid for, or are being paid for by their customers, the cost are sunk. So there's no question that you take politics out of out of the decision making process, that coal is the cheapest source for consumer and for the ability for our industrial manufacture manufacturers to compete in a global economy.

Robert Bryce 11:17 
Well, let's talk about the politics here, because and full disclosure. So Joe helped me get into the cardinal mine, which is in southern Illinois, is that correct? Western Kentucky, Western Kentucky, forgive me, that was in 2009, so 1213 years ago, and that, that vignette, that visit to the cardinal mine became the introduction to my book power hungry, which came out in 2010. So I don't know this is quid pro quo, if it is taken a long time to make it happen. But you helped me understand the coal mining business in a different way by going underground. I'd seen above ground mines. But there's a long intro or sidebar, is there a war on coal? And if so, who's who's who's waging war? Who are the people that are that are that are the ones leading the charge against the coal industry?

Joe Kraft 12:02 
Now, the Democratic platform essentially has set climate targets climate emission targets as a co2 Ishee. And coal has been targeted as the easy pickings, if you will, that if we could reduce the COLAs, emissions, then it will show the rest of the world we're doing something to address climate change. And so that's started under the Obama administration. Under President Trump, he reversed some of those judgments is an example he got out of the Paris Climate Accord, then you come back and Biden wins. And the very first thing he wants to do is make a statement, a political statement, to reverse Trump's decision on the Keystone pipeline. And then there were multiple other things like getting back into the Paris accord, you know, participating in the cop 26, that was the the climate meeting they had global right climate meeting they had earlier this year in Alaska, in Glasgow and John Kerry traveling the world and trying to convince China, which is the major emitter of fossil fuels to join in the effort. Because the truth is, you could shut down every coal plant in America, it will not matter. If you're really focused on science, if you're focused on making a difference. We are at a level and with the technology we have we are we do have efficient power plants that you could shut us all down. And it does not matter in making a difference in co2 co2 emissions around the world. China and India are the primary culprits today. And that's really where our focus should be. But unfortunately, the Democratic Party as decided that the easiest thing for them to do to to suggest to their political base that they're doing something is to try to shut down more coal, coal fired power plants. So they're the the primary source.

Robert Bryce 14:15 
But who's driving the Democrats? I mean, who's their base? I mean, who are they trying to please? Is it environmental groups? I mean, it name names here, who's who you think is really driving the campaign? Yeah,

Joe Kraft 14:25 
Tom Steyer. You know, Tom Steyer was one that started the drumbeat you got Michael Bloomberg is another one that has invested a lot of money into the Sierra Club. You've got the Sierra Club and other political, other environmental groups that, again, it's in large part, in my view, more of a money grab than it is really an environmental effort. But I'm not saying I'm not denying that there's not climate change. But I think that there's more efficient ways that we could address the issue. as opposed to having disruption and having energy crisis having fuel shortages that we have right now, there's no reason in my mind why oil, gas, and coal has to be trading at the prices. It's trading today, if we had good government policy, on energy, but when you say to lenders, or you say to customers, I don't want you to consume oil, gas or coal, then guess what they don't. And then when all of a sudden there's an energy sorted, the wind doesn't blow as much, and Sun doesn't shine, or all sudden, there's a demand increase, or something else happens and gasoline prices start going high, then you have the president United States goes to Saudi Arabia to ask for them to increase production, but they won't go to our own producers here in the United States to create us jobs, to create lower cost oil, why pay the transportation coming? For the Middle East? I mean, those are political statements. That's not good energy policy, and truly is not good environmental policy. When you think about the total footprint of transporting oil, from Saudi Arabia to America, as opposed to using our own oil right here in our own country.

Robert Bryce 16:17 
So you said that you use the word money grab before so what's, who's the money grab? What's the where's the money going?

Joe Kraft 16:22 
Well, I think that the utility sector, the power sector, the the auto sector, I mean, those are markets that have been dominated by low cost energy previously by the market, not by policy interference to try to take that market away. So when you look at the size of our, of the fossil fuel markets, if you have the non-fossil people want to take that market away from you, they haven't been able to compete on price. So they've had to do it through public policy. And to try to take markets away by mandates, as opposed by competing and or giving significant taxpayer incentives, I subsidies to the wind and the solar business, to and or to the EDS markets, and to try to encourage the auto sector to build electric vehicles instead of so there's, there's a lot of money that people are investing in ESG movement. And when you look at the stock market and the ESG funds, and look at their gains year over year, because people are gravitating to quote the growth, this being mandated more by public policy than it is by CUSP consumer demand.

Robert Bryce 17:45 
Right? And so, so let me ask you about that because the ESG movement is gaining momentum. Has any of this affected you and you mentioned your lenders before Are you are you still have access to capital of your of your banks started talking about ESG or cutting off your credit lines, what's what's this

Joe Kraft 18:02 
we had banks leave our revolver. So we your revolving,

Robert Bryce 18:07 
revolving credit facility that you have to borrow money to meet your payroll and so on is which,

Joe Kraft 18:14 
for our working capital needs and or for temporary acquisitions, that we would then put permanent financing around. So we've had half of our banks decide, tell us that they're not going to be renewing, when we go to renew our revolver in 2023. They are saying don't count on us being there. Because of ESG purposes, only our balance sheet is pristine. We've got debt to EBIT da of less than one. So we're generating enough cash flow on an annual basis to pay what debt off we have. And yet, we've got a very strong credit,

Robert Bryce 18:57 
but the banks, but the banks are telling you go somewhere else,

Joe Kraft 19:00 
you know, banks are basically saying because of ESG purposes, we decided not to reduce our exposure to the coal industry and or just to not invest in order to lend to the NGO industry. And you so

Robert Bryce 19:14 
having so you said half of your bank. So how many banks is that? How many would be then be checking? Oh,

Joe Kraft 19:19 
we'd have around 12 point we have about 15 banks today. And so we're counting on probably having seven or eight or and we're going to try to recruit some others to replace some of the others. So hopefully, we will still have 12 or 15. But we're having to go market ourselves to other financial institutions that historically we did not need to do that. Because we had banks that had been in our bank group for years. I mean, 20 3040 years that have made this decision.

Robert Bryce 19:55 
And they don't measure from right from ESG. So well. No, well, you know, My brother, Wally and Tulsa, you know, I love my brother, great. He's done really well for himself a great. He's just a remarkable businessman. He and I were talking about this, I called him last night. I said, Well, you know, I'm talking to Joe craft. And he's I said, What would you ask him? And he said, Well, how does it feel to be in this industry? Where you don't you're not getting much love here craft? I mean, I would say that, in many cases, you're even loathed by, you know, kind of this the you know, compared to the wind business, is that you take any of this personally, how does this affect you in terms of, you know, you have these bankers you've dealt with for a long time, and they're suddenly telling you go somewhere else? How does that feel?

Joe Kraft 20:37 
Well, I mean, all I can do is educate. I mean, I'm a strong believer that what we do, is adding significantly to the benefits of our country. And to our people. Yeah, I don't know if you've had Alex Epstein. On your show. I had Alex says it very well, in part of our challenge in the environmental arena, and talking about climate is and fossil fuels, because he's written a bit of a book on I love fossil fuels, is the the the folks that want to give that makes us the bill. And if you will, like you were saying, when you get all these inbound, calls it you know, we don't need coal anymore. You know, they're only looking at part of the equation. They're not looking at the benefits, right? So he says, He gives an example that, you know, when your doctor prescribes a medication, and you got an illness, and he also now here's some of the side effects of you taking this drug. But here are the benefits of taking this drug. And you typically make the decision, I'm going to take it because the benefits far exceed outweigh Sure. The side effects. And unfortunately, we don't have that same dial when it comes to coal consumption, low cost energy, fossil fuels, whether it's autos and or the power sector, or so you need to, you know, there are people out there, they're telling the truth, you know, like Coonan, and Rio and LOMBORG. And these are people that are scientists that are really trying to think in terms of what is what should the priorities be for a global society, so that you can have the benefits of lifting people from poverty around the world, when you look at how coal has been utilized in India and China, just look at the massive improvement in the quality of life for hundreds of millions, if not billions of people in our world, because of fossil fuels. Here in America, you know, we've had the same value in the same benefit. So our customers, as I mentioned earlier, they've got power plants, they've invested in all the latest environmental emissions compliance investments, they're willing to invest more if society would allow them to, because they know that what they're doing is providing power is the lowest possible cost and the most reliable and resilient power that money can buy, or that, you know, you got nuclear, and you got coal. And you've got those two things that can provide low cost, reliable, resilient power demand, which we would love to have in all times where you can always just turn your switch and you know, you got and you got that power, and you don't have the disruptions, like you experienced last year in Texas we didn't like Europe is experiencing this year, because the wind speed in Europe is about a third of what they were expecting. And all of a sudden, they get caught thinking they can rely on these unreliable, and then they don't have the backup. And then you've got the geopolitical in Europe with Russia, building the pipeline, and are they going to hold back the gas they not. And there's a lot of factors that go into the energy space. What you're trying to do while I'm on the show right now is we're just educating people that you can't take energy for granted. And you're going to wake up and once you shut down a power plant, you just can't bring it back. Right. It's just an indoor you get public policy that encourages people to shut down power plants that are fully funded, working fine energy, environmentally compliant. And if you say to the power company that will let you shut that down, build a new one, and will allow you to get a return on the old one plus the new one but generate less power because you just shut down one plant. You got a lot more cost cost going to our consumers going to our industrial base, that's not good for America. We should not be doing that. So I think the advocate for low cost energy, I'm a strong advocate for creating jobs. I'm strong advocate for America having responsibility for itself. And not be depending on folks that may or may not really care about our future like we should be caring is responsible adults, for each other to make America, the leader of the free world. That's what my experience with my wife at the UN, most countries want America to be strong. They want us to be

to have the financial resources to be able to be a world leader, and to provide freedom. For those countries that value freedom. They want America to be strong. And the only way we can be strong in my view, is to be energy independent. We have to be energy dependent. We can't be dependent on other nations. Otherwise, they don't share the same goals for freedom. I'm sure Americans did.

Robert Bryce 26:01 
Well, let me just touch on one thing that you said I think is really important. And there's resilience and reliability issues because that's clearly the the problem in Europe now. And you're right. I mean, I've looked at as ever since winter storm Yuri February 15. Last year to a Mr. Lights Went out and stayed out for two days, but which were the plants in Texas in particular that were the most resilient during the during the blackouts was the coal and nuclear plants to your point. So you mentioned your wife, Kelly craft, who became a US Ambassador to the UN. You were close to Trump. President Trump. Are you still close to him was What are you in touch with him? I mean, he was a great advocate for the coal industry, maybe the strongest coal advocate for any president in modern history. You know, he was derided by a lot of people. He wasn't popular. You know, I have my issues with him. What was that like?

Joe Kraft 26:51 
Well, I think I think America is in a better place because of Donald Trump. I think his policies were what America needed. And it not been for COVID. We had the strongest economy we had had in decades. We had quality of life for our workers, our industrial, our coal miners love Donald Trump, they still love Donald Trump, because they know Donald Trump cared about them. He when He said it, he meant it. His policies, truly were focused on the working American. So my wife was very involved before she was at the UN, she was ambassador to Canada. And she was involved in the negotiation of NAFTA, which is now us MCA. And every day, she and Robert light hyzer would go to the President, the Oval Office to give him the posting, when the negotiations were reaching the level that he needed, be involved. And she would report to me that, you know, before she would leave, he would say, don't forget the farmers. Don't forget to coal miners don't forget the people we're doing this for. So he was very focused on helping working Americans have the opportunity and the future that he felt NAFTA prevented from the previous treaty. And he wanted to improve that primarily for the American worker. And he did so. And we're getting the benefits of that right now. And that's why we're saying even on the auto sector, in the state of Kentucky, Ford just announced an $11 billion investment with battery technology manufacturing in the state of Kentucky. That would not have happened, had it not been for us MCA in the auto file, some of the specific requirements of having a content of our automobiles that are made in America having to have labor, producing that content at a certain wage per hour. Right so that North American workers could have the opportunity to manufacture some of those products, as opposed to China, Mexico and other nations that were using, sure labor at at rates that are not livable wages.

Robert Bryce 29:25 
Well, so let me ask you about that. Because, you know, you made a couple points here. And to be clear, I'm not a Republican, I'm not a Democrat. I'm disgusted. Alright, so to me, I don't think I have a political party. But you've talked about the Democrats being anti coal and anti and you know, all in on renewables. And I think that's a fair assessment. And you were close to Trump and your wife, Kelly Kraft was ambassador to Canada and then ambassador to the UN. How was it that the Republicans in your view and I mean, you're going to be what, 72 this year if I'm if I'm right. The Democrats used to be the party of the working class and now it's Republicans, how did that mean? Just just curious how you view the politics of how this came about? Because to me, I'm still puzzled over it that and Trump did. That was why I think he was successful as he, he understood it. He was clumsy in a lot of his politics. But he certainly understood the issue of working class Americans and advocated for them which I hear continually in rural America when I'm there that he understood him like no, like, no other president wasn't part of that elite class, and how do you see it?

Joe Kraft 30:30 
Well, from my perspective, you know, I didn't, I wasn't very involved, either. I mean, I grew up as a Democrat, I was pretty much apolitical most of my career. But when President Obama got elected, he had a different vision for our country. And prior to that, you know, I gave to as many Democrats as I gave to Republicans, because most of my life, both parties wanted the same thing. They wanted America to be strong, they wanted to be the leader of the free world, they wanted us all to be prosperous, they wanted us to create jobs. And I think the Democrats started moving more in a progressive light to where they wanted government to do more. And the private sector to do less, and they wanted to encourage a different lifestyle. And we're seeing it today. I mean, that's one reason we got labor shortage. A lot of the build back better plan was to pay, not people that really are in a situation where they need some help. But they want able bodied Americans to feel good about staying at home, and giving them more and more of their lives expenditures, as opposed to encouraging them to have a quality of life, dignity of work, to get out and do your fair share, so that our economy can produce the goods and produce the products so that we can have the

Robert Bryce 32:14 
strong industry and strong industrial base on

Joe Kraft 32:16 
economy jobs, and instead of bragging about a low unemployment rate yet, when our workforce shrinks and shrinks and shrinks, and we've got 10 jobs to openings to every job that people want. And some people will point to well, that's just the service sector, but it's not. I mean, it's the we're talking about high paying jobs, and we were our people, if they want to work can make anywhere from 85 to $130,000 a year.

Robert Bryce 32:48 
And these are woody, what did you start? What do you start with?

Joe Kraft 32:51 
Three years out of high school?

Robert Bryce 32:53 
What is it? So what is an underground miner? Then? You when I went to the cardinal mine? I don't know. I said it 10 or 1312 13 years ago? What is it? What is the beginning miner at Cardinal are one of your underground miners? What do they make starting out?

Joe Kraft 33:05 
When they first started out? I mean, if they're experienced, you know, they would make 75 80,000 a year. That's a good way to experience then they've got to ramp it up. So they're probably 50 or something in that nature. But yeah. And then they got excellent benefits on top of what their W two earnings are.

Robert Bryce 33:24 
Right. So you started. And you mentioned Mapco, and how Mapco owned coal business. And you I guess you moved to Tulsa in 1980, I guess after you finished law school, is that right? And shortly after that

Joe Kraft 33:38 
I was a product the energy crisis and energy crisis occurred while I was in law school. So when I got out of law school, I joined a coal company in Lexington, Kentucky, in 1976. And then we sold that in 78. stayed with the company that bought it until Mapco. recruited me in 1980.

Robert Bryce 33:57 
Gotcha. And that's that explains your strong attachment at the University of Kentucky right, because you've been a big donor there for they're the big wildcat, I guess you're a big basketball fan. So that that was so so so my basketball and football, right? So tell me about the MLP structure. Why did the master limited partnership, the other resource companies, oil and gas companies have used that same structure? So the pipeline companies, why was the MLP structure so attractive? And is it any danger of being there's talking about the federal level of them changing the MLP structure? What Why did you use the MLP structure? And is it the what you're going to stay with?

Joe Kraft 34:35 
Well in the 19, back in 1999, and you looked at the corporate rates at that time,

Robert Bryce 34:44 
as well as the tax rates, tax rates and the corporate

Joe Kraft 34:47 
tax rates. So the MLPs had been used in the oil and gas sector and midstream sector. So you had Kinder Morgan. What at that time, was the model that was very successful using an MLP structure, which allowed for the elimination of double taxation. Basically, they would then set up a partnership that was traded publicly as opposed to a C Corp. Right. And then they set a standard that was very successful, they paid distributions, people were able to get a yield vehicle that was attractive compared to other options they were looking at. And so in the middle 90s, Mapco, decided to get out of the coal business. And we ended up selling Mapco ended up selling that asset, or allowing me to go do a management buyout. And then we went to private equity, to give us the funds to buy those assets. And then in 1999, that we bought, the private equity firm bought the assets from Mapco, in 1996. And then in 1999, there was a window of opportunity to allow us to use the MLP model. And we were able to do that, because when the company was sold in 1996, we could convert the structure from a C Corp structure to an LLC structure, to where it set us up for the opportunity to do a master limited partnership. And go ahead and get all the consensus from all the different constituents that you had to get consents to convert from one methodology to the other, and change of ownership provisions, etc. Right. So when that change of ownership occurred, the private equity firm that invested in us wanted to have the option to take the company public, and either an MLP or a C Corp at the appropriate time. And we had that opportunity in 99. And we took advantage of that. And it was has been a very successful source of capital for us. Now recently, you're asking about well, is that model going to contain any under the Trump tax cuts, they were able to preserve the MLP advantage was not as good, because they reduced the corporate rates. But they still allowed or the LLCs to have another discount where there was still an economic advantage, a tax deferred advantage to invest in MLPs versus C corpse. It wasn't as good as it was, because the corporate rates got dropped so much, but under the under the Trump tax cuts, but it still is an advantage for an investor that's looking for yield, that there are tax advantages for investors to continue to utilize the MLP space.

Robert Bryce 38:01 
Sure. So quick station Creek Station is

Joe Kraft 38:04 
still successful for us. And there's several pipeline companies and other midstream companies that continue to use it. Just this past month, we saw more inflows to MLP bonds, and we've seen in a while. So there, there are investor bases, or investors are always trying to decide where the best place to put their money. And and we're hopeful that that where energy prices are and the opportunities in front of us that we're going to see renewed interest. And we've seen it I mean, our stock is almost tripled this year.

Robert Bryce 38:43 
Let me ask you about that. Because, you know, well, I'll be blunt here. I mean, you You're a son of a lawyer, but did you ever think you'd make this much money? I mean, I'm you. I mean, you've, you've been quite successful. I know. But you've also been on something of a roller coaster ride I was looking at eight years ago, the stock was at $45. It's been as low as 350. You've tripled this year. So I mean, I mean, it's an impolite question, but you look at that stock price and think, Well, I'm worth this much today versus yesterday does that you're trying to avoid.

Joe Kraft 39:12 
I don't do that anymore. There was a period of time I did. But now I'm fortunate that I'm focused on other things relative to philanthropy right now more than I am building for me, but as CEO of the company, it's our responsibility. And it's our it's our job to manage these assets and grow our company. So you know, we're very focused on growth, a lot of that value. The stock price was driven more or multiple than it was results. Because our results we've had record years since 99. We had like 1718 years of record years and but for 2019 and then the COVID. We've had the disruption to where you know We're now bouncing back to try to get back on that same path we were in 2018, is where we're targeting. And if we can do that, then we're focused on trying to grow our company just like we did for the first 18 years, even though we've had three years of choppy markets because of COVID, primarily, right, and the export market dropped from us in 2019. So those two things, you know, made our drop, and then you had all this ESG and all the noise. Some other factors that really just, you know, you had people running away from the energy space, because energy returns rolling gas weren't as good. So right, there's a confluence of multiple reasons. But I think, because of the energy prices that we've seen the last half of 21, and what we're projecting over the next two, three years, we've started to see renewed investor interest. And you see that across the energy space, not only in her company, but you see the same with a lot of EMP companies and midstream companies. So energy is a great place to invest right now.

Robert Bryce 41:12 
Right. So you mentioned philanthropy, what are your areas that you've been famously given to a lot of politicians to the University of Kentucky? What would it what are the areas that you? You know, like I said, Well, let me ask that question again. Did you ever think you'd do this? Well, I mean, you know, coming out of law school, because I mean, you've been remarkably successful. And maybe that's a polite question.

Joe Kraft 41:33 
I mean, I never dreamed that. And I still can't explain it. I mean, how can you explain, you're in the same environment with a lot of other people, and your fortunes are different than others? And, and so, you know, I feel blessed. And that's one reason I signed the giving pledge, I feel that there's a responsibility. There's a reason that had these resources. And it's not for me, I'm a steward. And so there's, I've got a responsibility to find ways to get back in to try to help mankind mankind,

Robert Bryce 42:09 
and giving the giving pledge, what is that what explain that, if you don't mind.

Joe Kraft 42:13 
So the giving pledge is organization that was started by Warren Buffett, and Bill Gates, where they committed to give half their wealth to charity. And then they went around to people that have been successful, that have sufficient amount of wealth and said, you know, would you like to join our organization, to join forces so that we can encourage more people to make the world a better place. And so they set this organization up, that provides a lot of resources so that if people are engaged in philanthropy, whether it be for medical research, or education, or mental health or anything, and everything you can think of, then people that have had experience in that area can share those experiences so that other people want to do the same thing. You don't have to start from scratch and say, Well, I want to start a STEM education program for people from Eastern Kentucky, Eastern Kentucky ranches, what I've done, well, I, there's models out there that I could tap into, and then take my money and resources to duplicate successful programs in other places. So So there's multiple people from around the world that are part of this organization, and they've committed the give at least half of their their wealth to charity, as opposed to, you know, sending it to their heirs.

Robert Bryce 43:49 
Bigger yachts. Yeah. Bigger yachts and bigger jets. So let me talk about the issue of Mining and Metals and mining in general, because I've written a piece in The Wall Street Journal recently about rare earth elements in China and China's dominance of that. And there's been some talk and really, it's only been that and I mentioned my book, well, power hungry that you helped me in the get into the coal mine in the cardinal mine 12 years ago. But the issue of mining is not I mean, and mines just aren't popular. So the question I wanted to get to is, there's been a lot of talk about trying to increase lithium production or rare earth element production in the US. How if you started today, and you had a prospective mine and you you're in the coal business, but any kind of mind, how long would it take you to get it licensed and up and running?

Joe Kraft 44:38 
Well, again, it depends on exactly what product you're talking about. But, you know, I'd say anywhere from two, usually at least two years. You've got to do enough environmental reconnaissance to show what the impact of your operation would be. So you have to have a database base, what it is today, so that when you file the permit that you can have an environmental impact statement, basically. And so you're pretty much at a minimum of a two year process before you can open any type of mine.

Robert Bryce 45:16 
And then if you're if you're in California, yeah.

Joe Kraft 45:22 
We're in the eastern United States.

Robert Bryce 45:29 
Right? Well, I know you've got a hard stop here in a few minutes. And let me you're 70, you'll be 72 this year, and this has been your career for now. 40 some odd years? Do you think about doing something else? Or is that you're in this for the long haul, what's what's next for you.

Joe Kraft 45:43 
So we're definitely looking at succession. So we're thinking in terms of what other things we should be investing in. So we've got a great platform and a great runway for the next 10 to 15 years. But it'll be here sooner than later. So I'm focused on putting together a team that can invest in alternative investments that are non fossil that will provide a platform that is our plants, start retiring and 2030 2035 2040, that we've got opportunities to take the cash that we got today, and invest that in other areas. So hopefully, we will have a good team to be able to allow me to spend less time here at the office. And my focus is really focused on philanthropy. And that's where we spending more time, but it'll be gradual, as long as I'm healthy knock on wood, things are good right now. Don't feel 7272 Is the new 52. I don't know what the real saying. Gotcha. Yeah, I think that it's, there's oppening, we're looking to provide opportunities. And we're definitely looking to, to build teams that can take this company, and build on and success so that we can route opportunity, the people that have helped build this company, and help us do all the great things we do for the communities we're in.

Robert Bryce 47:15 
So my guest, by the way, is Joe craft. He's the president and CEO of Alliance resource partners LLP, you can find him and more about alliances on the web at a rlp.com. So Joe, I know you we haven't seen each other in person a long time. But I always ask my guests, what are you reading? What books are on your bookshelf or on your desk or on your nightstand? What are you reading these days? Wow.

Joe Kraft 47:39 
One of the benefits that that I that Kelly and I received from her service, as the ambassador to Canada, was we got to meet Jordan Peterson. Oh, yeah. So Jordan has become a friend of ours. And so I think he's actually coming to your city in January. But, so he and I have spent time thinking about education and how we can continue to recruit people that believe in capitalism and believe in freedom. And, and so most of my reading is on trying to think on how, you know, a what a, you know, what he wrote, right? I mean, I read everything. His books are right on my bookshelf, because I think he has a view on life and, and what it means for young adults as to taking responsibility and trying to be a productive member of society. He speaks to me, I've watched him speak to a lot of folks, we were just with him over Thanksgiving and got to see him speak to, again, some folks in Cambridge. That was amazing. And so I tend to read his works and in works that he would recommend to me to keep me focused on what my goals are in the philanthropic area.

Robert Bryce 49:10 
Gotcha. Yeah. Well, I'm a big fan of his as well. His if you haven't seen it, I've recommended it many times his his understanding of the Bible and his lectures on the Bible are quite remarkable, especially the one on the Sermon on the Mount. I just think it's, it's one of the best I've heard. So would it gives you hope? This is the last question for you, because I know you need need to run here. But you've you've had a remarkable career, and you're now in a business that essentially has become, if not fashionable, suddenly, people are realizing, hey, we were gonna need coal. After all, what gives you hope.

Joe Kraft 49:44 
Now, one of the benefits that well, one of the philanthropies that we've invested in as a craft Academy, so where we are providing an education for it started at 60 juniors in high school, and now it's going to grow to around 90. So it's, uh, there'll be 90 juniors, 90 seniors, and then now we're following them, and they're in high school and we're winners in Morehead Kentucky. Okay, so it's on campus at Morehead State University. So they are getting an education in STEM education, the best and brightest of Kentucky can apply for these coveted slots. And then by the time they graduate from high school, if they would go to a state school in Kentucky, they would have almost two years of college credit to where they can then graduate earlier or take a semester off and do study abroad or do things that allow them to really make a difference in the world. And so we call it stem x. So the stem is to get a great education in science and math in the X is to be entrepreneurial, but also be giving a you know, there's a service component. And the, my hope, because I've seen now over 200 people that we've helped through college and through this program, these people are amazing, and to see the innovation and the ideas and the desire to to accept the responsibility to make America the best it can make. And these are political statements. These are just individuals that have God given talent, that want to say, God's given me this talent now, what's my purpose in life? And how can I make the world a better place? Having this experience to get letters every semester, about these young people's lives and and what they're doing, it just gives me a lot of hope that that notwithstanding, the misinformation that goes on out in the media, and social media is bad, and in my view, you we got to get back to the fundamentals of trusting each other, because we got great people in America, and we got to get back to where we can talk to each other and have sharing of ideas and avoid the separations. You know, we were so hopeful as a country, that Biden would be a uniter, unfortunately, he's decided, even though he campaigned on that he decided not to do so. So it's my expectation, whoever the next candidate for president will be that they truly will be a uniter for this country. Because we have a saying and Kentucky United We Stand divided we fall, that's the motto. And I believe that very sincerely. So we need someone to bring all of the talent of America together and get back to where it was. Where we all want the same thing for America, we want America to continue to be strong to be the world leader in freedom. And we want freedom for our people. And and that's that that just takes leadership. And so my hope is we got that. And we now have to get that message out. We got a right elect the right leaders, so that we can, again, unite, no matter what your political spectrum is that we can unite people on the great things that we're trying to do. So that America can be the world leader, like it has been and what I think most of those that are freedom seekers around the world, want America to be

Robert Bryce 53:42 
well, I'm gonna put you on the stump here. Kraft has run for office here pretty soon. There you go.

Joe Kraft 53:49 
Anyway, me desire for that, because I'm 72 years old. Not that you can't be 72 and still run, I guess. But as Biden dropping? Yeah. I think I'm better served doing what I'm doing.

Robert Bryce 54:01 
Sure. Well, Joe, thanks for your time. It's been fun to talk to you. My guest again is Joe craft. He's the president and CEO of Alliance resource partners. You can find him and his more about his company on a rlp.com and find out what's happening in the coal market. So Joe, thanks to you for being on the power hungry podcast. All you got in podcast land. Until next time, see ya.

Joe Kraft 54:24 
Thank you, Robert. Thanks, Joe.