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Coal - where to now?

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The position of coal prices has become quite interesting and this concerns the bottom end of the coal market. Thermal and sub-bitumous ( steaming ) coals are mainly used in powerstations and there are vast reserves in South Australia. China has recently announced the intent to build an increasing number of powerstations using sub-bitumous coal.
It does seem that the future is very bright for coal in the 30 years ahead.
 
noirua said:
The position of coal prices has become quite interesting and this concerns the bottom end of the coal market. Thermal and sub-bitumous ( steaming ) coals are mainly used in powerstations and there are vast reserves in South Australia. China has recently announced the intent to build an increasing number of powerstations using sub-bitumous coal.
It does seem that the future is very bright for coal in the 30 years ahead.
Click to expand...

yes i agree

i read a report in AFR a few months ago about australia's energy sources...

in 2050, we are still expected to generate 40% of our energy from coal (down from about 50% today)..

EXL the best exposure?
 
nizar said:
yes i agree

i read a report in AFR a few months ago about australia's energy sources...

in 2050, we are still expected to generate 40% of our energy from coal (down from about 50% today)..

EXL the best exposure?
Click to expand...

Hm coal specialists

EXL, MCC, CEY, GCL, FLX, RSP?

any others not too small?

Yeah i like exl the best beacause of their forecast EPS through to 2010 (see half yearly)

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 49.3 48.2 76.0 101.9
DPS 24.0 24.0 39.0 50.5

However their Millenium Mine cost blowout has been a problem this yr, hopefully it will be completely fixed up in May 06 as they have said

thx

MS
 
nizar said:
yes i agree

i read a report in AFR a few months ago about australia's energy sources...

in 2050, we are still expected to generate 40% of our energy from coal (down from about 50% today)..

EXL the best exposure?
Click to expand...
Note that this refers to primary energy and not electricity generated (electricity being the major use of coal). A bit over 80% of Australia's electricity is from coal, about 10% from hydro (60% of that in Tasmania, 30% from the Snowy and the rest in Vic, Qld, NSW and WA) and most of the rest is from natural gas. A minor amount is from oil both to supply the major grids and in remote areas (diesel) and also wind and bagasse (sugar industry waste) are minor sources. Trivial sources include solar and landfill gas.

In terms of primary energy regardless of the end use, coal and oil dominate with most of the rest from gas. Hydro is minor in this context partly because of conversion efficiency and what's being measured. In the case of hydro (and wind, solar etc) it's the output of the power stations (themselves over 90% efficient in the case of hydro) which is measured whereas with coal it's the input (60%+ of which is lost in conversion to electricity) which is measured. So the minor sources (hydro etc) are more important than primary energy stats indicate but they are still relatively minor compared to coal, oil and gas. Wood makes up most of the rest with a bit from wind and trivial amounts from solar etc. :2twocents
 
Smurf1976 said:
Note that this refers to primary energy and not electricity generated (electricity being the major use of coal). A bit over 80% of Australia's electricity is from coal, about 10% from hydro (60% of that in Tasmania, 30% from the Snowy and the rest in Vic, Qld, NSW and WA) and most of the rest is from natural gas. A minor amount is from oil both to supply the major grids and in remote areas (diesel) and also wind and bagasse (sugar industry waste) are minor sources. Trivial sources include solar and landfill gas.

In terms of primary energy regardless of the end use, coal and oil dominate with most of the rest from gas. Hydro is minor in this context partly because of conversion efficiency and what's being measured. In the case of hydro (and wind, solar etc) it's the output of the power stations (themselves over 90% efficient in the case of hydro) which is measured whereas with coal it's the input (60%+ of which is lost in conversion to electricity) which is measured. So the minor sources (hydro etc) are more important than primary energy stats indicate but they are still relatively minor compared to coal, oil and gas. Wood makes up most of the rest with a bit from wind and trivial amounts from solar etc. :2twocents
Click to expand...

Hi Smurf, whats yoru preference for the below coal specialists?

EXL, MCC, CEY, GCL, FLX, RSP?

thanks

MS
 
This is a feature article about producing 'clean' coal through separating CO2 and then disposing of it safely, I think the issue has been mentioned before by Smurf and others. Can this really be so good? Will it work? 300 yrs of coal is a helluva lot!! I can see why it's in the national interest to harness it if you can take the negatives out of it.
http://www.theaustralian.news.com.au/story/0,20876,19398445-28737,00.html

An extract:

...........Together with proposed private industry spending, investment in clean coal technology in Australia alone is expected to tip $20 billion in the next decade.

The reason for this massive investment is that Australia has about 300 years' worth of coal still in the ground and fossil fuels comprise a quarter of all exports. Australia also has 24 large power stations that burn more than 250,000 tonnes of coal every day to supply what is among the cheapest electricity in the Western world. The downside is every station releases thousands of tonnes of carbon dioxide into the atmosphere.

The federal Government has gone a long way to support the coal industry, risking international opprobrium by refusing to sign the Kyoto protocol - a treaty that seeks to reduce greenhouse gas emissions by putting a price on carbon dioxide. ................
 
A few points on that article...

1. The power station where the carbon capture project is planned is the Callide A station in Queensland. This is a relatively small (120 MW) plant which consists of 4x30MW units all black coal-fired. The plan is to fit the technology to one of those units as a trial. The other Callide power stations are not involved at this stage.

As a relatively high cost plant in a well supplied market (Queensland being the only state in that position) Callide A is idle at present. Production from the plant with carbon capture is primarily to test and demonstrate the technology although running one 30 MW unit constantly would, after allowing for maintenance, generate about 0.5% of Queensland's electricity or 0.1% of national electricity. As I said, the point is to demonstrate the technology rather than achieve large scale emissions reductions at this stage.

If successful, there is no reason (apart from cost) why the technology could not be fitted to other Australian power stations within reasonably close distance of somewhere suitable to store the carbon. The brown coal power stations in the Latrobe Valley (Vic) are the most obvious place to start given their close proximity to depleted offshore oil and gas fields and baseload (constant 24/7) operation although there are plenty of opportunities elsewhere too.

From a practical perspective, it wouldn't be possible to take more than one large generating unit in each state offline at a time and the conversion would likely take a year or two for each unit. (The time is speculation at this stage however since it's untested in practice.) So over a number of years it would be possible to gradually convert existing power stations to a zero-emissions operation doing it one unit at a time.

Given the need to reduce oil and gas use for power generation as other demands for those fuels increase and supplies tighten, it's just dreaming to think that coal is about to disappear as a power source in Australia or internationally. Coal generates about 40% of world electricity now whilst there is a need to replace much of the combined 42% from oil, gas and ageing nuclear plants. Only the 18% that is renewable (mostly hydro) is sustainable without rebuilding and non-carbon emitting in ongoing operation. So, in total, 82% of the world's electricity is from sources that are running out (oil and gas), emit lots of carbon (coal) or are in most cases ageing (nuclear). A huge demand for new capacity in the next 50 years that renewables alone simply will not, can not, meet. So coal and/or nuclear MUST have a future at least for the next half century - a point that even many conservationists acknowledge despite their concerns over the impacts.

2. Regarding the photo of Hazelwood power station in the article, it is somewhat misleading IMO. The visible emissions from the stacks are NOT greenhouse gasses (carbon dioxide is invisible to the human eye). It is mostly condensed water vapour (literally steam) due to the roughly two thirds water content in the coal from the Morwell mine burnt at the plant. The remaining visible emissions are fine ash particles which are now almost completely removed (so it looks like an old photo circa 1970's).

I have my own photos of the plant with 4 units running and 4 offline. I'll scan and post it if I can get access to a scanner and I challenge anyone to tell me which units are idle and which are active in the photo. Clear blue sky is all you'll see. Point here being don't believe the media when they show pictures of polluting industry - carbon dioxide is invisible. If the media is showing pictures of it then you're looking at steam or particles, not carbon dioxide. :2twocents
 
RichKid said:
This is a feature article about producing 'clean' coal through separating CO2 and then disposing of it safely, I think the issue has been mentioned before by Smurf and others. Can this really be so good? Will it work? 300 yrs of coal is a helluva lot!! I can see why it's in the national interest to harness it if you can take the negatives out of it.
http://www.theaustralian.news.com.au/story/0,20876,19398445-28737,00.html

An extract:

...........Together with proposed private industry spending, investment in clean coal technology in Australia alone is expected to tip $20 billion in the next decade.

The reason for this massive investment is that Australia has about 300 years' worth of coal still in the ground and fossil fuels comprise a quarter of all exports. Australia also has 24 large power stations that burn more than 250,000 tonnes of coal every day to supply what is among the cheapest electricity in the Western world. The downside is every station releases thousands of tonnes of carbon dioxide into the atmosphere.

The federal Government has gone a long way to support the coal industry, risking international opprobrium by refusing to sign the Kyoto protocol - a treaty that seeks to reduce greenhouse gas emissions by putting a price on carbon dioxide. ................
Click to expand...

The efforts by Gail ( India ) Ltd to build an underground coal or lignite Gasification Plants looks to be another way forward. http://www.thehindubusinessline.com/2006/02/18/stories/2006021803170200.htm
 
michael_selway said:
All of them up today as EXL merger

MCC, CEY, GCL, but not FLX and CNA

thx

MS
Click to expand...


It looks like a recovery period for coal stocks as confidence rises. Even ordinary thermal coal should stay above US$50 per tonne and steaming coal, at the bottom end, is getting good reviews on pricing. Even FLX and CNA should recover quickly to well above recent lows.
 
Thermal Coal prices are set to increase in the next round of price agreements. Check the coal stocks and work out their production, production costs and likely increase in profits, as many are now forgotten.

China still rules on demand: http://au.biz.yahoo.com/070119/19/125j6.html

Uranium, Gold, nickel, Tin...don't forget Thermal Coal.
 
noirua said:
Thermal Coal prices are set to increase in the next round of price agreements. Check the coal stocks and work out their production, production costs and likely increase in profits, as many are now forgotten.

China still rules on demand: http://au.biz.yahoo.com/070119/19/125j6.html

Uranium, Gold, nickel, Tin...don't forget Thermal Coal.
Click to expand...

Hi, at current prices, which coal stocks u like best? CEY, GCL, FLX, CNA, RSP, any others?

http://www.globalcoal.com

NEWC Index
Oct-2006 42.59
Nov-2006 42.36
Dec-2006 50.99
Jan-2007 51.

thx

MS
 
noirua said:
Thermal Coal prices are set to increase in the next round of price agreements. Check the coal stocks and work out their production, production costs and likely increase in profits, as many are now forgotten.

China still rules on demand: http://au.biz.yahoo.com/070119/19/125j6.html

Uranium, Gold, nickel, Tin...don't forget Thermal Coal.
Click to expand...

Dear Noirua,

Which are the specialty thermal stocks? I just use BHP, RIO as an entry to coal which probably dilutes any movements in prices for me as they are into so many other resources.

Garpal
 
In December, Xinhua news agency reported that China's coal use was likely to increase to 2.5 billion tonnes in 2007. Government data gives 2005 coal consumption at 2.2 billion tonnes
Click to expand...
Each year the increase in Chinese coal consumption is far greater than the total amount that Australia uses. A point of major significance to both the coal market and the climate change debate. :2twocents
 
Garpal Gumnut said:
Dear Noirua,

Which are the specialty thermal stocks? I just use BHP, RIO as an entry to coal which probably dilutes any movements in prices for me as they are into so many other resources.

Garpal
Click to expand...

Hi, making profits on coal production can be very hard work, note the Radio Report yesterday my CEY. There is a need to do a lot of research on what types of coal a company has at each mine and the costs versus position of the mine. Longwall mining can present many problems.

It will be a while yet before the new coal loader is commissioned at Newcastle. Seventy ships are reported to be at anchor waiting. Demurrage costs are racking up.

Many, including Peabody, Xstrata and Felix Resources, are waiting go-aheads on thermal coal mines in NSW. These would be combined with the new port extension at Newcastle that also awaits a go-ahead.

Companies like MCC and CEY, are beset with problems, and may come good if they manage to overcome these. FLX mines mostly thermal coal, but is treble the price it was less than 12 months ago and there is a gamble factor concerning the extension of the Newcastle port and the Moolarben go-ahead. Coal and Allied are the largest Aussie in the thermal coal sector; Like FLX their key assets are in the Hunter Valley via Newcastle.

A long answer in what remains a quite risky sector.

An interesting link: http://www.iht.com/articles/2007/01/11/bloomberg/sxasia.php
 
noirua said:
Hi, making profits on coal production can be very hard work, note the Radio Report yesterday my CEY. There is a need to do a lot of research on what types of coal a company has at each mine and the costs versus position of the mine. Longwall mining can present many problems.

It will be a while yet before the new coal loader is commissioned at Newcastle. Seventy ships are reported to be at anchor waiting. Demurrage costs are racking up.

Many, including Peabody, Xstrata and Felix Resources, are waiting go-aheads on thermal coal mines in NSW. These would be combined with the new port extension at Newcastle that also awaits a go-ahead.

Companies like MCC and CEY, are beset with problems, and may come good if they manage to overcome these. FLX mines mostly thermal coal, but is treble the price it was less than 12 months ago and there is a gamble factor concerning the extension of the Newcastle port and the Moolarben go-ahead. Coal and Allied are the largest Aussie in the thermal coal sector; Like FLX their key assets are in the Hunter Valley via Newcastle.

A long answer in what remains a quite risky sector.

An interesting link: http://www.iht.com/articles/2007/01/11/bloomberg/sxasia.php
Click to expand...

yeah i liek CEY at current prices, if it does well it can very well

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 17.5 13.8 22.1 32.0
DPS 13.0 13.0 11.0 13.0

EPS(c) PE Growth
Year Ending 30-06-07 13.8 19.6 -21.3%
Year Ending 30-06-08 22.1 12.2 60.1%

thx

MS
 
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