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Coal - where to now?

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Guys,

COAL will increase in price about $300 above current levels. My friend working in the commodity sector says lots of reports and forecasts saying that.

WHat are the few coal stocks you can think of? I bought Cockatoo Coals(COK) last week. I think CEY is doing very well too.
 
imaginator said:
Guys,

COAL will increase in price about $300 above current levels. My friend working in the commodity sector says lots of reports and forecasts saying that.

What are the few coal stocks you can think of? I bought Cockatoo Coals(COK) last week. I think CEY is doing very well too.
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Hi have you got any links and also what time frame?

CEY, FLX, GCL, MCC, (RSP-NHC), WHC, AQA, RIV, COK, NEC, CZA, PRC, CDS, CNA, SRL, MLM, CES...

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Date: 11/2/2008
Author: Stephen Wisenthal
Source: The Australian Financial Review --- Page: 19
Record prices for Australian coal have resulted from recent floods in Queenslandand the Chinese snowstorms. These short-term issues are balanced by longer termissues of increasing demand and improving transport infrastructure. The highprices have pushed the GlobalCoal index to a record $US125.48 on 8 February2008. Australian coal companies are attractive investments due to the high coalprice, with particular attention on Macarthur Coal, Centennial Coal and FelixResources. The coal industry is more resilient than other resource stocks due tothe continuing demand for heating fuels
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Does anyone know what's happening with Australian domestic (as opposed to export) coal prices? I'm assuming they are lower than export given the shipping constraints etc.
 
I'm really glad I bought into AQA a few months back - established diversified producers , especially those with both coal and iron ore exposure will kick ass in 2008
 
Smurf1976 said:
Does anyone know what's happening with Australian domestic (as opposed to export) coal prices? I'm assuming they are lower than export given the shipping constraints etc.
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Quite a lot of Aussie Power Stations have their own coal reserves, and train and truck the coal in. OneSteel has an agreement with BHP where they use the same trains, back and forth, for coal, iron ore, pellets, pig iron and steel.
 
noirua said:
Outlook 2008: Why Coal - The World's Forgotten Fossil Fuel - is About to Double in Price: http:www.moneymorning.com/2008/02/14/out...tten-fossil-fuel-is-about-to-double-in-price/
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Do u know what i think there will be an engery crisis in coming years, and it will be electricity & coal, oil to a lesser extent as coal is the most used for enegy needs. And yes its a need not want, so very hard to reduce our energy needs in this modern age

Its the capacity thats the problem rather than "runnign out" so to speak

thx

MS
 
osmosis said:
Which company is Australia's blue chip coal producer?
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All the big miners, including Wesfarmers, have been mopping up the small and medium coal producers. Only company with a prospect of reaching the ASX100 that is only producing coal is Felix Resources, as 70% of the stock is owned by substantial holders. They may make it around 2012/13.
 
noirua said:
"Coal prices to decline as China resumes exports", and may affect negotiations on coal prices that normally conclude in March: http://mjunction.in/market_news/coal_1/coal_prices_to_decline_as_chin.php

Price of thermal coal out of Newcastle port fell US$4.71 to $134.45 a tonne for weekending 22/2/2008.
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Well a ST pull back would be reasonable ince its gone nuts in the last few months. :)

thx

MS

Coal prices to decline as China resumes exports
February 29, 2008: Taiwan Power Co reported that the fuel's cost will drop after China restores exports in April. This will release the pressure on buyers to resolve term negotiations at double the price last year.

According to the head of the company's thermal coal unit, Albert Jen, at the McCloskey Group conference, the Chinese exports' resumption after a two month ban and reduced rainfall in Indonesia will enhance supplies.

Taiwan Power is awaiting the conclusion of price discussions of Japanese utilities with Australian sellers before talking with its suppliers, he added. Coal prices witnessed a hike after the heavy rains in Australia, snowstorms in China and power shortages in South Africa led to a decreased output.

"The Japanese could delay negotiations and wait for spot prices to fall. The next few weeks will be crucial because the talks usually conclude in March," mentioned Jen at Taipower.

Source: The Financial Express
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michael_selway said:
Well a ST pull back would be reasonable ince its gone nuts in the last few months. :)thx MS
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Fair enough m_s, FLX profits at US$140 a tonne would be about $600 million in 2009/10, and going up to $2.5 billion when Moolarben gets to full production in 2012/13. This won't happen and 2008/9 prices will/may be around US$105 for thermal and will drop back further as ports expand at the latter end of 2009 - make hay whilst the sun shines.
 
noirua said:
Fair enough m_s, FLX profits at US$140 a tonne would be about $600 million in 2009/10, and going up to $2.5 billion when Moolarben gets to full production in 2012/13. This won't happen and 2008/9 prices will/may be around US$105 for thermal and will drop back further as ports expand at the latter end of 2009 - make hay whilst the sun shines.
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Yep it will be interesting going forward inthe comign years

CEY, FLX, GCL, MCC, (RSP-NHC), WHC, AQA, RIV, COK, NEC, CZA, PRC, CDS, CNA, SRL, MLM, CES, EQX,

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http://www.forbes.com/global/2008/0310/016.html

It's black and dirty, but that's not stopping coal from being hailed by miners and investors as "the new gold." Soaring prices, driven by Asian demand for power and aided by production shocks in coal-exporting countries, lie behind a global stampede to secure supplies for power generation and to make steel. "It's like the California gold rush," says Michael O'Keeffe, chief executive of Riversdale Mining, an Australian company exploring for coal in the southern African country of Mozambique.

Late last year one of India's biggest companies, Tata Steel, joined the search by paying Riversdale $91 million for a minority stake in a small portion of an exploration prospect in northwest Mozambique. It will be several years, at the earliest, before coal is mined at Benga on the banks of the Zambezi River, but Tata moved early to ensure its future entitlement to what was once regarded as an abundant commodity.

"There is a global shortage of both thermal (to generate electricity) and coking coal (to make steel)," says O'Keeffe, 56, who grew up in Cairns, Australia. "Indian demand for steel, and hence coking coal, is going through the roof. We've always believed that you'll be able to find iron ore for steel, but it's much harder to get coking coal."

Riversdale's coal discovery in Mozambique, coupled with its Tata deal, has put a rocket under its share price. Over the past 12 months Riversdale stock has more than tripled, even after a recent fallback. Riversdale is generating a small annual profit from a coal mine it acquired two years ago in South Africa, but the real game is its big discovery in Mozambique.

Different types of coal mean there is no common price. However, as a rough guide, prices for both thermal and coking coal have more than doubled over the past year (see chart) and are tipped to rise further.

Mark Pervan, senior commodity strategist in the Melbourne office of the Australia & New Zealand Banking Group, says the most recent sales of coking coal have been around $270 a tonne, more than double 12 months ago. Thermal coal has nearly tripled in price in the same span. By comparison, gold, which O'Keeffe reckons is being replaced by coal as the prospector's favorite, has captured attention by rising all of a third over the past 12 months to $920 per ounce.

"Iron ore is driven by demand, but the coal market is being largely driven by supply shortage," Pervan says. "Key global producers Australia, China and South Africa are grappling with weather-related disruptions. These supply problems, together with rising demand throughout Asia, are likely to keep a high floor on prices. Slowing exports out of Indonesia and Vietnam are also affecting the market, with Vietnam diverting output to meet stronger domestic demand."

Ironic, perhaps, at a time when the world is consumed with notions of carbon energy caps and nonfossil fuels, but old King Coal has never burned as hot. Today as an energy source, it accounts for an estimated 24% of global energy consumption, and 39% of electricity production.

China, traditionally a coal exporter, has banned coal exports over February and March to ensure it has enough to meet domestic demand for electricity production after being hit by a deep freeze and record-breaking snowstorms. Preston Chiaro, chief executive in London of the energy division of big miner (and takeover target) Rio Tinto, is surprised by the surge in prices. Rio Tinto is one of the world's biggest coal miners, with operations in North America and Australia. In the year to Dec. 31 it mined 156 million tonnes of coal, mainly thermal for power generation. "It's been a confluence of events," Chiaro says. "Weather is the big story, with rain in Australia and snowfalls in China. We had seen some tightness in the market before, but those two events really brought it to a head."

Flooding in open-pit coal mines in Australia over January and February forced five coal exporters, including Rio Tinto and Xstrata (other-otc: XSRAF.PK - news - people ), to declare force majeure, by which a company can blame events beyond its control for failing to fulfill a contract. Chiaro says the price rises were a warning shot of an ongoing coal shortage, not the vagaries of a temporary weather pattern. "The infrastructure for moving coal is really strained, so even small disruptions can have a big effect."

One of his headaches is the clogged Australian rail and port system. Over the past two years more than 50 ships have been riding daily at anchor off the major coal export ports of Newcastle, Gladstone and Dalrymple Bay waiting their turn to load. The record, according to The Australian newspaper, which visited each port to count ships at anchor, was 71, set on Apr. 28 last year

Another leading coal-mining country may also soon be exporting less. In January South Africa suffered severe blackouts when its state-owned power utility, Eskom, failed to generate enough electricity to meet demand. During a week of turmoil South African households were left in the dark, shops closed and tourists traumatized.

Blame for the power outages was put on a lack of investment in new power stations and problems with low-grade coal. Part of the solution is for Eskom to buy 45 million tonnes of extra coal to replenish its depleted stockpiles. Some of that coal was earmarked for export but will not now available.

It's a similar story in Vietnam, which plans to reduce coal exports by about 10 million tonnes a year, a 32% cut, to save coal for domestic use. And Bali has also experienced power outages from coal shortages.

An unnamed Vietnamese government official told Reuters on Feb. 15 that a number of new coal-fired power stations would begin operating this year. "The plan is to gradually reduce exports and eventually stop all coal exports to meet domestic consumption only," the official was quoted as saying.

South Africa's power crisis is music to the ears of people like O'Keeffe. He was planning to start the Benga joint venture with Tata by exporting coking coal to India but is now dusting off plans to start operations by delivering coal to a "mine-mouth" power station, which would burn lower-grade thermal coal and sell electricity into a grid that connects Mozambique with South Africa.

"We were targeting metallurgical coal," O'Keeffe says. "But what we might now do, provided we line up all our ducks, is get into coal production for a power station fairly quickly because we don't have to wash [remove impurities] that type of coal."

O'Keeffe, a former managing director in Australia for the big commodities trader Glencore, said his Indian partner, Tata, would not object to the potential for a thermal-first option because it could mean getting to the deeper coking coal quicker.

Paul Mazak, managing director of Churchill Mining, a London-listed explorer with coal assets on the Indonesia island of Kalimantan, said two countries dominated demand for coal in Asia. "They're the usual suspects, China and India," he says.

Churchill is in a similar position as Riversdale in that it has an asset in the ground but is yet to start mining. Despite its embryonic position as an explorer, Churchill is being inundated with inquiries from coal buyers hunting supplies. "The reason they're knocking on our door, even though we've yet to produce anything, is that buyers have now realized that it's no longer a buyer's world, it's a supplier's world," Mazak says. "They want long-term security of supply, which means they want to get involved with the mines, and the earlier the better."

O'Keeffe's plans for Mozambique have their roots in his background as a commodities trader with Glencore, where he had oversight of its coal business and where he learned all the intricacies of mining, exporting and trading coal. After quitting Glencore in 2004 O'Keeffe struck out on his own. "I left to start doing for myself what I'd been doing for Glencore," he says. "I'd completed what I'd been hired to achieve for Glencore, which was to be the number one trader in Australia."

Within days of his departure Riversdale was created, with coal as its primary focus. After looking around the Australian landscape O'Keeffe opted for greener pastures. "Australia has too many junior companies competing for limited opportunities," he says. "All of the big assets are held by majors. No junior explorer is discovering world-class assets in Australia. We reckoned it was best to chase elephants [big assets] in elephant country, and that means Africa. It is also fairly obvious that Africa has close proximity to India, which is at the start of a supercycle of growth for steelmaking. That makes our chosen location for exploration and mine development even more compelling."
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thx

MS
 
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