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US Coal Companies become latest Victims of Cheap Natural Gas

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US Coal Companies are being forced to close coal mines and reduce production because of a massive glut of cheap natural gas and emission standards . Note Coal Disadvantages are much more than that of other fossil fuels making it the dirtiest form of energy. While India and China face massive coal shortages , USA on the other hand faces a glut . Coal has been coming under increasing attack in the West with few new thermal plants being opened and many closed due to tougher pollution standards. Note Clean Coal Technologies and CCS is being promoted to prolong the use of Coal but they are not getting much traction.

We face a 2 track world where in USA ,Energy has become cheap because of the Shale Gas Technology while it increases in Asia . While Indian Power Companies are desperately scouting for coal resources, US companies are being forced to shutter mines.

Australian,Indonesian,African Coal Mines Selling like Hot Cakes amongst Power Hungry Indian,Chinese Companies

With domestic coal production rising at a snail’s pace,these companies are racing to secure coal supplies at whatever price they can get.Steel companies too are hungry for coal as it forms a major component of their product.Lanco Solar,Adani Power,Reliance Power,Tata Power,Tata Steel,Coal India have all bought or are in the process of buying coal mines and coal companies in foreign countries.Australian and Indonesian miners are minting top dollar as competition hots up with Rio and BHP Billtion also using thier massive cash hoard into play.Australian coal mining company Whitehaven Coal is the latest to put iself on the selling block with a price tag of more than $3 billion.More than 20 companies are set to be looking into entering the tendering process.

Alpha Natural to cut coal output as demand weakens

Alpha Natural Resources said it will scale back production at many of its central Appalachian coal mines, citing weakening demand from its electric utility customers.The mining company said it will immediately idle four mines in Kentucky and West Virginia and plans to idle two more by early 2013. Other mines will alter work schedules to reduce output, cutting overall production by 4 million tons a year.

How to Play the Coal Story – Buy KOL

Market Vectors KOL ETF provides a good well diversified way to invest in Coal which is seeing a massive upsurge in demand driven by India and China.Note KOL is the only listed Coal ETF with Assets under Management (AUM) of nearly $900 million.It invests mostly in large cap companies and has a global scope.For investors looking for individual stocks here is a list  of US Solar Companies and Stocks and Indian Coal Stocks.China with around 3 Billion Tons of Coal Consumption and India with another 500 million Tons depend on King Coal for majority of their Energy Needs.While China generates 80% of its Electricity from Coal,India generates around 65%.While both countries have Huge Reserves and Production of Coal,their voracious demand is leading to surging imports.These Imports are being sourced from countries like Australia,Canada and USA which are going through Coal Mining Booms.Ports are getting congested as Infrastructure failed to meet the growing coal needs of India and China..The Biggest Advantages of Coal its Abundance and  Cheapness of Coal has made it the Fossil Fuel of Choice for Electricity Companies building power plants in developing countries despite its Drawbacks.This has led to a fight to secure Coal Supplies through vertical integration into buying up of coal mines,building ports and railways to transport Coal.Though India too faces some environmental opposition,massive ultra mega power plants with capacity of 4000 MW are getting built by new Indian private utilities.



Abhishek Shah

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