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Energy / Coal

  • Surprising Opportunities In Coal

    Long term subscribers and those with a long memory may remember that back in August of last year I wrote a piece on coal stocks. At the time I described them as too risky for investors and suggested only one trade, shorting Westmorland Coal (WLB) which, at the time looked seriously overvalued. That trade worked out well as WLB fell from there, dropping around 40 percent until bottoming out earlier this month. That wasn’t the only coal stock to fall in that time. They pretty much all did, but now the risk/reward ratio has shifted enough to make investing in…

  • Clock Runs Out On Clean Coal

    Clean coal is dead. While the notion of coal being a source of “clean” was a bit oxymoronic to begin with, the Obama administration perhaps put an end to the dream for good. The so-called FutureGen 2.0 project was an ambitious – some might say quixotic – attempt by the Bush administration to demonstrate the viability of coal in an era of greenhouse gas reductions. The $1.7 billion project hoped to overhaul a 65-year-old coal-fired power plant in Illinois with carbon capture technology. After carbon sequestration was demonstrated, the government-backed project would help develop a new industry of low-carbon coal…

  • Will 2015 See A Rally In Coal?

    2014 was, on the surface, a good year for those of an environmentally conscious bent. Under pressure from developed nations, two large emerging economies, India and China, both made some commitment to a reduction of greenhouse gasses and laid out plans to increase the use of renewable energy sources. That, combined with falling oil prices, put enormous pressure on the coal industry, already burdened with increased regulation in the world’s major economies. That drop in oil and coal prices, however, may set up a year that will see significant gains in coal in 2015. It is, of course, hard, if…

  • Germany Considers Coal Phase Out

    Amid a major phase out of nuclear power, Germany is weighing whether or not to undertake another monumental energy transition – shutting down a significant portion of its coal-fired power plant fleet. In 2011, Germany decided to shut down its nuclear reactors within a decade, a bold response in the aftermath of the Fukushima meltdown. The so-called energiewende – or energy transition – is an audacious plan to rapidly switch from large baseload nuclear power to renewable energy, primarily from solar and wind. A second energy transition is being considered in Berlin. The German government is negotiating with utilities to…

  • Utilities Facing Coal Shortages Due To Rail Congestion

    With winter approaching, the piles of coal at utility yards are running well below average, and several utilities are pressuring rail companies to allow more coal trains through. The problem is the traffic jam on railways across the country. A bumper crop for U.S. grain has led to a surge in shipments, with farmers shipping 15% more grain so far in 2014 compared to a year earlier. The story is similar with oil. Shipments of oil by rail – owing to a dearth of pipeline capacity – are up more than 13% this year. But coal still makes up the…

  • The Unwelcome Reality For U.S. Coal Exports

    U.S. coal export capacity is running well below capacity, and as such, exporting coal from the U.S. west coast is a losing strategy. That comes from a new report put out by the Institute for Energy Economics and Financial Analysis (IEEFA), which found that despite the very lofty plans by many coal companies to ship coal to rapidly growing markets in Asia, doing so would result in a financial loss. The report finds that even existing coal export terminals are not running full tilt. The U.S. exports coal largely through ports on the east coast – at Hampton Roads, VA,…

  • Coal Exporters Just Got A Big New Competitor

    Rumors emerged last week of big changes coming in the coal market. From one of the world's largest players in the business.That's China. Where officials are reportedly moving to change the country's coal export policies--with potentially large consequences for other exporters globally.Platts quoted "industry participants" as saying that the Chinese government is close to announcing a cut in coal export duties. With sources suggesting that export taxes could be reduced to 3%, from a current 10%, as early as January 1, 2015.Coal companies were reportedly meeting on Friday with China's National Development and Reform Commission, to finalize details around the…

  • Will Coal Be Cut Entirely From German Energy Mix?

    Germany is looking into cutting its use of coal power, at the same time that it is cutting out nuclear. If it does, there could be a ripple effect because Germany is a major player in the European energy market. A Berlin-based journalist said that Germany’s emphasis on renewables is already impacting electricity markets in Poland and the Czech Republic. (Denmark is also exploring how it might go coal-free, but even sooner.) “The conservative government of Chancellor Angela Merkel last week issued a discussion paper proposing to implement the strictest controls on coal fired generation yet to be seen in…

  • Ukraine Facing Harsh Winter Due To Coal Shortages

    On 22 October, Prime Minister Arseniy Yatsenyuk said that by the end of this year Ukraine will be 4 million tons short of coal. The deficit stems from the fact that 88 of the 93 Ukrainian mines operating in Luhansk and Donetsk oblasts, which together account for 70% of domestic production, are located in areas controlled by the militants. As a result of the war, 69 mines in the Donbas have ceased activity, and several have been destroyed. Even those mines still operating are having problems making deliveries to Ukrainian power plants due to damaged railway lines. As a result,…

  • Falling Coal Prices Wreaking Havoc With Corporate Balance Sheets

    The slide in oil prices has raised speculation that oil companies in the U.S. could be forced to cut back on production, but a market slump in another commodity is also putting pressure on producers. Coal markets are currently experiencing a supply glut that is showing no signs of recovery. Mining companies drew up plans for billion-dollar projects in the mid-2000s, when commodity prices were on the upswing. With many of those projects now coming online, coal production is rising.BHP Billiton, an Australian mining giant, just opened a $3.4 billion mine in Queensland, which will add 5.5 million tonnes of…