The only thing holding thermal coal back today is perception.
The fundamentals for the sector are excellent. Demand is booming in India. Production is being scaled back in China. Surprise consumption is emerging in places like Japan.
All signs point to a rise in coal prices. With knock-on benefits for producers. Especially those with shipping access to the Pacific and Indian Ocean spheres.
And yet this high-potential sector has been completely ignored by investors.
All that is, except one of the world's largest private equity firms.
Coal got a major vote of confidence last week from money managers Exhilway Global. The firm is the largest private equity group investing in emerging markets. They're also apparently believers in the coal story.
Exhilway said it has raised a $200 million fund dedicated to coal and iron ore projects worldwide. The firm is reportedly looking at projects in Peru and the Ukraine. And already has plans on the books to up the fund's capital to $500 million if some of these works proceed.
This is one of the first high-profile endorsements of coal's potential. A sign that perhaps sentiment is shifting in the business.
An encouraging indicator for the commodity, and for associated projects. Think East Africa particularly--a place poised to capitalize on all of the centers of demand growth driving the coal market today.
Here's to the turning tide,
By. Dave Forest