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08 January 2010 at 20:00 IST
Coal ETFs look upbeat for the new year
By Tom Lydon There’s a reason that coal exchange traded funds (ETFs) were true standouts in 2009: There doesn’t seem to be enough coal to go around and coal prices are shooting up as a result. Companies trying to capitalize may benefit from the greater efficiency brought on by mergers and acquisitions.
Among the activity in the industry right now includes:
-Coal Miner Consol Energy (NYSE: CNX) has budgeted $500 million for coal operations this year and $100 million for additional activities, reports Kishori Krishnan for Coal Investing News. Consol Energy has 12 coal mines in six states and has around 4.5 billion tons in coal reserves.
-Global miner BHP Billiton (NYSE: BHP) has bid on Australian state of Queensland’s coal freight business.
-Vancouver-based Tech Resources paid $14-billion to take over Foding Canadian Coal Trust, which will pass along ownership of the massive metallurgical coal resource in BC’s Elk Valley.
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-Leighton Holdings Ltd. was awarded a 12-month contract extension at Tarong Energy’s Meandu coal mine in Queensland state that is worth around $140 million. Queensland-based Macarthur Coal could soon become Australia’s leading independent coal producer if it succeeds in purchasing Australian Gloucester Coal, which would give Macarthur Coal a market capitalization of $3.4 billion.
-Chief executive Michael Roche of Queensland Resources Council says coal export records are likely to set new highs this year.
The colder weather is helping in pushing coal prices higher, and some analysts believe the rising price will lead to more merger and acquisition activities, writes Wang Xinyuan for Alibaba. Coal inventories in China are diminishing on the increased power demand and coal consumption. Power companies are loath to lock in year-long coal contracts because of volatility in coal prices, and they are now considering acquiring coal suppliers instead for their energy sources.
Two Coal ETFs:
Market Vectors Coal ETF (NYSEArca: KOL): up 17.7% in the last month
PowerShares Global Coal Portfolio (NASDAQ: PKOL): up 13.4% in the last month
(Max Chen contributed to this article; Courtesy: ETFTrends)
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