Meanwhile........have a read of this article and ponder about the decision-making skills of the QLD government. I wonder why they smashed our clean energy technology in favour of this dirty fossil fuel industry. Where do the Greens stand on this filthy industry ?
Is King Coal on Life Support?
By Bob Kohut | 02.05.2016
On 27 April a story appearing here on thebull.com reported the sad tale of the “last train to leave Leigh Creek.” The train carried coal from a now-shuttered mine in the town formerly operated by electricity retailer Alinta Energy for the South Australian state government. At its peak the mine produced about 2.5 million tonnes of coal per year to fire two power generating stations that supplied 40% of South Australia’s electricity. Coal mining at Leigh Creek dates back to 1888.
Since the advent of electricity, coal has been viewed as the “king” of commodities. But even with the most highly valued commodities, technology can issue a death sentence. More than a century ago the world had a seemingly insatiable demand for whale oil to light the night. The onset of kerosene sent whale oil demand plummeting, leaving only its use in soap and vegetable and certain machine oils. The last whaling ship in the once mighty US whaling fleet left the Port of New Bedford Massachusetts in 1921.
The future of coal is a hotly debated topic. There are those who firmly believe thermal coal used to generate electricity will join whale oil as an obsolescent commodity as natural gas and renewable energies become dominant. Like or not, coal is a “dirty” fuel, pouring carbon into the atmosphere.
Metallurgical or coking coal used in the production of steel appears to have a better long term outlook, but even here steel is losing ground to lighter materials in many sectors, most notably automotive and aviation. In addition new technologies such as high-powered electric arc furnaces (EAF) are already used in lieu of coking coal in both the US and Europe.
Others scoff at the notion that King Coal is on its deathbed, believing the abundance of coal and its supposed price advantage over other forms of energy will keep coal afloat for decades to come.
We think the question to be addressed is not what the future of coal is; but what is the future of coal mining stocks as viable investment opportunities. Coal is a major Australian export commodity, making it a prime candidate for wishful long term thinking. Investors hoping for a rebound in the price of coal can find market experts proclaiming better days ahead due to rising demand in emerging markets as well as rising prices for natural gas.
Despite a downward share price drift spanning more than two years, the share prices of our two largest remaining pure-play coal producers on the ASX have spiraled upward in the last month. Here is a one month price chart for New Hope Corp Limited (NHC) and Whitehaven Coal (WHC).
CNX Price at posting:
1.1¢ Sentiment: Hold Disclosure: Held
