http://www.theaustralian.news.com.au/story/0,25197,23622722-18261,00.html Snooty prices for sootiest commodity Robin Bromby | April 30, 2008
THERE aren't many cheap entries into the coal sector remaining.
The big producers are trading on pretty hefty valuations, which is not surprising given what is happening to prices and demand.
Just as copper theft around the world has been a sign of the value of that metal, coal smuggling from Vietnam to China is now big business and one involving criminal gangs, showing just how scarce the commodity is becoming. The Vietnamese are concerned because they want to conserve resources as they build new coal-fired power plants.
But, while things are pricey at the producer end, there are a couple of juniors trading modestly.
One is Bowen Energy (BWN) and this has come to our notice because a Mauritius investment company, which represents Indian clients Savni Holding, has bought 13.3 per cent of Bowen on-market. India's Bhushan Steel already holds 10.2 per cent of the junior, along with a swag of options.
The timing is interesting because of the sense that a number of predators are circling the coal sector. Furthermore, Bowen is awaiting drill results from the South Blackwater coking coal project which neighbours the Blackwater mine operated by BHP Billiton (BHP).
Is Savni part of some blocking bid, a positioning to extract the best possible price should an Indian or even South Korean buyer make an offer? If the drilling results are as good as Bowen must be hoping, such a move could be triggered earlier rather than later.
Keep an eye, too, on Atomic Resources (ATQ) whose move into coal passed with almost no attention and only light trading. The uranium junior has seen the light in terms of any expectation of being able to advance its West Australian projects while state Labor is in power.
The company is acquiring 70 per cent of two Tanzanian coal fields which, according to previous work, may together contain up to 150 million tonnes of coal. Two things to keep in mind: one is that Tanzania is looking to get more thermal power stations built to improve its electricity system and the other is that there are new rail lines planned for southern Tanzania that would make exporting the coal easier and cheaper.
BWN Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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