a rhetorical question ..All things being equal should we be...

a rhetorical question ..

All things being equal should we be automatically rating companies with coking coal projects higher than companies with good quality thermal coal - without first considering the projects themselves ?


sure coking coal may sell for say another 30%(Long Term) more per ton over a good thermal coal ,, but that's after you've first got it out of the ground.

HUN has a maiden resource of good quality thermal coal with a strip ratio of better than 1:1 - I would personally rate this project as highly as I would rate it if it was a Mongolian coking coal project(of equal size and in the same location) with a strip ratio of 10:1 and higher than an underground coking coal project (of equal size).

To my thinking ..
If coal prices were to fall (they probably will) - so you'd expect would the differential/premium between the coking coal and thermal coal prices.

But if it costs you $50/Ton less to extract coal from a shallow thermal coal project today compared to a deeper coking coal project(with a higher strip ratio) - the saving could be $100/T in 10 years time (costs do definitely go up - that's one thing to count on) - but there's no guarantee that the coking coal would be selling for $100/T more in 10 years time.

I'm not overlooking HUN's low strip ratio - and it's a good thermal coal - in a perfect world it would have been coking coal and be located 1km from a hungry power station in China.