Hi all - returning after a very pleasant day off from posting on HC. Just scanned the day's HC CCC offerings. Now my head hurts!
For those who wished to know about Ferr./Pen mining approaches & margins - I would recommend you read the relevant post from GS, which Jason Brewer, (who has a Master's degree in mining engineering from the Royal School of Mines in London, and operating experience in Canada, South Africa, and Australia), has confirmed with me as pretty much spot on. More importantly, read the company announcements on these projects. Also, trust the fact that CEO Don Turvey, Johan Heystek, Ken Hodge, Eugene de Villiers, Mike Nell, Haroon Ali and TWP Projects have many decades of combined experience in both OC & UG operations in these very coalfields - with SA's largest coal miners and Energy companies in BHP, Anglo, XStrata, Rio, Total, Noble, Shell, etc. If this experience is not world class (as far as SA goes, anyway), then I don't know what is.
Here is DT's BHP experience: "In his previous role at BHP Billiton he was responsible for major projects ranging from US$50M - US$1000M, JV negotiations, Eskom Contract Negotiations, Support to other Energy Coal Projects, BECSA Mineral Resource Management, Energy Coal and BECSA Commercial & Corporate Support ... he also serves on the Pretoria University Mining Advisory Council. Mr Turvey is also a past President of the South African Colliery Managers Association.profile source I'll take that any day over Roidz's "30 years in coal" (doing what exactly?) and his "mates" who have probably never operated a mine in SA.
For those who think thermal coal is going back to $60 tonne anytime soon - tell that to these experts.
The situation in Egypt has had an impact on European and South African coal prices, with prompt coal prices for delivery into Europe rising by almost US$3/t for both swaps and physical markets. This occurred despite the fact that the Suez Canal is not a key transit route for coal freight and Egypt is not a major coal consumer. According to Reuters, demand in Europe is lacking, with the exception of Finland, which is seeing some spot buying. Indian and Chinese buyers are still playing a wait and see game, in the hope that prices will fall.
However, there is some potential for prices to spike, particularly if a cyclone hits Queensland, preventing or overturning efforts to restore the coal-rich region to its pre-flood state. Jaime Correal of Wood Mackenzie is expecting thermal coal prices to remain above US$100/t over the course of this year, despite a uncertain demand outlook, while other analysts and industry insiders are expecting volatility but higher than average prices compared to 2010 along with healthy margins for coal producers.
Chinese coal imports are expected to slow their frantic pace, as supply constraints on the international market are expected to lead to higher prices. A Bloomberg poll expects Chinas overseas coal purchases to rise by 9% to 180Mt, this year, compared to the 31% rise seen in 2010 to 165Mt.
More "Coal Bullishness" can be read about on this website
extracts:
"Were bullish, we dont expect prices to fall back to $90, more likely $120-129 but the weak demand response currently is tempering price increases," said Jaime Correal, U.S.-based analyst with Wood Mackenzie.
"The cumulative effect of these weather-related problems has been to leave global coal inventories extremely low at the start of this year," analysts said.
"Supply constraints and the low inventory base lead us to believe there is more upside to prices through the year," said Amrita Sen, analyst with Barclays Capital.
"Prices are definitely not going back below $100 a tonne. Definitely not, because there are enough players with long-term long positions who are bullish coal and will hold on," he added.
"The volatility in prices was expected but the outlook remains bullish," said Emmanuel Fages, analyst with Societe Generale.
CCC Price at posting:
80.0¢ Sentiment: LT Buy Disclosure: Held
