Snooty prices for sootiest commodityFont Size: Decrease Increase...

Snooty prices for sootiest commodityFont Size: Decrease Increase Print Page: Print PURE SPECULATION: Robin Bromby | April 28, 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.