Coal chokes China skies - but fuels investor portfolios
European coal prices rose the most in almost three weeks as Anglo American Plc and other mining companies shut production in South Africa because of power cuts.
More than a quarter of Europe's energy coal is shipped from Richards Bay, South Africa. Anglo American, the second-biggest coal producer in the country, stopped five of its nine mines after state utility Eskom Holdings Ltd. said it couldn't guarantee electricity supply. ``It seems as if it's going to be pretty chronic,'' Walter de Wet, head of commodity research at Standard Bank Group Ltd. in Johannesburg, said in a telephone interview today. Cuts and rationing may occur ``for a couple of years. I would definitely not be bearish'' on coal, he said.
The problems in South Africa may bolster coal prices globally, London-based investment bank Fairfax I.S. Plc said.
``If electric coal trains into Richards Bay coal terminal are cut for a significant period then coal-fired power stations around the world will need to find alternative supply,'' John Meyer, an analyst at Fairfax, said in a report. ``That could cause a major spike in coal prices.''
Look to :
Peabody BTU
Arch Coal ACI
Consolidated CNX
as well as
Teck Cominco ( TCK.B) - the Canadian mining conglomerate has a controlling interest in Fording Coal
Jack Bass is the editor of the market letter The Apprentice Millionaire Program available at www.amprogram.com His new book is "Building Your AMP Portfolio, Our Best Ideas for 2008 "
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