joewolf I doubt they paid much of a premium, probably a fair...

joewolf I doubt they paid much of a premium, probably a fair price based on current coal prices. It would be at least the amount Rio has capitalised for Bengalla, as they won't take an impairment hit, but probably not much more than that. Better to buy a good asset at a fair price than a poor asset at a great price. They haven't had to spend any money developing the mine, it is already running efficiently, and will be cashflow positive from day one (I assume). The big thing though is that they have done this when coal prices are low, and this mine has around 25 years to run apparently. As has always happened in the past, the oversupply will eventually dry up and prices will start to rise again. Mines take several years to develop so the time will come again when demand outweighs supply which will cause a big surge in prices (this could be 5-10 years away). When that happens their margins will be huge, and the share price will be multiples of todays price.

As for China I really can't imagine that they will stop importing coal. The facts remain that coal fired power generators are the main source of electricity around the world. For the foreseeable future there will be strong demand worldwide for it, even when gas takes more of a share, huge amounts of coal will still be in demand. As always the higher cost coal producers will have to close mines (this has been happening for a couple of years now and will continue to happen for another couple of years) while the current oversupply and low prices persist. I'll be taking advantage of the boom bust cycle.