The tight coal market is all about the 'alternative' supplies from now on and has been for some time. The coal majors have done little to address the supply issues and have been happy to see the coal price rising. This is forcing mills and power generators into new markets. These new markets can help, but remain weak for the same reasons. The mining companies have been unable to raise the money over the last couple of years as the money flows from investors dried up. This basically means we now have a major lag compared with the pace of recovery. All this sends the coal price higher. China took advantage of the down turn and tried to buy into smaller companies in Australia but the long lead time to get the projects up and running has still not come online and won't for some time. Given what their real long term needs are, all this is a drop in the ocean. The QLD govt is effectively broke and is selling off the rail. The current govt is also going to tax coal companies for good measure with the new possible taxes. How does any of this help?..it doesn't. RIV's assets are off shore and this makes them even more desirable imo as they are free of the silly stuff going on in Oz. The major iron ore producers are always going on about the freight rate discount for shipping the ore. RIV freight rate into the major coal markets is clearly cheaper than exporting from Oz. We now have 2 major steel mills from India and Brazil climbing up the share register and yet the market is focused on the smaller more expensive coal producers in Australia [multiple times riv market cap]. That has all been about short term supply but does little for the real problem over time. This is where RIV can step in. There is no other listed coal stock with the potential of RIV for both resource and production capability down the track. I personally think that there are many companies that must either want into this for long term supply or would be happy to take a serious look at it [2 mills so far]. Time will tell on this front but i remain long for what is the writing on the wall on the fundamental front. Coal is used for power, steel production and cement making. Good luck replacing it any time soon. CSN is now a major shareholder with no off take? Off takes mean more cash in the bottom draw for RIV. dyor.
RIV Price at posting:
$7.68 Sentiment: ST Buy Disclosure: Held
