Coal stocks moving northFont Size: Decrease Increase Print Page: Print PURE SPECULATION: Robin Bromby | May 25, 2009 Article from: The Australian THERMAL coal prices edged up a little during last week to $US64 a tonne. Keep an eye on this commodity, but don't get too excited for now.
We simply don't know what is going to happen in the short term, but in the long term, for all the many new nuclear power plants being foreshadowed, there will be enormous demand for thermal coal as people in China and other developing economies get air-conditioners and flat-screened television sets and, more importantly, factories begin to open rather than close.
It may be a false dawn given activity in the US economy remains subdued, but it is noticeable that several US coal stocks have put on substantial gains in recent weeks.
For example, Foundation Coal shares went from $US14.07 in March to $US29.51 six weeks later, and James River Coal was $US9.09 in March, $US23.05 by early April, and has stayed near that level.
The problem, however, is that the world economy remains frail, but more and more production is either coming on line or mines are being developed.
Being a few years out from production might be the better bet, latest forecasts indicating the global dry bulk shipping fleet will begin expanding from 2012.
Coalworks (CWK) has just engaged mining consultants from Runge (RUL) to come up with a bankable feasibility study at its Oaklands thermal coal project in southern NSW.
With a resource of 760 million tonnes, Coalworks is looking at producing 3 million tonnes a year, working up to 6 million. Oaklands is near an existing rail line, so coal can be loaded there and sent direct to Geelong for export.
CWK Price at posting:
23.6¢ Sentiment: None Disclosure: Not Held
