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Looking for the next Grande Cache
Grande Cache Coal Corporation, priced at less than C$1 a share just four months ago, has recently traded above C$7, as a beneficiary of one of the hottest sub-sub-mining sectors, metallurgical ("hard coking") coal, used mainly in steel smelters.
More than 100 stocks listed around the world offer exposure to coal, directly or indirectly or as part of a diversified portfolio. Coal miners produce mainly steam (thermal) coal (typically the feedstock for power stations), and/or metallurgical coal. Most coal is bound for inland markets; the smaller, seaborne, market is less easy to access and operate in, but is potentially more lucrative.
Price differentiation in coal can be significant. Inland steam coal suppliers may be tied into very long term fixed-price contracts with power utilities. Those operating in the seaborne market benefit - in rising price markets - from the annual setting of benchmark contracts by the majors, such as Xstrata (world's largest exporter of steam coal and a significant producer of metallurgical coal and semi-soft coal), BHP Billiton (operator and majority owner of Queensland Coal, world's leading supplier of high quality metallurgical for steel production).
Grande Cache seems to have it all: it mines metallurgical coal for the (booming) global steel sector and holds coal leases covering over 22,000 hectares in a relative mining haven, by world standards, in the Smoky River Coalfield in west central Alberta, Canada. The company operates several underground and surface mines, under four coal leases which it owns; it also owns 10 additional coal leases with exploration and development potential. Grande Cache's principal market is the seaborne market, into which it sold around 1m tons in the year to March 31 2007. For some context, BHP Billiton sold 38m tons of metallurgical, and 87m tons of steam, coal, in its 2007 financial year.
Listed coal stocks are rerating not only on commodity price action - seaborne metallurgical coal prices have roughly tripled in the past 12 months - but also on potential corporate activity in a world where downstream companies are keen to secure supplies. This week, for example, ArcelorMittal, a significant global steelmaker, announced that it had acquired a 14.9% stake in Australia's Macarthur Coal, which in its 2007 financial year produced 3.6m tons of saleable product. Its main merchandise is so-called low volatile (LV) pulverised coal injection (PCI) coal for use in the production of steel.
50 selected coal stocks | ||||
Stock | From | From | Value | |
price | high* | low* | US$bn | |
Shenhua | CNY 51.96 | -45.2% | 40.5% | 122.53 |
China Coal | CNY 21.08 | -15.3% | 31.6% | 27.59 |
Peabody Energy | USD 77.29 | -4.7% | 114.9% | 20.99 |
Consol Energy | USD 98.23 | -4.9% | 185.8% | 17.95 |
Fording | USD 75.14 | -1.6% | 174.3% | 11.17 |
Shanxi Xishan | CNY 59.00 | -24.1% | 232.4% | 10.23 |
Arch Coal | USD 64.99 | -5.4% | 134.1% | 9.37 |
Coal & Allied | AUD 105.00 | -8.7% | 61.5% | 8.53 |
Yanzhou Coal | CNY 25.40 | -8.2% | 120.9% | 10.75 |
Raspadskaya | USD 9.95 | -3.4% | 350.2% | 7.77 |
Neyveli Lignite | INR 148.85 | -46.4% | 155.3% | 6.13 |
Shanxi Lu'an | CNY 83.77 | -12.4% | 186.1% | 7.66 |
Hedei Jinniu | CNY 54.00 | -3.1% | 321.2% | 6.08 |
Massey Energy | USD 65.47 | -4.6% | 308.9% | 5.27 |
Kailuan | CNY 54.35 | -4.6% | 203.6% | 4.36 |
Banpu Pub | THB 488.00 | -3.9% | 128.0% | 4.18 |
Walter Industries | USD 92.26 | -3.3% | 349.4% | 4.83 |
Alpha Natural | USD 73.90 | -1.9% | 364.2% | 5.20 |
Macarthur | AUD 19.56 | -6.8% | 279.8% | 3.89 |
Huolinhe | CNY 32.33 | -35.0% | 90.3% | 3.93 |
New Hope | AUD 4.33 | -2.7% | 170.6% | 3.29 |
Indo Tambangraya | IDR 30,950.00 | -2.7% | 121.1% | 3.80 |
Foundation Coal | USD 65.52 | -5.2% | 112.2% | 2.97 |
Shanxi Guoyang | CNY 56.47 | -24.7% | 90.1% | 3.88 |
Tambang Batubara | IDR 11,950.00 | -6.6% | 168.5% | 2.99 |
Felix Resources | AUD 18.70 | -1.7% | 313.7% | 3.44 |
Shanghai Datun | CNY 25.24 | -42.5% | 95.2% | 2.61 |
Natural Resource | USD 40.15 | -6.6% | 63.1% | 2.61 |
Belon | USD 176.00 | -4.9% | 369.3% | 2.02 |
Patriot Coal | USD 99.69 | -1.7% | 268.3% | 2.67 |
Southgobi | CAD 17.00 | 0.0% | 302.8% | 2.18 |
Taiyuan | CNY 29.97 | -7.8% | 309.3% | 2.20 |
Straits Resources | AUD 7.71 | -9.8% | 128.1% | 1.68 |
Enacar | CHP 0.97 | -36.6% | 38.8% | 1.70 |
Alliance Holding | USD 27.10 | -19.7% | 41.0% | 1.62 |
Gujarat NRE | INR 157.85 | -13.1% | 218.2% | 1.28 |
Penn Virginia | USD 27.75 | -15.7% | 54.2% | 1.28 |
Centennial Coal | AUD 4.75 | -4.6% | 176.2% | 1.48 |
Riversdale Mining | AUD 9.72 | -13.6% | 358.5% | 1.69 |
Guizhou Panjia | CNY 26.91 | -3.8% | 307.1% | 1.43 |
Inner Mongolia | CNY 11.53 | -41.2% | 42.0% | 1.67 |
Int'l Coal | USD 9.67 | -6.9% | 157.9% | 1.48 |
Zhengzhou Coal | CNY 13.34 | -33.2% | 69.7% | 1.20 |
Anhui Hengyuan | CNY 42.94 | -29.6% | 109.6% | 1.16 |
Whitehaven Coal | AUD 3.50 | -10.3% | 250.0% | 1.29 |
Sundiro | CNY 8.09 | -37.2% | 44.5% | 0.85 |
Gloucester Coal | AUD 12.00 | -2.5% | 230.6% | 0.92 |
Komsomolets | UAH 14.50 | -12.1% | 480.0% | 1.02 |
James River Coal | USD 38.41 | -2.4% | 978.9% | 0.97 |
Western Canadian | CAD 6.60 | -4.6% | 1304.3% | 0.75 |
Tier I averages/total |
| -13.0% | 224.1% | 356.56 |
Weighted averages |
| -27.3% | 90.4% | |
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Diversifieds with coal | ||||
Stock | From | From | Value | |
price | high* | low* | US$bn | |
BHP Billiton | GBP 21.13 | -4.2% | 84.1% | 241.24 |
Vale | USD 42.44 | -3.9% | 149.6% | 207.96 |
Rio Tinto | GBP 67.35 | -6.0% | 139.9% | 168.49 |
Anglo American | GBP 35.63 | -3.3% | 64.4% | 93.30 |
Xstrata | GBP 42.45 | -4.3% | 74.3% | 80.43 |
Teck Cominco | USD 51.84 | -3.6% | 91.6% | 22.48 |
Exxaro | ZAR 150.05 | -1.9% | 138.2% | 6.97 |
Coal of Africa | ZAR 26.00 | -8.5% | 445.1% | 1.02 |
ARM | ZAR 296.00 | -0.7% | 186.7% | 8.22 |
Chevron | USD 102.40 | -2.1% | 34.0% | 211.80 |
Exxon Mobil | USD 93.30 | -2.9% | 20.3% | 492.97 |
Kazakhmys | GBP 17.87 | -9.1% | 88.1% | 15.85 |
Sasol | USD 65.90 | -3.0% | 95.3% | 41.66 |
Cleveland-Cliffs | USD 95.48 | -5.3% | 238.6% | 8.64 |
Aquila | USD 14.48 | -2.8% | 373.8% | 3.36 |
Mechel | USD 52.50 | -10.5% | 390.7% | 21.85 |
Sherritt | CAD 15.32 | -15.1% | 31.2% | 4.38 |
E.ON | EUR 135.50 | -12.1% | 22.5% | 139.63 |
RWE | EUR 81.01 | -21.0% | 13.8% | 65.51 |
ThyssenKrupp | EUR 44.08 | -6.1% | 49.4% | 35.04 |
CEZ | PLN 178.20 | -10.9% | 31.0% | 47.37 |
Endesa Chile | CLP 774.00 | -12.6% | 59.6% | 13.68 |
ENRC | GBP 14.09 | -9.1% | 160.9% | 35.38 |
Idemitsu Kosan | JPY 11,170.00 | -24.5% | 53.4% | 4.24 |
Transalta | CAD 35.74 | -0.2% | 37.1% | 6.99 |
Wesfarmers | AUD 39.85 | -13.2% | 22.6% | 22.10 |
Div. averages/total |
| -5.5% | 86.0% | 2000.54 |
Weighted averages |
| -5.6% | 54.7% | |
Coal: Tier II, developers and other | ||||
Stock | From | From | Value | |
price | high* | low* | US$bn | |
VorkutaUgol | USD 190.00 | -22.4% | 19.5% | 0.47 |
Market V (ETF) | USD 53.29 | -1.2% | 63.5% | 0.27 |
Grande Cache | CAD 7.28 | -2.3% | 925.4% | 0.52 |
Waratah Coal | CAD 3.12 | -22.0% | 212.0% | 0.17 |
Carnegie Corp. | AUD 0.28 | -43.3% | 189.5% | 0.11 |
Westmoreland | USD 17.84 | -37.9% | 81.9% | 0.17 |
Evergreen Energy | USD 1.76 | -75.0% | 72.5% | 0.15 |
Rocklands Richfield | AUD 0.18 | -40.7% | 40.0% | 0.05 |
Bowen Energy | AUD 0.32 | -14.9% | 142.3% | 0.02 |
Eastern Corp. | AUD 0.18 | -53.8% | 50.0% | 0.01 |
East Energy | AUD 0.30 | -60.0% | 20.0% | 0.03 |
Cockatoo Coal | AUD 0.95 | -16.7% | 455.9% | 0.37 |
Cougar Energy | AUD 0.17 | -5.7% | 371.4% | 0.06 |
Unique Mining | THB 31.00 | -33.3% | 133.1% | 0.14 |
Wescoal | ZAR 2.38 | -20.7% | 296.7% | 0.03 |
Keaton | ZAR 13.20 | -14.8% | 14.3% | 0.25 |
SA Coal | ZAR 3.70 | -47.1% | 80.5% | 0.20 |
Hwange | ZAR 8.20 | -17.9% | 446.7% | 0.11 |
Matodzi | ZAR 0.23 | -34.3% | 21.1% | 0.01 |
Miranda | ZAR 2.40 | -19.5% | 287.1% | 0.07 |
Gansu Jingyuan | CNY 14.07 | -22.5% | 110.0% | 0.36 |
Cash Minerals | CAD 0.25 | -81.3% | 40.0% | 0.03 |
Coalcorp Mining | CAD 1.65 | -69.9% | 55.7% | 0.15 |
Homeland Energy | CAD 1.25 | -19.9% | 108.3% | 0.18 |
West Hawk | CAD 0.31 | -37.4% | 210.0% | 0.03 |
Lanna Resources | THB 20.30 | -11.7% | 79.6% | 0.22 |
Dong Won | KRW 13,250.00 | -53.5% | 28.0% | 0.06 |
Hullera Vasco | EUR 6.60 | -24.1% | 10.9% | 0.08 |
Perdana Karya | IDR 720.00 | -53.2% | 80.0% | 0.05 |
Dayaindo | IDR 280.00 | -61.6% | 141.9% | 0.05 |
ATH Resources | GBP 1.99 | -15.4% | 9.7% | 0.16 |
Coal Int'l | GBP 0.48 | -3.5% | 218.3% | 0.09 |
Cambrian Mining | GBP 1.92 | -4.5% | 284.0% | 0.36 |
Headwaters | USD 11.73 | -43.4% | 33.3% | 0.49 |
Joy Global | USD 79.25 | -3.9% | 88.2% | 8.55 |
Bucyrus Int'l | USD 131.59 | -8.8% | 132.1% | 4.93 |
Petmin | ZAR 5.14 | -6.5% | 193.7% | 0.36 |
Sentula | ZAR 18.20 | -31.3% | 12.0% | 0.56 |
Fortune Minerals | CAD 1.70 | -57.5% | 17.2% | 0.08 |
National Coal | USD 6.74 | -12.9% | 206.3% | 0.21 |
QGX | CAD 3.79 | -8.7% | 76.3% | 0.18 |
Red Hill Energy | CAD 0.64 | -55.9% | 16.4% | 0.03 |
Nacco | USD 82.37 | -52.8% | 19.7% | 0.55 |
Churchill Mining | GBP 0.67 | -11.9% | 315.6% | 0.08 |
Cline Mining | CAD 1.11 | -33.9% | 909.1% | 0.08 |
Buildmax | ZAR 1.85 | -64.8% | 21.7% | 0.20 |
Tier II averages/total |
| -31.2% | 159.6% | 21.35 |
Weighted averages |
| -19.0% | 94.1% | |
Overall average/total |
| -21.7% | 193.2% | 377.90 |
Overall weighted averages |
| -26.9% | 90.6% | |
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* 12-month |
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