The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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See Ed Davey's scathing response..."we have more wind projects than we can support..." http://www.telegraph.co.uk/finance/newsbysector/energy/10725596/SSE-scraps-20bn-offshore-wind-farm-plan-and-questions-viability-of-sector.html
SSE announced today a scaling back of plans to build offshore windfarms as it does not have'sufficient confidence of the viability of the wider offshore wind sector. This comes on top of a recent cancellation of a large project in the North Sea by Centrica. Meanwhile I read that the Humber ports alone imported 8-9 million tons of coal this year. I contribute this in the interests of a balanced debate!
Given the trumpeting today about the new wind construction plants getting the go ahead I feel somewhat compelled to post this article: http://www.renewableenergyfocus.com/view/37637/siemens-announces-plans-to-build-major-offshore-wind-manufacturing-site-in-the-uk/? It would suggest your predicted demise of wind projects is simply not happening. The numbers discussed indicate we may yet see over 18GW offshore capacity installed - that's close to the lower end of baseload capacity typically quoted as being around 20GW daily. In which scenario, there would be periods where coal would not be required. We shall see.
As this forum continues to debate the future prospects of this Company and much of this discussion concerns the future of coal and the price of coal, here are some recent, gloomy, predictions to consider from Reuters and Merrill Lynch: ‘Thermal coal prices to drop further on oversupply, weak demand’ (Reuters, 20/3/14) @ http://www.reuters.com/article/2014/03/20/energy-coal-prices-idUSL6N0MH30Y20140320?rpc=401&feedType=RSS&feedName=rbssEnergyNews&rpc=401 ‘ “Maximum coal burn” to continue in Europe’ (Responding to Climate Change, 20/3/14) @ http://www.rtcc.org/2014/03/21/maximum-coal-burn-to-continue-in-europe-says-merrill-lynch/ Both predict a fall in coal prices for the forseeable future and with current prices hovering around £45.60 yesterday it does not look good. When Scottish Coal went bust the coal price was c £53. Hargreaves should be more transparent when they finally report their annual figures and allow shareholders to compare their opencast operating / production costs with the price the coal has been sold at. Before UK Coal went bust this info was always reported both for the deep mines and the surface mines.
Indeed I am a shareholder on a small scale and all I know about this company and others I it's sector is what I can glean from the web. I have sided with moneybags in his beliefs opinions on the future of coal in the uk . With regards to Hsp I would like to be positive as indeed I bought in at the wrong time when the price was much higher. Maybe if I heard that the company was planning to develop some of the land it owns into housing or commercial property developments I would feel some comfort that I might get my money back. I am sitting on paper losses in various companies in this sector and wish that raw materials prices would recover to give these companies like Hsp a chance but like moneybags I just can't see it.
Goldcoaster, you appear to know an awful lot about a company you obviously have no high regard for. Which begs the question: Why your continued interest (via this forum and, no doubt, elsewhere) in Hargreaves, who you seemingly appear to have written off as having no dynamism, no balls – and no future? If that’s what you truly believe, then why expend time and effort on here just to ‘diss’ the present and try to big-up the past – particularly the old founder and his fd sidekick? Old scores to settle maybe? Or long-gone and missed opportunities on your part? The other day, another poster (SmallCap1) summed up a lot of what makes Hargreaves continue to attract investor support – so I won’t repeat his points unnecessarily here: they are self-evident. If I were of a cynical disposition (and believe me I am) I would almost think that your carping about the brilliance of the Hargreaves ‘old guard’ compared to your assertion about the current team lacking bottle/direction is an attempt by you to somehow turn back time. Revisit the ‘good old days’ maybe? Perhaps they were even YOUR ‘good old days’? Perhaps you might enlighten the rest of us... I imagine most of us, who judge - and then invest - according to what we see before us, will continue to do just that, irrespective of your jaundiced opinions: in today’s climate, any company that continues to evolve; continues to respond to changing markets; continues to demonstrate that it DOES have balls – will continue to attract support, from institutional investors right down to us little guys. The days of the dinosaurs are past (the various Scottish concerns, the esteemed Mr Budge et al). Like the dinosaurs they went because they failed to adapt. (Or worse, they didn’t realise they needed to). After the MBO, Hargreaves became a very different animal – a modern plc. If the ‘founder’ and his FD of whom you speak so highly had still been in charge where would Hargreaves be now? Running trucks I would imagine.....but then of course you know that the ‘new’ Hargreaves does that as well – and profitably as it happens.
Yet the majority growth in new capacity in several of these countries - most notably China - is in renewables. A scenario that was not envisaged even a year or two ago. China have shut down 2000 coal plants. Their use of coal is being intentionally reduced. My continuing point is that the trend is to move away from coal is starting to manifest, and will increase substantially. In the last couple of years, the amount of installed base of renewables has rapidly increased, outstripping what was previously only achieved over a period of decades. Costs of production of these technologies is plummeting and that gets passed to the end user, who progressively finds that it is equally cheap, or even cheaper. These are now mature technologies. Many comparisons are being made with the computer revolution. I refer to our earlier discussion and my posts about grid parity being achieved. Targets for installed capacity are being smashed. Coal's dominance is beginning to be threatened.
In response to the request for my evidence re. coal powered generation :- the IEA report dated 2112 states that 41% of electricity worldwide was coal powered. Coal powered 93% in S.Africa,78%in Australia, 67% in Poland, 79% in China,68% in India, 41% in Germany and we know it was over 40% in UK last year. World Resource Institute states in Nov 2012 that 1200 coal plants were under construction in 59 countries. Yesterday's capping of CPF (Carbon Price Floor) shows ,as expected , a move back towards common sense in that our future depends on us competing on price with the rest of the world in energy cost.
Hi there! I assume Lyndhurst25 will permit me to respond here... I guess I can only reiterate my view (apologies to Bev88 for boring him with repetition) that no matter how clever Hargreaves are, I do come back to the position that I'm sceptical they can make the numbers add up where others couldn't. They are able to absorb the immediate impact due to being diversified into other areas of business, but whether they can make enough of a margin with coal prices being so low and with no prospect of recovery any time soon, is debatable. A lot of hopes, particularly firms in the US suffering from Obama's war on coal, were pinned on the Asian market, but there's a massive, indeed unprecedented turnaround occurring there with restrictions on imports and restriction on ecenomic growth starting to be effected. Which will impact the world market as badly, if not worse, than the turndown in the US. For sure, they're still a massive, consumer, but the degree to which they've cut back in only a year is nothing short of mindboggling. So these factors are what I see as being the brake on any firm in this country realistically being able to make a decent profit on it. We should make a date to convene here in a year's time to see how things go!
Well said that man-I think you have it about right-the risk is there , hence the low p/e, but these guys are doers not daunted by doomsayers and are ,as you say, light on their feet. Incidentally, don't underestimate Kevin Dougan just because he is ex British Coal. He demonstrated to me a deep knowledge of opencast issues and how to manage them.
Would you care to point to some stats on that? You prefer to ignore that companies are collapsing worldwide and most are having a pretty bad time, many are in a precarious state re credit. How many jobs disappeared in this country? As I mentioned before, 8,000 in Australia, as an example. Interestingly, in Germany, plants are in the process of being built or commissioned, yet demand doesn't exist, due to the growth of renewables. RWE in particular, which puts its future in the hands of coal, is in very bad financial shape. Daily reports are coming out of China indicating that they are severely throttling back on coal use. If you could quote me some sources, I'd gladly read them and would concede to you if you were able to demonstrate the points you make!
I’m new to this forum so unsure of etiquette (sure if I overstep the mark someone will enlighten me). As a small shareholder I wonder am I looking at the same company that some of the regular posters on here appear to see? I see a company that in the face of challenges in the marketplace, domestic and global, have continued to drive turnover and profits upwards, have continued to increase dividends to shareholders, and appear to be pretty nimble when it comes to spotting opportunities and then grabbing them. Sure, like any large company, Hargreaves has faced disappointments and setbacks: show me a large ‘traditional industry’ enterprise that hasn’t and I’ll invest in them tomorrow, thanks! I like it that the current Hargreaves management team always have something up their sleeves; they see potential and then they don’t fanny about. They see a profit to be turned and go for it – you only have to look at what they’ve done in Scotland. So what if, here and now, in March 2014 those new Scottish interests haven’t yet made spectacular returns. Magical instant profit is not the name of this particular game; there’s potential there and it’ll come good in time. Didn’t Hargreaves do a large fundraise last year, a war-chest set up so they could strike at opportunities quickly? Would they/could they have raised that £40m+ if investors doubted their ability to deliver? None of us, surely, invest for pure sentimental value! I know I don’t.... I can’t help thinking that some on this forum (and I’m looking at you Goldcoaster) have somewhere down the line got a little bit burned (maybe selling and buying at the wrong time and not watching the wider market as well as you could have done?). I’m assuming, of course, Goldcoaster, that you ARE a shareholder? Or do just have too much time on your hands? And MrsMoneybags: You’ve been ‘chastened’ by your experience with companies that Hargreaves has bought into? I can understand you being a sceptic; I’ll bet we’ve all been ‘chastened’ somewhere down the line, but I like to see Hargreaves having the confidence to spot HOW and WHY others made mistakes – and then go in with a plan not to repeat history, but to create some new history. Sorry to bang on at such length, but I’ve gone from being a curious and passive onlooker to the point where I had to have my two penn’orth...Keep the faith
To paraphrase Oscar Wilde, Mrs Moneybag's report of the death of coal is somewhat exaggerated- not to mention repetitive. Given that as I write this ,not only is coal massively the biggest power source worldwide but has the lions share of plant under construction,be it China,India,Germany,S.Africa etc. To turn round this supertanker in the near future would be impossible and not to realise this somewhat undermines the credibility of her contributions.
Up to the government to address the situation. I think they're sitting on their hands hoping fracking will sort all their problems. Recent news on that front suggests that's not going so well as anticipated. The point I'm just tending to make is that while they faff, there is a potential market for self-generation capable of taking off. Whether it's homeowners or corporations. The Googles, Apples, Bransons are leading the way. So while the thumb-twiddling inertia continues, opportunities exist to exploit the gap in the market that's opening up. I see coal as going the way of the dinosaurs (bad pun implicit there, sorry).
I am with you again moneybags in what you say on hargreaves and the future of coal. Look at the main board of the company and who has opencast mining experience let alone deep mine. The only ones are a guy called dougan and From my research it appears dougan hasn't been involved in opencast mining for 20 years .the Scottish companies that failed in Scotland with much higher coal prices and lower transport costs and the welsh ones in wales were old school hardened tough nosed men who worked 70 hour weeks 6 days a week and failed. Hargreaves are new school low risk taking white collar health and safety over conscious English dudes out of their comfort zone. Ten only people who will benefit in wales are the welsh tower miners who did a Great bit of business with a desperate plc that needed positive growth and strategy news to appease institutional investors. Bev 88 is correct though moneybags on the fact that no clear energy strategy in the uk will lead to shortages at peak times in the near future . IMO companies go one of two ways up or down they do not stand still and hargreaves has been standing still for too long now both in terms of news and share price
Simply challenging some of the unfounded assertions our friend Bev88 is making. As someone who has been suitably chastened by experiences with the companies that Hargreaves bought into, I'm amused at the idea that Hargreaves is saying they'll succeed where others with plenty of expertise in the market have failed. I'm only responding to points being made. I look forward to seeing if they can. But I have to admit I'm rather sceptical.
In the real world, the world market for coal is collapsing. Market forces, nothing else. Happening right now. And having its impacts right now. We are investors, in the business of looking to the future. If there is any reprieve for coal, it's temporary. Other fuel sources are encroaching on its dominance, right now. Hargreaves obviously made a tactical decision to prop up their failed endeavours in deep mining by expanding into opencast. I can't help but think they bought a pig in a poke though. They've admitted in their newsletter what they conceal in their interim results - that they aren't turning enough of a profit. What are the reasons for that? Production problems or an imbalance between operating costs and the price they can get for the coal? So as I say, it'll be interesting if they can make it pay from this point on. Though given that they kept that fact from you, I'd be rather hesitant to trust anything they say, to the extent you seem to. And can you show me the data that says we are close to the safety margins with respect to national power supply? I like facts, not opinions. The fact is, energy consumption has steadily decreased, and we are able to draw additional supplied from other sources. The scenario is yet to raise its head. And remember, building new coal plants takes a long time. Other types of energy are more quickly deployable. As I've already shown elsewhere, what is happening in places like India where supply from coal is unreliable? They're turning to solar in particular.
Mrs Moneybags, can I ask what your motivation is for your numerous posts saying that Hargreaves business model is doomed? Surely there must be dozens of other listed companies with similar, real or imagined, problems. Why do you choose only to post about Hargreaves?
With respect Mrs Moneybags while clearly well versed in future possibilities such as enhanced geothermal(still experimental) is forgetting that we are running down our base load supply whilst killing off any new supply by politicians scoring points by seeing who can best deter capital being risked for new plant. We are close to minimal safety margins and a couple of major outages away from power cuts which will bring us back to the real world.
How solar is upsetting things in The States: http://oilprice.com/Alternative-Energy/Solar-Energy/Solar-Power-Threatening-Future-for-U.S.-Electric-Utilities.html
How Silicon valley is getting in on the act and may upset utilities that are failing to get on the bandwagon: http://www.businessspectator.com.au/article/2014/3/14/solar-energy/utilities-be-warned-silicon-valley-coming-you
Now here's a truly fascinating possibility. The Chinese energy regulator is talking about replacing coal ENTIRELY with geothermal energy! God knows what that would do to the world market. I reckon it would totally collapse. http://www.chinadaily.com.cn/bizchina/2014-03/14/content_17346901.htm? Would certainly put the kibosh on Hargreaves' Asian endeavours. Did I mention the smart money is getting out?
Moneybags right again . I have solar panels and get a really good rate of return and my bill has halved and they take no looking after. Defo the way forward. On hargreaves you are also correct. These story 5 years ago was expansion into Europe now where are we thee out of Belgium badly burned distanced ourselves from German operation and off we go to Hong Kong. It's a story with no substance. The open casting is a time buyer, monckton has no secure fuel supply long term out of renewables transport that they started from has gone nowhere in recent years. If you listen to what they say in the newsletter etc and read between the lines they are currently standing still which in real terms only goes one way
IEA: High renewables penetration possible in any country: http://cleantechnica.com/2014/03/11/iea-high-renewable-energy-market-penetration-feasible-country/?
Wrong, wrong, wrong. Households pretty far North can be completely self-sustaining. I know a couple of people doing it. While returning surplus to the grid. Doesn't require massive changes to infrastructure. Places that have problems with it do so because TOO MUCH power is being returned to the grid. Many power suppliers including ours have failed to invest profits back into updating national grids, as well as R&D. The thing is, solar, despite being a comparatively new tech is expanding rapidly. I suspect South Africa could be one of the next markets where it'll happen. Read something about Ghana intending to make it their main source of power. Re making hay: despite stating in their interim report that their opencasts in Scotland were performing well, I understand in their newsletter just published, Hargreaves have admitted these have not yielded expected profits - doesn't sound like they're doing as well as they want you to think...I'm sure they are heading into the same problems encountered by the firms that floundered - too high operating cost, too low world coal price. But they seem to be willing to let you, the shareholders, absorb the cost, and presumably it will drain the rest of the group as well. They were able to isolate bad performance in Germany by dumping debts into a separate company, can they keep doing that? Hm...