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Couldn't help but think of some past comments made here when I read this... http://www.businessspectator.com.au/article/2014/5/27/energy-markets/big-banks-see-bleak-future-coal?utm_source=exact
More recently, The Australian reports that the “boss of BHP Billiton Coal, Dean Dalla Valle, has not ruled out divesting coal assets as he warned there was little sign of relief in the short term for the struggling sector.” On top of that, The Wall Street Journal reported just last week that Rio Tinto “put stakes in several Australian thermal-coal mines on the block in sales that could fetch around US$3 billion, people familiar with the matter said.”
Go read the words of their CEO on their approach to thermal coal, which they are talking of getting out of in EVERY country in which they operate. You really don't read these articles I post, do you? I'd say you're the one who tends to introduce noise into the debate, rather than facts. ;)
BHP close to getting rid of South African coal assets: http://www.bdlive.co.za/business/mining/2014/04/02/bhp-billiton-may-be-close-to-an-exit-from-sa-coal Tells you everything when such a company is pulling out, no?
Interesting article - BHP divesting coal assets as they see no improvement any time soon http://www.fool.com.au/2014/04/07/is-a-coal-crash-coming-bhp-billiton-limited-and-rio-tinto-limited-are-selling-coalmines/
Not specifically a coal miner though. Activities include shale in US, coal's greatest enemy... ;)
Why not credible? Your opinion only. As for Australia, I read financial analysis, not propaganda from failing companies...you're also contradicting yourself, since you quote opinion referring to what will happen over decades to come, yet you say I should not put forth evidence of increasing take up of renewable generation. As for keeping it real, as already noted 8k Australian coal jobs gone and numerous companies struggling and close to collapse with high levels of debt. Do share where you think this miracle turnaround is going to come from, because no trend supports it. And of course we now see UK Coal about to collapse (again) looking for a bailout (again). Do you think Hargreaves will hoover up their assets? It looks like Moulton is expressing interest.
Couldn't help but notice this article re South Africa, which you noted has power outages recently - due to failures in the system of coal supply - bit of analysis re the strong openings for other power generation methods than the harder to implement (let's face it) fossil fuel methods. http://www.bdlive.co.za/opinion/2014/04/02/there-is-light-at-the-end-of-the-renewable-power-tunnel? This is a trend I reckon we could well see a lot of, particularly in developing markets.
I'd like to just take this opportunity to say Beg, I find this debate very useful - investing is a black art as it is, and the more information we can thrash out or dig up is actually very useful to all of us. Figuring out what the trends are beyond the film flam of the companies who want our money is the thing to work on. The world market for coal is in real upset at the moment - who'd every have thought we'd ever see all the collapses and reversions that are happening now, even just two years ago? It's definitely a case with coal of closely scrutinising what is happening globally, in a way we didn't really need to in the past. The security it presented in the past does seem increasingly to be a few thing of the past, its volatility and uncertainty is growing.
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
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.
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.
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!
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!
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).
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.
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?