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Feb.20

1:59 PM ET

Wednesday, 20 Feb 2008

Coal on Fire

Posted By:Giovanny Moreano

Topics:Commodities | Energy | Alternative Energy | Stock Market

Sectors:Oil and Gas

With oil prices touching $100 a barrel again and the ongoing drive to develop affordable alternative fuels, coal has reemerged as a major opportunity area in the energy sector. Coal futures, for instance, have soared 83% in the past six months.

Worldwide, coal is the largest source of electricity generation, accounting for over 40% of power supply. Although coal is one of the dirtiest energy sources -- emitting carbon dioxide, ash and sulfur -- many companies and entrepreneurs are working on ways to make coal cleaner and more environmentally friendly.

Evergreen Energy [EEE Loading... () ], for example, has developed a technology that uses heat and pressure to chemically and physically diminish some of the emissions caused by burning fuel.

Coal in the United States:
The United States holds the world’s largest coal reserves. Coal generates more than half of the energy produced here and is expected to remain a major energy source for several years to come. The US uses more than 95% of its coal for energy generation, while the remaining amount is used in industrial production or exported.

Thirty-eight states engage in mining practices with Wyoming, West Virginia, and Kentucky mining the most coal. One third of US coal is derived from the Central Appalachian region.

Leading Coal Producers:

Arch Coal [ACI Loading... ()

] provides about 11% of America’s coal supply and 6% of the electricity generated by utility companies. Shares are up 18% in 2008.

Peabody Energy [BTU Loading... ()

] is the world’s largest private-sector coal company and generates about 10% of America’s electricity. Peabody provides more than 2% of the global electricity generation with operations in twenty countries. Although the company is down 4.5% year to date (YTD), it is up by 54% from a year ago.

Massey Energy [MEE Loading... ()

] is the largest producer of Central Appalachian coal. Shares are up 16% YTD.

Alpha Natural Resources [ANR Loading... ()

] is another leading Central Appalachian coal producer. Its stock is also up 16% in 2008.

Consol Energy [CNX Loading... ()

] has seventeen mining complexes. Coal accounts for 82% of its revenue. Consol Energy is up 11%.

James River Coal Company [JRCC Loading... ()

] is the sixth largest Central Appalachian coal producer. Shares are up an impressive 48% YTD.

Patriot Coal [PCX Loading... ()

] is a leading provider of coal in the Eastern United States. The company's stock is up 17% this year.

Foundation Coal Holdings [FCL Loading... ()

] is one of the top five coal mining companies in the US. Foundation Coal stock is up 7%.

Penn Virginia Resources [PVR Loading... ()

] manages coal properties and enters into long-term leases with third party miners. The stock is up 11% YTD.

Alliance Resource Partners [ARLP Loading... ()

] produces and markets coal to utility and industrial users in the United States. So far this year, the company's share price is up 9%.

International Coal Group [ICO Loading... ()

] produces, processes and sells steam and metallurgical coal. International Coal shares are up 22% in 2008.

Other coal facts (National Mining Association):

The US industry exports coal to more than forty countries.
Coal accounts for over 95% of the United States’ fossil energy reserves.
Worldwide, the coal industry employs an estimated seven million people.
Coal is used to make coke, which is used in the steel making process.

2006 Major Coal Players:

Top Producers

China
USA
Australia
India

Top Consumers

China
USA
India
Japan

About two-thirds of all coal is transported via railroads. Part two of this research will focus on some of the players in the railroad industry that stand to benefit from the increasing demand for coal energy.

Sources: Energy Information Association EIA, National Mining Association, The Economist

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