I don't know if anyone was paying attention what with some various outrage of the week,
but I thought i would mention that the Coal Industry died. Oh, it may keep kicking in death throes, but, Bob Murray of Murray Energy and Alpha Resources both admitted it's over.
http://www.bloomberg.com/...
Alpha Natural Resources Inc. filed for bankruptcy in Virginia on Monday, becoming the latest victim of the coal industry’s worst downturn in decades.
The second-largest U.S. coal company has lost almost all its market value since 2011,
The Second largest player went Bankrupt....
Now, read below to see what happened.
Now if you listen to Bob Murray, it's all Obama's fault. Oh, dear, the cruel vicious
Kenyan making war on Coal
http://www.nationalreview.com/...
“President Obama is responsible entirely for the closure of that mine and the loss of those jobs,” Murray Energy Corporation’s founder and CEO, Robert Murray, a major Republican donor, told CNN in August. “The many regulations that he and his radical appointees and the U.S. EPA have put on the use of coal . . . have closed 175 power plants,” Murray added. In the 2008 campaign, Obama told the San Francisco Chronicle that the “notion of no coal . . . is an illusion,” but he added that he favored a cap-and-trade system. “So if somebody wants to build a coal-powered plant, they can,” Obama continued. “It’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.” In 2007, Joe Biden told Grist.org, “I don’t think there’s much of a role for clean coal in energy independence” in the United States — though he added that he favored cleaning up China’s coal plants.
Read more at: http://www.nationalreview.com/...
Oh, it's Obama's fault. Obama killed your business? So does that mean Bush and Cheney made your business? That you were not inherently valuable on the market but
needed political and policy support to survive? Hmm.. Bet you bitch all the time
about those Electric Vehicle Tax Credits.
Well I hate to break it to you Bob.
You sell a commodity, an Energy commodity.
http://www.eia.gov/...
See the chart above? Bob? That's Coal losing 20% of it's market to Natural Gas.
http://www.eia.gov/...
Take a look at prices... Gas is getting cheaper and that's fungible to your product...
In April, natural gas-fired generation surpassed coal-fired generation as a percentage of total generation. Gas-fired generation made up 32% of total generation compared with 30% for coal-fired generation. Although the contribution from coal- and gas-fired generation converged in April 2012, when gas prices hit an all-time monthly low, April 2015 marks the first month gas-fired generation actually exceeded coal-fired generation in the same month. Because of low demand from mild spring weather, generation from both coal and natural gas, as well as total generation, generally hit their annual lows in April.
While natural gas-fired generation has been rising over the past several years because of relatively low prices and new capacity coming online, coal-fired generation has been declining as older plants have been retired. About 4 GW of coal-fired capacity retired in April, although on average this capacity was operating at a below-normal 25% capacity factor, meaning generally that thes
Coal Plants are going away, and they aren't running enough to be profitable.
It takes about 2 hours to start a coal plant and it takes about 2 hours to shut one down.
A Gas plant starts in about 15 minutes.
Well the market is much more dynamic, so coal plants are not running at 80% capacity
but running at 25%, not easy to make money that way.
and what's happening? You are trying to become the big fish in a shrinking pond.
Mr. Murray immediately ramped up production at his five new mines. By producing more, the company can lower its overhead costs per ton and undercut its competitors. Mr. Murray has boosted profits using longwall machines.
Murray Energy, which already had roughly $1.9 billion in debt, said it would finance the Foresight purchase with new debt, including a new $1.6 billion term loan facility and about $860 million in second-lien senior secured notes.
Natural-resources companies often add debt to grow, trying to outlast the downturns in the commodity cycle. But it can be crippling when several companies follow the same path at once, creating an oversupply that can depress prices for a long time.
“You just keep borrowing more,” Mr. Murray said. “It’s easy to get into the coal business. It’s impossible to get out.”
But you are trying to grow, and dominate just like the others....
How'd that pay off for Alpha?
http://www.wsj.com/...
The Bristol, Va., company filed for chapter 11 protection in U.S. Bankruptcy Court in Richmond, Va., brought down by plummeting coal prices and high debt from its 2011 acquisition of Massey Energy.
The Wall Street Journal reported Sunday that Alpha, with assets of $10.1 billion and liabilities of $7.1 billion, would be entering chapter 11 as part of a plan to cut its debt load, another victim of the severe slump in coal prices that continues to wreak havoc on the industry.
,,,,,
A steep drop in coal prices has Alpha and its rivals bleeding cash and choking on debt taken on to finance acquisitions from earlier this decade, when the industry’s outlook was rosier. In 2011, Alpha paid $7.1 billion for rival mining company Massey Energy, a deal that extended Alpha’s lead as the largest miner of the type of coal used in steelmaking.
But the price of metallurgical coal has hit an 11-year low amid an economic slowdown in China, the world’s largest producer of steel. Thermal-coal prices have also plummeted as power plants switch to abundant and relatively clean-burning natural gas.
and your peers?
http://www.cbsnews.com/...
"It's a tough time for anybody in the coal industry, not just Alpha."
Alpha rivals Patriot Coal (PATQ), Walter Energy (WLTGQ) and James River Coal (JRCCQ), have also sought bankruptcy protection since the start of 2014.
And what's happening?
China and the Chinese people are sick of mind blowing smog.
http://www.bloomberg.com/...
Now the world’s biggest carbon emitter, China has moved to address the environmental damage that has been a byproduct of its breakneck economic growth and become a leading cause of social unrest. Government reports and recent comments from top officials about pollution have revealed the extent of the damage and raised new concern about its health effects.
and india is worrying hard about smog.
http://www.bbc.com/...
In London last week, the most dangerous particles - PM 2.5 - hit a high of 57 - that's nearly six times recommended limits.
Here in Delhi, we can only dream of such clean air.
Our reading for these minute, carcinogenic particles, which penetrate the lungs, entering straight into the blood stream - is a staggering 215 - 21 times recommended limits. And that's better than it's been all winter.
Until a few weeks ago, PM 2.5 levels rarely dipped below 300, which some here have described as an "air-pocalypse".
and
we borrowed an air pollution probe from a friend to work out what progress, if any, we'd made.
Switching it on, our P-M 2.5 levels registered an off-the-charts 44,000.
My husband scratched his head, consulting the manual.
"This says 3,000 is hazardous."
"It must be broken," I said.
But it wasn't, so we had to call in the experts.
One afternoon, a young man turned up with a small, free-standing air filter, specially modified for Delhi's dust. He pressed a button, which activated something called a "plasma cluster".
After 20 minutes, the numbers on our air monitor began to drop... precipitously.
My husband and I watched, mouth agape, as the readings went down from 44,000, to 20,000, then 11,000. Eventually, the probe settled around the 1,000 mark.
That's still worryingly high by global standards... and that's only the air inside our home. There's nothing we can do about the air outside.
but, let's say Murray is right and it's really all Obama's fault.
Well Let's look in Australia, with a Conservative right wing government.
http://www.bloomberg.com/...
The destructive force of a collapse in world coal prices has been underscored by the sale of a mine valued at A$860 million ($631 million) three years ago for just a dollar.
The closing of Isaac Plains and a second mine in Australia shut last year, Integra Coal, led to a 7.2 percent reduction in Vale’s total coal output in the first half of 2015. It took a $343 million writedown on its Australian coal assets, part of total impairments of $1.15 billion last year, Vale said Feb. 26.
In three years Australia's newest mine went from a billion dollar enterprise to worthless.
Australian Coal is going down 7% Per year and generating Billion dollar writedowns.
and it's sector wide.
http://www.abc.net.au/...
There have been a number of coal mine closures in Australia in the past few years as the price for thermal coal, used for energy production, dropped to around $US62 a tonne and metallurgical coal, a key steel-making ingredient, has dropped to $US113.
But it's not just Australia... it's Germany too
http://www.indexmundi.com/...
http://www.indexmundi.com/...
Consumption and production are down.
why?
because Renewables are up...
http://energytransition.de/...
Germany had roughly 78 percent renewable electricity as a share of domestic demand for a few hours.
and the UK
http://www.businessgreen.com/...
Wind farms provided a record 14 per cent of UK electricity in January and reached all-time highs for weekly and half-hourly generation, according to National Grid figures.
The 4.13 terrawatt hours produced by UK wind farms saw the sector beat the previous record of providing 13.6 per cent of UK electricity set in December 2014, industry body RenewableUK said.
With exponentially cheaper PV and ridiculously cheap LED Light bulbs...
Where are we?
http://www.dailyfinance.com/...
Coal is dying as a source of energy in the U.S. as increased regulation and competing energy sources push it out of the market. The headlines might make you think that coal's decline will lead to higher energy bills or less energy security, but that's simply not the case.
As coal plants and coal mines are shut down around the country, the cost of electricity hasn't been as impacted as you might think. In fact, energy costs are now growing more slowly than they were when coal was the leading source of energy in the U.S. To understand why, you have to look at how quickly competing sources of energy are lowering their own costs.
,,,
It may seem counterintuitive, but more renewable energy and natural gas combined with less coal is actually having the effect of slowing the growth in electricity prices, not the other way around. It's actually great for consumers.
Coal has played a big role in energy in the U.S. for over a century, but those days are coming to an end -- and it's becoming clear that the death of coal will actually have a positive impact on your energy costs. Maybe the new generation of cleaner energy plants makes both environmental and financial sense after all?
Oh right the Death of Coal....
I just Hope Bob Murray takes all his money and doubles down on Buying Alpha.
UPDATE:
A question was asked how fast could Coal go away?
Well, coal is used for 2 things, electricity generation and steel production.
Coal is pretty marginal now for electricity production. Cheap PV and Cheap NatGas
are changing it all.
http://www.eia.gov/...
Coal-fired power plants in the United States have been under significant economic pressure in recent years because of low natural gas prices and slow electricity demand growth. The Annual Energy Outlook 2014 (AEO2014) Reference Case projects that a total of 60 gigawatts (GW) of capacity will retire by 2020, which includes the retirements that have already been reported to the U.S. Energy Information Administration.
That's about 10% there, and it's really running ahead of the curve. Just following the EIA curve it's 15 years but in reality, it's probably 2-3.
These coal plants are money losers, and will start shutting down as soon as the ink turns red.
As for steel production that can be bessemer process coal or it can be electric arc furnaces with oxygen. Cheap renewables means cheap steel.