Raymond James analyst: Don't rule out coal just yet
By Lee van der Voo
An East Coast research analyst with expertise in metals and mining says the market for coal exports may be in a slump for now, but that it’s likely to rebound as China and Japan grow, making exports from the Northwest profitable again in a few years.
Those insights follow reports of slumping finances at Ambre Energy, an Australia-based company behind two of three proposals for coal export terminals in the Northwest.
The export proposals have met with fierce opposition from environmental groups, who have cheered news of strained finances at Ambre, falling prices for coal exports to Asia, and market reports urging investors to steer clear of coal.
But Jim Rollyson, senior vice president of equity research at Raymond James Financial, Inc., a Florida-based diversified holding company with client assets totaling $216 billion, said while Ambre Energy’s difficulty finding funding is typical of the coal industry today, PRB exports to Asia will remain profitable if China, Japan and Korea grow as expected, particularly while Indonesia looks to keep more of it’s coal resources at home.
Rollyson said the need for a West Coast coal export facility is being driven by lack of access to Canadian ports for PRB companies.
While those ports are at their regulated capacity and dominated by other entities, “there is interest, for sure, from some coal production entities and probably some consumers overseas to make that happen over the long haul,” he said.
Though growth projections for exports were initially overblown, and plans for three proposed export facilities in the Northwest failed while Asian export prices for coal fell and transportation costs held, Rollyson said, “Will it stay that way forever? It’s easy to say that now. But probably not.”
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