BHP Billiton (NYSE: BHP) and Peabody Energy (NYSE: BTU) are both major stakeholders in a joint venture to build a port facility in Newcastle, New South Wales. The 30 mtpa facility is nearing completion, with plans in the works to then double capacity to 60 mtpa. After gobbling up Australian miner Felix Resources last summer, Yanzhou Coal Mining (NYSE: YZC) also owns a slice of this infrastructure pie. I consider Yanzhou shares favorably priced following a steep 25% dive over recent weeks.
Peabody Energy envisions a 20% to 30% increase in its thermal coal exports from Australia for 2010, and foresees 15 million to 17 million tonnes of capacity by 2014. Factoring in a planned 12 million to 15 million tonnes of high-margin metallurgical coal capacity, Peabody offers a rock-solid choice for investors seeking exposure to this reconfiguration of the global coal markets.
Are you detecting a pattern? The Australian seaborne coal market is in full-blown bull-market mode, and China is removing the veil of uncertainty that has plagued commodity markets with the clearest indications to date that this new demand is here to stay. Last week, I implored Fools to prepare for the met coal surge that was foretold in part by China's 17% investment stake in Teck Resources (NYSE: TCK), and now you see that the thermal coal market stands in a position of similar strength.
To unstand how the coal minners are doing all you have to look at is the railroads are doing, Going foward the most bullish sign was Warren Buffett buying Burlington Northern, Railroads in general the last 50 years their largest customers are the coal companys,I conclud that Buffett must be bullish on coal to spend billions on a railroad company. They dont make their money shiping corn flakes.
"Berkshire Hathaway, based in Omaha, Neb., agreed last fall to pay $100 per share in cash and stock for the 77.4 percent of BNSF shares that it didn't already own.
When he announced the deal, Buffett called it an "all-in wager" on the U.S. economy, since freight railroads carry so many items that consumers use everyday. Everything from toys and cars to lumber for homes and coal for electricity rolls on the rails. Burlington Northern, based in Fort Worth, Texas, ships enough coal to power one of every 10 homes in the U.S.
In an interview with The Associated Press, CEO Rose said a rise in recent shipments indicates the economy is stabilizing, but sustainable growth still appears a long way off.
Although recent storms on the East Coast have bumped up demand for coal to generate electricity, the outlook in other segments -- especially those tied to consumer spending -- is still mediocre at best."