Australian-based coal companies will earn more than ever this year as record cargoes from Australia largest miner Xstrata combine with a 32 percent jump in prices.
“Coal-mining companies in Australia are making hay while the sun shines,” said Tim Schroeders, a Melbourne-based fund manager at Pengana Capital Ltd., which oversees about $1.1 billion of assets. “Global demand is expanding rapidly and prices are reflecting tightness in supply. Companies will be looking to sell every ton they can produce.” Production will fall 33 million tons short of demand this year, part of a pattern of commodity shortages encompassing everything from copper to palladium, according to Barclays. That’s generating more profit for BHP Billiton Ltd. (BHP) and Rio Tinto Group and allowing Glencore International Plc to sell as much as $11 billion of shares. The forecast for a surge in coal prices comes amid a rout in commodity markets. Global power generation from coal will rise by 25 percent from 2009 to 2035, the U.S. Energy Information Administration said in a report last month. “Coal demand is strong and will stay that way,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group, said from Melbourne. “Industrial demand in Asia will be very energy-intensive, and that means a lot of coal.” Source: Bloomberg '+'
