Tuesday, 3 June 2014

ACI, WLT - coal miners facing implosion

With relentless anti-coal policy from the US Govt. the US coal industry continues to face increasing pressure. Two of the smallest listed miners - Arch Coal (ACI), and Walter Energy (WLT), settled -6.4% and -4.4% respectively. Outlook is bearish..if not a case of which one closes down first.

*I don't chart either of these stocks, but I'll post a standard daily chart of them anyway...




First...see stats for both...

Arch Coal, @ yahoo finance

Walter Energy @ yahoo finance

Most obvious, both are loss making, and both have a significant debt mountain, many times their current market cap. It would seem Mr Market is starting to assume neither of these companies are going to be around in the long term.


Frankly, it does not look good for either ACI or WLT. I'd guess neither will be a listed company for much more than another year or two.

Just as PCX (Patriot Coal) and JRCC (James River) imploded, it'd seem we will see a few more of the listed coal stocks file for bankruptcy within the next year or so.

I still think Alpha Natural Resources (ANR) has a fair chance of surviving across the longer term, but...perhaps even they will disappear, but more likely to be merged with BTU (Peabody Energy) or CNX (Consol).

Much of this train wreck of a sector is due to the anti-coal stance of the US Govt. It would indeed seem we remain in an era where the Govt' chooses the winners...and the losers.