Coal

For many investors, oil and natural gas are the only energy commodities.

But thermal coal, used to fire power stations, is also important even if it is often overlooked.

Don’t get me wrong, oil is still the most important source of energy, but rather than concentrating only on whether its price its $100 a barrel, investors should also pay attention to whether thermal coal prices continue their climb up towards records.

Kiran Stacey

Hatfield colliery, owned by PowerfuelPowerfuel’s move into administration is grim news for supporters of carbon capture and storage, not least those companies thinking of investing in the sector.

Powerfuel was developing one of the UK’s first commercial scale clean coal power plants, but ended up unable to foot the hefty bill.

One of the administrators, Richard Fleming of KPMG, said:

Developing low carbon energy generation requires a large amount of capital upfront and the CCS development falls £635m short of the investment needed to progress the project beyond the preliminary stage. It needs moving on to a new owner with deeper pockets.

Sheila McNulty

In a sign of how controversial shale drilling has become, key Republican members of Congress are questioning the Obama administration’s moves to regulate the technology that has made the US gas boom possible.

US Rep Joe Barton and the man who beat him to the chairmanship of the House energy committee, Fred Upton (picutred), are pressing Ken Salazar, the interior secretary, for information related to the agency’s plans for new regulations on hydraulic fracturing.

Kiran Stacey

Sara Vaughan, image by Eon

Sara Vaughan, image by Eon

In the first of a new series of readers’ Q&A sessions, Sara Vaughan, Eon UK’s head of energy policy and regulation, tackles the burning questions you wanted answering. Eon is Germany’s largest energy company and is heavily involved in the UK market.

In the first of two parts, Sara talks about why the changes to the carbon reduction commitment could be a good thing, how to reform the energy market and the future of carbon capture and storage.

In the second part, to be published later this morning, she will discuss the obstacles to building new nuclear plants, how the UK measures up on low-carbon technology and the limitations of a carbon floor price.

Next in the hotseat is Ditlev Engel, chief executive of Vestas, the world’s biggest manufacturer of wind turbines. Send in your questions by the end of Friday, November 26th for consideration, to energysource@ft.com.

But for now, over to Sara:

Botswana was once a darling of investors on the African continent. Long loved for its placidity and its diamonds, the world’s largest producer of the gem is now on the map of resource-hungry Brics for another resource: coal.

India’s JSW Energy on Wednesday agreed to acquire Canadian mining company CIC Energy for US$414m (C$422 mn), adding Botswana – where CIC is developing a major coal field, as its second African coal asset. The 43 per cent premium JSW is prepared to pay, according to Wednesday’s proposed offer of C$7.42 per share, reveals how the growing appetite of Indian energy consumption is reaching far corners of the world.

Kiran Stacey

Last week I wrote about the spike in Chinese demand for coal, which was driving a boom in coal M&A deals.

The phenomenon has not gone unnoticed by environmental campaigners, many of whom are quoted in a piece today in the New York Times.

The paper reports:

At ports in Canada, Australia, Indonesia, Colombia and South Africa, ships are lining up to load coal for furnaces in China, which has evolved virtually overnight from a coal exporter to one of the world’s leading purchasers.

Kiran Stacey

Starting next week, Energy Source is bringing back its reader Q&A sessions. This is a chance for you to ask the bigwigs of the energy industry anything you could possibly want.

Sara Vaughan -- image by Eon

First up in the hotseat is Eon’s Sara Vaughan, their UK director of regulation and energy policy.

Eon is of course Germany’s biggest energy company, but it has a very high profile in the UK. Sara will be answering all your questions, from why it decided not to press ahead with Kingsnorth, to what is the future of UK nuclear power, to what carbon price is needed to stimulate green energy growth.

Send all your questions to energysource@ft.com by the end of Friday 19th November.

Kiran Stacey

Just two days ago the Wall Street Journal picked up on Chinese state media reports that the government was worried it might run out of coal. The paper reported:

State-run media reported that Beijing is considering capping domestic coal output in the 2011-2015 period, partly because officials worry miners are running down reserves too quickly to meet the needs of a rapidly expanding economy.

Those signals have been picked up by companies around the entire world, who are now clamouring to meet that demand.

By Paul Francis-Grey of mergermarket

Vallar, the mining investment vehicle of UK businessman Nathaniel Rothschild, has staked its future on Indonesia’s coal boom – in a deal which would create the first Indonesian-controlled company on the London Stock Exchange.

The company has paid $3bn for 75 per cent of Berau Coal Energy and 25 per cent of Bumi Resources – respectively Indonesia’s biggest and fifth-biggest coal miners. Part of the price will be paid in Vallar stock, with Bumi’s owners, the Bakrie Group, becoming the largest shareholder in the company.

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