The announcement of a global agreement to cut coal use weighed on the shares of mining companies on Monday, but a lack of the commodity gave support for a sector that has made enormous gains so far this year.
The UN climate negotiations in Glasgow finished on Saturday with a pact aimed at reducing fossil fuel consumption. Pressure from India and others forced the shift to “phase down” rather than “phase out” coal. China Shenhua Energy and Yanzhou Coal both lost 1% while the Hong Kong stock market climbed marginally. One percent decreased in an index of mainland-listed miners. Other regions’ coal reserves were also under stress. “Activists will indeed portray COP26 as a failure in the coal sector (and fossil fuels). Despite the frustration (and the current market conditions for energy), we continue to see a growing consensus about the importance of reducing our reliance on fossil fuels, “said John Miller, a Cowen analyst.
Surging coal production in China, which is a significant customer of Indonesia’s, exacerbated the decline. There was a 5.7 percent drop in Bumi Resources, and 4.5 percent and 7 percent drops in Adaro Energy and Indika Energy. Whitehaven Coal (WHC.AX) and New Hope (NHC.AX), both listed in Australia, saw their shares fall by about 1.6% and 1%, respectively, on a more substantial overall market. There was a 1.4 percent dip in South32 and a 4 percent loss in Coronado Global Resources. Whitehaven, South32, and New Hope have curtailed their year-to-date gains by a global energy shortage, which prompted a recent downturn. Each one is up by more than 40%.
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“Coal will continue to be utilized for power generation for the foreseeable future. Despite the fact that it’s likely to be a moneymaker, “A Sydney-based research firm’s chief executive officer, Mathan Somasundaram, echoed these sentiments.
According to official statistics, China produced its most quantity of coal in more than six years last month, which lowered short-term market prices. As a result of the Glasgow agreement, there have been pledges of future reductions in consumption, resolution of regulations for carbon markets, and a direct attack on fossil fuel subsidies.
KEPCO (015760. KS), LX International, and Doosan Heavy, all listed in Seoul, traded between a 2.5% drop and a 0.6% gain in a market up 1% elsewhere in Asia. Banpu, a Thai mining company, dropped 2.7%. As a consequence of disappointing quarterly results, Coal India’s stock price dropped by 4.3%. It’s time for NTPCedge to get going. One of the biggest exporters of metallurgical coal, Anglo American, saw its shares fall almost 1% in London, while South African coal miner Sasol held steady.
According to Melbourne’s George Boubouras, head of research at K2 Asset Management, under-investment in coal projects would likely keep spot prices high in the long term. Still, the fuel’s ultimate extinction may restrict stock price increases. Stocks in the sector were steady as oil prices fell almost 1% in European trade.
Energy companies are phasing out coal, and some investors believe that uranium may take up part of the void left behind. As a result, the price of uranium and other commodities has risen sharply in recent weeks.