Wednesday, April 09, 2008
Search for Exposure to the Metallurgical Coal Business
Fording Canadian Coal Trust (FDG) is a royalty trust. The Trust, through its subsidiaries, holds a 46 percent interest in Neptune Bulk Terminals (Canada) Ltd. and a 60% interest in the Elk Valley Coal Partnership, which currently operates six Canadian mines in British Columbia and Alberta.
Elk Valley Coal’s operations employ conventional open pit mining techniques using primarily truck and shovel methods The majority of coal mined and processed at the Company’s operations is metallurgical hard coking coal for the global steel industry. Responsible for about one sixth of the global seaborne market supply, Elk Valley Coal is the second-largest supplier of its product in the world. The Elk Valley Coal Partnership accounts for about 98 percent of the Trust's revenues.
Looking at the graph, FDG's share price went from 20 to 70 in one year. It appears that I am late to this party. But coal blogs speculate that coking coal will increase by 240% from last year's bench mark price of $98/tonne, so the new price would be $333/Tonne. FDG would be able to distribute 17$ per share! It may still have some interest.
I would like to have more time to research and discover the next metallurgical coal when it is cheap, at 20$, and not when it has risen to 70$. Where will the next scarcity be?