takeover bullish for CPT/CPL coal.... This is an interesting article borrowed from the Australian Hotcopper website by Cyclops that gives some possible reasonsfor a imminent takeover of CPT :
Seeing as how Japan is the main target for Coalspurs coal this article holds more than the usual interest to us.
Glencore International Plc’s agreed 39.1 billion pound- ($62 billion) takeover of Xstrata Plc, making it the world’s biggest thermal coal exporter, poses a new threat to Japanese utilities forced to buy more of the fuel after the Fukushima nuclear disaster.
Glencore, the world’s largest publicly traded commodities supplier, produces about 20 million metric tons of power station coal and would boost output fivefold through an acquisition of Xstrata.
Japan’s thermal coal imports will probably rise 3 percent to 104 million tons in 2012, according to Daiwa Capital Markets.
“The coal market will likely tighten because the merger accelerates market domination by suppliers.
Japan will increase coal imports because of energy issues after the Fukushima accident.”
The top five thermal coal exporters led by the combined company would have about 30 percent of the global market after the deal.
Japanese power companies, the world’s second-biggest buyers of thermal coal, are forecast to pay near record prices for imports from Australia again this year as the Asian nation shifts away from nuclear energy following the Fukushima accident last March, the worst since Chernobyl in 1986.
“Fewer suppliers through mergers and acquisition activities may oligopolize the market. There’s a “possibility that the negotiation power of the utilities will weaken.
China Impact
The merger will have little impact on coal imports into China because purchases are based on the price rather than the quality of the commodity. Chinese consumers would seek supplies from local producers should prices gain, overcoming transportation hurdles.
Japan’s contract prices for thermal coal from Australia for the year starting April 1 may be $120 a ton, Daiwa said. That would be 71 percent higher than the 10-year average for spot sales of coal from Australia, according to data from IHS McCloskey Group Ltd. The contract price reached a record $130 a ton last year.
Japan, which relied on nuclear energy for about 30 percent of its power needs, now only has three of its 54 reactors operating. The nation is running its thermal coal plants at nearly 100 percent because the fuel is the cheapest after uranium and it’s building new coal-fired power stations. Chugoku Electric Power Co. and Kyushu Electric Power Co. are among companies building or planning to build plants.
Buying Xstrata will give Glencore control of coal mines in Australia, Colombia, South Africa and Canada. Glencore, which describes itself as “a market leader” in coal marketing on its website, also buys thermal coal from other companies.
Tokyo Electric Power Co. is running only one of its 17 nuclear reactors after the March 11 earthquake and tsunami wrecked its Fukushima Dai-Ichi plant. It boosted consumption of coal by 24 percent in December, alongside a three-fold gain in fuel oil and a seven-fold gain in crude oil.
Nuclear energy costs was estimated to be at least 8.9 yen per kilowatt per hour while coal, liquefied natural gas and oil were calculated at 9.5 yen, 10.7 yen and 36 yen, respectively, a government panel said in December.
Japan, which imports almost all its coal, has boosted purchases 80 percent since 1990 and accounts for about 15 percent of the world’s total coal trade, according to a Jan. 16 report by Enerdata. About 65 percent of its coal comes from Australia.
Global seaborne demand for thermal coal may gain 22 percent by 2016 to 947 million tons from last year.
Mining takeovers are accelerating as companies struggle to replace depleting deposits and China’s industrial growth stokes demand for metals.
“Pricing power will shift into mining companies as they accelerate domination in the market, “Suppliers may gain pricing power in the second half of this year to next year, when the European debt crisis calms down and economies recover.”