King Coal

Associated British Ports have plans for a coal terminal in Hull, occupying about 40 acres costing £55-110 Million. Soaring gas and oil prices are driving up demand for imported coal. AB ports will soon open a £59.5m specialist coal-import terminal in Immingham, Humberside, with an annual capacity of 9.5m tonnes, backed by agreements with BHP Billiton, Drax, EDF, Scottish & Southern and International Power.

Meanwhile UK Coal (UKC LSE) on 14th December ( when the shares stood at 121p) claimed that they were now profitable and expect to report profits in 2006. This was at the time that WL Ross & Company LLC funds increased their ownership in UK Coal to 400,000 shares, or 3.3 per cent of the UK’s only sizeable coal producer. (and by now maybe even more) Since then Audley European and St James have disclosed a 3.25 % interest and this week Allianz AG 3.6%.

Today the shares inched up a further 1.5 p to 155 pence – remember the property assets are supposed to be worth 200p per share.

I said on December 12th ..

“UK Coal’s major shareholders , Phoenix, Morgan Stanley, Fidelity will no doubt be having interesting conversations with Mr Ross and his colleagues who are dedicated to “managing distressed securities funds.”

It is therefore interesting to see that more major market players have moved in… although as I further pointed out ..

“Mr Blair must have a grim smile on his face when he sees how vital decisions about the UK energy supply are made by financiers in New York rather than politicians in London.”

Despite Mrs Thatcher’s famed “dash for gas” , the slight benefit of gas over coal for the alleged worries over carbon dioxide emissions, coal is cheaper and is back in favour for electricity generation. The only competitor in the UK is nuclear power and that is 10 years off at best.

The stupidity of the White Paper on Energy is now exposed – as The Forth Coming UK Energy Deficit(FCUKED) said at the time. The security of our gas and oil supplies is hurting, to damp demand the Government has approved using price as a cap on demand.

The coal fired staions of course are ageing – there hasn’t been one built in the UK for 30 years, they pollute, but … they produce much needed electricity.

So we now have the prospect that we have sold, off, closed down , run down our natural assets and face an uncertain future importing all our energy.

It would have been impossible to organise a more spectacularly unsuccessful, costly and expensive policy for energy security and supply.

The good news is that UK Coal shares closed at 155p today … looks like a good buy to me. Buy some today whilst there is some light so you can see to sign the cheque.