Yanzhou has no control over coal prices. Furthermore, it has limited control over production costs, which are determined by fuel, steel, and labor prices.Yanzhou's core mines are running low in very high-quality reserves. Growth will come from new mines that might not be as profitable as legacy
Most of the factors that drive James River's success are not under the company's control: commodity prices, transportation, and environmental policies. Adverse changes in conditions would curtail profitability.It's currently unprofitable to produce thermal coal in Appalachia. James River is one of
Cloud Peak has a bright long-term future, but natural gas is running the show for now.
Alpha's bid for Massey was expensive. It resulted in substantial dilution and more than $1 billion of incremental debt. We think this deal destroyed shareholder value.Metallurgical coal prices have been falling since summer 2011. Should China's economy slow, there is more room to fall.U.S.
Arch operates in a cyclical commodity industry. Abnormally high profits are merely a reflection of peaking conditions.The ICG deal stretched Arch's balance sheet. Increased metallurgical exposure and leverage bring more macroeconomic vulnerability. Metallurgical coal will become an ever larger
Peabody operates in a cyclical commodity industry. Cash flows and profitability can be very volatile from year to year.U.S. coal demand is stagnant or even falling as low natural gas prices and much stricter emission regulations and general regulatory uncertainty deter investments in coal
U.S. domestic coal demand is unlikely to grow over time. Stringent permitting for coal power plants,low natural gas prices, and a more aggressive Environmental Protection Agency make it very difficult to build new plants. Some older plants may be shut down in the next 5-10 years.A fall in
Through its alliance partners, Renault's results should benefit from global growth markets.
Most of the factors that drive ICG's success are not under the company's control: commodity prices, transportation, labor shortages, and environmental policies. Adverse changes in conditions would curtail profitability.A recent large-scale mine accident that claimed 29 lives may bring scrutiny from
Difficulty in finding new mining permits may curtail the combined company's growth plans in the long run.Through its metallurgical coal production, Alpha/Massey is exposed to economic cycles overseas. If China or India experienced a slowdown or recession, the firm's results would be hurt.U.S.