Coal Stocks Fall Sharply as More Regulations Feared
NEW YORK, NY -- (Marketwire) -- 11/13/12 -- Coal stocks across the board fell sharply last week as Obama's re-election increased speculation that more regulations may be on the way for the already struggling industry. Both the Market Vectors Coal ETF (KOL) and the PowerShares Global Coal ETF (PKOL) both fell over 5 percent last week. The Paragon Report examines investing opportunities in the Coal Industry and provides equity research on CONSOL Energy Inc. (NYSE: CNX) and Walter Energy, Inc. (NYSE: WLT).
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The Environmental Protection Agency has imposed limits on pollutants such as carbon dioxide, mercury and sulfur dioxide, which have made it more expensive for utility companies to burn coal for energy generation. Mitt Romney was widely known as a supporter of coal, and argued "excessive" environment regulations has had a negative impact on U.S. economic growth. Reuters last week reported that coal stocks fell on fears President Obama would impose more regulations on the coal sector.
"The coal industry has seen increased regulatory oversight from the EPA on a number of issues under Obama's first term, such as stricter permitting requirements in Appalachia and new regulations for emission reductions at utilities," said Lucas Pipes, a Brean Capital Carret & Co. analyst. "There's a perception that another Obama term is negative for coal."
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CONSOL Energy has 12 bituminous coal mining complexes in four states and reports proven and probable coal reserves of 4.5 billion tons. The company's premium Appalachian coals are sold worldwide to electricity generators and steelmakers. The company has announced that they plan to idle its Miller Creek surface operations. To date in 2012, the Miller Creek complex has produced 1.55 million tons of coal.
Walter Energy is the world's leading publicly traded "pure-play" metallurgical coal producer for the global steel industry with strategic access to high-growth steel markets in Asia, South America and Europe. The company reported metallurgical coal sales of 2.62 million metric tons in the third quarter, an 8 percent sequential decrease.
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