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Clean Coal – it’s more than an advertising slogan

Today's Financial News - Posted January 6, 2010

Tom Bulford, regular contributor to the daily UK publication The Right Side, shares his analysis of a company ready to cash in on the benefits of coal in the coming year.

Tom Bulford (The Right Side):

The situation that could trigger a rally in these two stocks

South Africa is desperately short of power. Although the recession temporarily reduced demand from the mining industry, power cuts are now re-emerging on a regular basis. State generator, Eskom, is simply not keeping pace with demand. With the World Cup coming to South Africa next summer this is not only a major economic problem but an embarrassment. SNRP’s anthracitic coal is ideal for burning in power stations.

It is also ideally situated because some 10% of the power that Eskom generates in the north of the country is lost in transit to the important south-eastern coastal cities of Durban and Port Elizabeth. So SNRP’s business plan involved a tie-up with AIM-quoted IPSA (ticker: IPSA) which planned to build one power plant at the site of the Elitheni coal mine and another at Coega near Port Elizabeth.

IPSA’s plans, however, fell foul of the credit crunch and left it with the need to sell off the giant turbines ordered for Coega. I understand that this sale could be close. If so, it could be a trigger point for both its shares and those of SNRP.

But SNRP is not relying on this alone.

It is already selling coal to local homes and brick makers. It has also struck a deal that will allow industrial users to clean up their environmental act by converting their boilers to use SNRP’s anthracitic coal.

But the biggest opportunities could lie in the export of coal, for which SNRP is already receiving enquiries from India and China, and in that remarkable Underground Coal Gasification technology.

Click here to read more of Mr. Bulford’s analysis, presented at Fleet Street Invest, UK.


Next Article: TFN eNews 01/06/2010: Will Gazprom cause a spike in natural gas prices next Monday?

Posted by Tom Bulford · Filed Under Oil and Energy 

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