Arch Coal and James River Coal Shares Fall Sharply as More Regulations Speculated for Coal Industry
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 Arch Coal Inc. (NYSE: ACI) and James River Coal Company (NASDAQ: JRCC).
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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" environmental regulations have 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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Arch Coal is a top five global coal producer and marketer, with 157 million tons of coal sold in 2011. Arch is the most diversified American coal company, with mining complexes across every major U.S. coal supply basin. During the third quarter the company decided to idle their Bismarck, Carlos and Imperial mines, which produced a total of 1.0 million tons of coal in 2011. Shares of the company have fallen over 10 percent in the past week.
James River Coal is one of the leading coal producers in Central Appalachia and the Illinois Basin. The company sells metallurgical, bituminous steam and industrial-grade coal to electric utility companies and industrial customers both domestically and internationally. During the third quarter of 2012 the company's net loss widened to $20.6 million. Shares of James River Coal have fallen nearly 50 percent in the last week.
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