This is the Coaltrader Podcast on the Clear Commodity Network, your source for trading and investing in the coal market. Hey everyone and welcome to episode 11 of the Coaltrader Podcast as always on your hostnetwater with my partner Joe Aldina. Joe, how are you doing buddy? Hey Matt, doing well, fun fact. I am traveling internationally again. This is my third international podcast and second from Mexico. The weather down here is much better than Washington DC. It is much better than Washington DC. I am happy to report that it is like 50 degrees outside Fahrenheit, which shines in stark contrast to the past two weeks where it was much, much lower. Oh, Wayne O'Bott Parales gas prices and less coal prices though Matt. Absolutely, Matt, they are. But yeah, we are coming up on what we call shoulder season and for those of you out who are unfamiliar with what that is, the period of time in the year where coal demand begins to sag a little bit from a weather perspective. On the thermal side, it is directly related to weather. On the Met coal side, it is mostly related to the fact that steel is a very lumpy business and people restock mostly in these two big points during the year and one of them is right at the beginning leading up to Chinese New Year, which is imminent. Then afterwards, both spot prices and equities tend to sag into summer demand season, which is when everybody comes into restock again after cidling through the spring. Right, Joe? Yeah, absolutely. We are kind of past peak in a lot of northern hemisphere markets in thermal coal. But thermal coal prices are holding up pretty well and in some cases ticking up a little bit, which has been consistent with our outlook. But yeah, this is starting to get into the shoulder season past the peak and you just don't want to fight against that. No, that's right. The thermal side obviously has another month or so left for coal weather. Just looking through the futures, Newcastle, Front Month Contract, up, I want to say about to 2 to 3% on the two weeks that we've been out, 8% on the month, looking at European prices there up about 7% on the month. And we've seen a really nice comeback in South African coal prices in Richard's Bay, up almost 11% on the month. What's going on there from a demand perspective? Yeah, we put out an update a few days ago on thermal coal markets and we talked a lot about South Africa. It just happened to coincide with the McCloskey Opus coal conference that was taking place in Cape Town. It's a good time to write about South African prices going up. It's Indian buying their primary market. You have strong sponge iron demand that's been key. We call that direct reduced iron in the US and the EU by the way. So sponge iron is an India specific term. We've gotten some questions from readers and listeners on explaining all these funny coal industry terms. This is one of them, sponge iron. But the Indian producers, these are, this is an intermediate steel product and demand has been very strong and South Africa because of proximity to the Indian market and the right coal quality characteristics is the preferred source and that's been driving up demand. And then the other big source is cement demand for South African coal. So both sponge iron and cement have been strong. And these are big markets in India for imports because domestic production heads to utilities that gets preferential treatment heading to the power sector. So if you make money in the industrial sector and sponge iron and cement, you can pay for imports and you want to make sure that you get coal and you look to the international markets. So yeah, the South African prices up very solidly almost at the $100 level 96ish when I put out my piece on the 10th of February a few days ago. That's kind of the rundown in South Africa. You know, European prices were coming into a little bit of warm weather and so gas prices at the TTF titled transfer facility in the Netherlands, which is a virtual gas trading point kind of representative of overall European gas pricing. Those prices are down a good bit and so coal is just, you know, there's not a lot of demand. Prices have helped up though, 102, 50 or so. You got in front of you, Matt, but when I wrote about it a couple days ago, it was 102, 50 or so. And, you know, so hanging in there, which I think is a good sign. Same with China hanging in there. We got past the peak low temps and they were looking at a little bit of warmth coming over the remainder of February. We got lunar new year, but prices still holding over $100 per metric ton. Arbitrage window is open. So, you know, we're doing okay. Yeah, just running down the prices. There's a lot of green on my screen on the Thermal Coal Futures. Newcastle February contract at 11670 next month, closer to 120. API 2 currently at just under $105 next month, 107, Richard's Bay contract front month, 98, 25 next month, 99. So, it's a lot better condition that we've seen. Whole markets here in a bit. Yeah, absolutely. Hey, we like owning a little bit of the real economy and, you know, the real economy is doing all right and coal prices are doing all right. So, we like it. Yeah, now that's, that's right. On the Metcalfe side, a little bit different commentary. There's starting to be a little bit of red on the screen, Joe. That's a, we never really like to report that, but we have to acknowledge kind of where we are in the, in the cycle. And with Chinese New Year coming up, there's very little buying out of China, India, which is largely driven this, this last, this last price cycle has kind of come to the point where they're, they're relatively satisfied at the mill level. So front month futures right now at $247, that is up to 0.4% over the past few days, up 8% over the past month. But we hit 250ish and now we're starting to move the other way. March futures are at 222, just to give you an idea about where we're probably headed. And then, you know, as we look forward through the curve, you know, the, it kind of bottoms out around the $215, $212 level on Metcol. I think we'll probably explore a little bit lower than that given how plats and argus tend to rate physical prices during the shoulder season. There's not, to give folks an idea, there's only about 2% of the entire global Metcol market that trades on spot. But any cargo that's heard or any steel producer that's got a bit out in the market, all of that information funnels through plats and as those numbers lower due to, you know, the ostensibly large lack of demand during these periods and times in the, in the year, the price sort of falls down with it. So we're headed into that season. I think we'll probably see a low in May. And I think it'll probably have a one handle, probably 195, 190 somewhere down in that area. And for our purposes, that is a higher low, which is really good in cycle terms. And I'm looking at Dallion futures. Dallion futures are also down, you know, across the board, about 3% on the curve, the front month down about 10%. That just kind of signals that China's done buying here for the near term. So not terribly dissimilar market activity as we're seeing on the thermal side, Joe. Yeah, not too much, but man, 2% spot, Matt, that's like, it reminds me of the term you used earlier this week about trading by appointment. I guess it's a little bit better than that in the Met coal markets. It used to really be annual contracts and really trading by appointment. But yeah, I think we had a lot of questions about the seasonality of buying in Met coal. And the market has changed, but there's just some strong buying patterns here. So good to have you talk about that seasonality and explain it to our listeners. Yeah, I mean, that's kind of what people should start to expect right now because that funnel through to the equities, right? As coal prices come down, so will the equities because these are cyclical stocks. And there's a lot of beta relative to where prices are. So we're going to start to see that in the Met market, a figure we're probably going to see, you know, AMR, Warrior, Ramaco, those stocks had lower from where they are. I'm a buyer on the way down because, you know, looking at a broader picture in the cycle, you know, 2026 is, you know, the year that the market begins to pick up should be expressed fully in 2027, 2028, you know, the more we get to the end of the year. But that's that's kind of where we are. So, you know, folks who are out there, you know, buying aggressively, just, you know, pump the brakes a little bit, cool to jets, let the market kind of play out and let's see where we're at. I think, you know, from macro perspective, there's a lot of things that are working in our favor, but seasonality is seasonality and we are in that part of the year, right? Yeah, absolutely. I think entry point matters a lot for the cyclical metastasis.
at coal names. We talked philosophically about this in one podcast a little while ago. And I know, you know, I'm a little bit more of a bien-holded mister. I just wrote a long piece on the MLPs. You know, I've been holding ARLP for a long time, and RP for a long time. But on, you know, AMR, I want to be sensitive to my entry price. Yeah, that's right. And in comparison to you, I tend to do a lot of planting and pruning in my 401k, you know, I build up, you know, positions over time and, you know, only overweight them when the cycle is really working in our favor. And, you know, right now, you know, that's not the case. So I think, you know, kind of normal positioning rather than overweight positioning is fine. You know, up here at these levels, we probably want to be at our main allocations with the idea to get up to, you know, more, you know, higher allocations as we get into, like, June, July, when the market should begin to turn from a seasonal perspective, right? Yeah, absolutely. I am going to take a quick lap on MLPs though, because they've been up big time this week. There's a lot of people. It's almost like people are looking for places to hide out during this period of volatility, right? Yes, perhaps. Or, you know, something, something that actually makes cash and returns it to investors. So, you know, my Bitcoin position did not work in that regard. I sold out of that quickly. I like things here that have some free cash flow. So, you know, I've written, written plenty on the MLPs recently. Check out a piece I put out today on Alliance Resource Partners and Natural Resource Partners. You know, so I won't go into it too much. They're just, they're good yield plays. They're solid. You know, alliances got the thermal bias. NRP has got the met bias. And yeah, I think, you know, even if you're not normally an MLP investor, maybe take a look, you know, in this market climate. Yeah, that's, that's right. I mean, the Alliance is trading up toward $26 a share now, which is up about 10% a year to date, 11% thereabouts. Natural Resource Partners at 126 up 20% year to date. Yeah, just started taking off in December. You know, it's sad to sat around for, you know, a couple of years not doing a whole lot. And even though things were getting more and more positive, more and more positive, Matt was talking about it before me. And we've been talking about it for a long time, at least a year, but now it's playing out. So victory lap. Yeah. And then on, on my end, you know, because I tend to play in Prunel, I was actually selling Alliance and selling sub NRP here this week, you know, from, from my perspective, I, you know, I kind of put those allocations in my, I'm going to put the scenarios, what's my savings account. And I've already outperformed the yield on both of those stocks. So I took off, took off quite a portion because there's some other, you know, more interesting places to allocate that capital. But if we get, if we do get a shoulder season pullback in everything, we're putting that money right back in those buckets because the do denser pretty well scared NRP going to be out of debt here by the end of the year, Institute of Shareholder Return Program. Pretty solid on, on, on general. Yeah, I, you know, I don't disagree with your strategy, Matt. I think, you know, you see capital rotating into the MLPs and the prices go up. And then, you know, you could see them trade down here a little bit and the dividend gets back up. And, you know, they, they cycle a little bit. It's not a large cycle in ARLP, but you can definitely trade around the cycle. So that's right. If I had a lot of money invested in either of these, you know, it'd be a different story. But for, you know, for a few grand, you know, like I have kind of put away on the saving side, it's, you know, it's fine to kind of trade in and out. But we did also have some earnings this week. And that's probably something we should talk to, but here pretty soon. But before that, why don't we take a break and hear from some of our other friends in the Clear Commodity Network. If you're interested in investing in the commodity and resource space, check out the Corlan Economics report, just search DKE report in your podcast player. That's where we provide daily commentary from the top analyst newsletter writers and fund managers in the space as well as exclusive company updates, keeping you as up to date as possible in commodity moves and key company updates all produced under the Clear Commodity Network. In mining, the difference between a good project and a great investment often comes down to one thing, visibility. Tara Hutton is a Sweden-based online mining investor platform built to make the invisible investible. Because a great project without a story is just data, drill results, spreadsheets, and technical reports that never fully connect. And a great project that isn't online might as well not exist at all. Tara Hutton brings mining projects into the digital spotlight, combining data, narrative, and context in one place. So investors can see not just what a project is, but why it matters. Whether you're evaluating early stage exploration or more advanced development assets, Tara Hutton helps turn complexity into clarity and information into insight. Visit Tara Hutton online and start discovering the stories behind the data. So thanks for rejoining us here listeners. One quick note, you just heard from Clear Commodity's network. We just had a discussion of the MLPs. I want to point out we have a lot of Canadian and Australian listeners. Beware of MLP taxation. If you're buying those US MLPs, you get tax of very high rates and they're almost not worth playing. I won't go into the details, but check out our writing on the MLPs. I made a note of that and just do your due diligence there. But Matt, I think you want to cover some earnings. There's some good news there and you had a very nice projection, I believe. Yeah. So yesterday there were two companies that reported core natural resources and warrior Metcol. Our prognostication for warrior Metcol showed net income of pretty cents per share and they reported 44 cents per share. So pretty darn close if I don't say so myself. Yeah, you're going to have to try harder next time Matt. I'm afraid. Yeah, that's right. I did have a couple of questions about how I model revenue and how I model costs and those sorts of things. One thing I should note is that I only try to model mine revenue. I can't really model transportation costs or trying to think of other logistics related things that also get put into warrior's reports because they report FOB at the port, given they export all their production. I'm really just looking to get my level revenue and my level costs because at the end of the day, all the rest of those costs are passed through. So we're looking for the delta, the delta for EBITDA and then estimate as best we can SGNA, DDA costs, those sorts of things and try to get to net income level that makes sense. We did a good job of that here. This past go around. But the call was really interesting. The thing that sort of was concerning to me was that they're realizing only 71% of premium low volatile coal prices, which is incredibly low and they're doing that for a reason. The first is because they're ramping up the blue creek mine and they have to place those tons in the market. In order to gain market share, they have to show a little bit of leg with regard to with regard to the discount. That makes, I mean, that's that is a very common thing that happens when you bring on a new mine. But the other side of this is that they're marketing blue creek as a, I'm going to put this in air quotes, Joe, a high volatile A coal when it kind of really isn't. And that's probably something we should have, you know, go along, right? I was confused about that myself, Matt, because I have been, I was in blue creek, I don't know, a long time ago, more than a decade ago. I always thought of it as a midvon. Well, that's just kind of what it is. You know, when the end users, when typical end users think about a US East Coast high volatile A coal, what they think of is something like alpha's marfor, for instance. When you heat that coal up in a coke oven, it contracts. It loses volume. Whereas, you know, the coal's down in Alabama really don't. So in addition to that, the CSR or the coke strength after reaction, which is a unit that has basically served as the marketing point for premium low-volatile Australian coals for the past, you know, 30, 40 years, it's much higher than US high-volay coals. And the difference here really is that it's kind of important to highlight because it shines a light on the value and use of these coals. And it's not, it's not just from a strength perspective, it's not just from a, you know, physical properties perspective, it's, it highlights more the need to tailor individual blends to what coals you have access to as a coak maker. And for instance, the Pocahontas 3C, which is mined by a lot of, you know, southern West Virginia, southwestern Virginia mines like Buckanet, like from Coronado, for instance. Those Pocahontas 3C goals will expand in co-covins. And they used to be back in the day, a real pain in the keester for coak, for coak makers because that can damage the coak oven walls. So, Massey actually created the high-vol, what we call now, the high-volay market by selling coal from
a Marfork, which has this contracting property. So she could buy as much bicannon as you wanted, and you just pair it with Marfork to hit this kind of mid-vol, 25% volatile content target, 26 maybe, in Europe these days. And without having any operational issues or pressures or having to do additional co-governor reliance or anything like that, that was really the desire for it. But Blue Creek Coal really doesn't do that. So to me, it's kind of a different product altogether. Does that make sense? I think that makes sense. I just want to tell our listeners, who might not be familiar with the co-governor, you have these really tall, narrow ovens, and you charge them with the coal from the top. And things expand. And because you're in these narrow steel chambers, you don't want the walls to push out. And that's kind of what you're talking about there. It's a little bit of a wonky thing. And Metco is a commodity that has a lot of different properties. But I always thought about it as folks kind of need to blend to get the right properties for the right equipment. But you're largely trying to hit a mid-vol spec. Maybe is that fair to say? No, that's exactly right. It's a matter of fact. When we think back to the dawn of the steel industry, the percent of volatile content-- and all that means for folks who might not be familiar with it is that there's a percentage of coal in its lump form that is not organic. It's not carbon. It'll be driven off as you heat it up in the absence of oxygen and become a gas. And then for a steel maker, what's one is the fixed carbon. And really, that's the difference between high-vol and low-vol, and why there are different prices. Low-vol has more fixed carbon. High-vol has less fixed carbon in it. And then the other places, the realogical properties or the cooking properties of each individual coal. And Blue Creek is really closer to what a number four type product is. Their number four mine used to be one of the most sought after mid-vols in the world. Now it's a little bit higher volatile content than that. Mid-vol usually cuts off at about 28% volatile content. Number four, I think is up in the maybe low 30s, upper 20s. Now, Blue Creek is a little bit higher than that, but it's still not the 35%, 36% volatile content that we see from typical US East Coast high-volays. And in my opinion, that coal should be fetching a premium over US high-vol A product at the moment, not a discount. And that is really one of the-- if I had a bone of contention to pick with how the company's going about framing this, like I would say that you're just leaving money on the table. Because this is really kind of an off-spec mid-vol coal, not a high-vol A that management is clearly trying to push out of the market. Because there's a lot of high-vol A producers in West Virginia, for instance. I would rather see them make more money selling closer to a premium low-vol or a premium mid-vol index, because their product deserves it for a quality standpoint. And while I'm excited to have come really close to where their earnings came in here this quarter, also a little bit concerned that they're not capturing as much value for the product, which is fantastic, as they really should. And that is a pretty mild criticism, considering they've brought this mine in on budget, on time, in advance of schedule, and the long-walt was absolutely smoking here this past quarter. Pretty much in full capacity here right now. But anyway, something for folks to consider, I think. You think on the marketing side, Matt? It can get higher realizations over time. I know if I think about MedCole guys-- again, I think I remember a little bit about the business. They're very wary of trying new stuff. You've got to test everything, test it again. You think realizations will move up over time. And I do think they deserve it. They should move up over time. That's kind of the point, right? Of course, when you're bringing a new product to market with a cadre of people, a customer base that is reticent to make changes, you have to make concessions in order to bring it to market. People have to learn how to use it. It's a new product. If there's literally no other quality, maybe percent P-Body's show Creek mine. But P-Body's show Creek has had customers for years. And they know how to use it. Blue Creek is having to find new customers, which can be a challenge. And I understand what management's doing. It's absolutely correct to try to encourage end users to participate in it. But I do hope they understand the quality of their material that they're mining is very, very different from what the market really thinks of US East Coast Highball A. And to be fair, I think it should have its own index at Plats or at Argus, because it's just a completely different product. Yeah. Yeah, I would agree with you on that. I know you've talked about this stock as having some more juice. It's done really well over the last eight months or so, up 60%. It's pulled back a little bit here. We talked about the shoulder season coming up. This is one I've been thinking about adding to my portfolio to generate a bit of alpha. You think in the coming months, this is a good buy? I mean, even at 86.50, where it's at today, or a 6.30, it just ticked down a little bit. Here at this level, it's a good buy. For sure. What I would just hope is that they're able to really increase their realizations going forward. Because they spent a lot of money and a lot of time and didn't capitalize on the $600 medical prices from 2021 to 2022. And now's the time for them to actually go make hay. And from my perspective, I'd hope that they describe the value that I really think that coal is worth to their end users. Because otherwise, if they're-- if looking forward, warrior is going to get a 75%, 70% realization relative to PLV going forward, that's kind of, in my opinion, not really what investors signed up for with regard to Blue Creek. They're going to make a great margin at whatever price they sell it at, because the cost are going to be fantastic. But if it's me, I'd rather sell it at $150 a ton, than $130 a ton, because I like money. And that's about it. Yeah, you want to make sure you get the maximum monetization for those reserves, too. So I think you're right. It's one I'm going to be watching to stick into my portfolio alongside the MLPs to get a little alphax boger. What else is happening out there? Sure. Core natural resources also reported this week. Didn't quite nail a little bit worse than we expected from a modeling perspective in terms of net income. But they have some insurance money coming in from we're south. We're pretty optimistic about what the best ephemeral prices will do this year. And again, the legacy arch resources assets that they have, particularly we're south, which is now back in production, is basically a call option on the Met coal market. So we still like core. The Pennsylvania mining complex is going to generate a ton of free cash flow this year. Things should definitely look up relative to Q4. And they kind of guided to a point that looks as much. So pretty excited about that. We do have some other reports coming up. Natural resource partners set the report on February 27th. Also, alpha is going to issue actual audit reports step one in time, Ramaco on March 10th. And let's see. I think everybody else is pretty much out here at this point in time. So anyone else that you're looking at, Jeff? No, but I'm looking forward to the NRP release on the 27th. I wrote about that. It'll be really interesting to see where they are in paying down debt and what they do with any special distributions this year or how they talk about upcoming distributions. Because NRP, I think if people get more comfortable that this stock with a very clean balance sheet is going to just distribute cash more reliably than they have in the past, I think there's a lot of buyers for that. So I'm looking forward to that and hoping that it makes me some money. Yeah, be too buddy. So I think we left off last time with a couple of listener questions that hadn't been addressed yet. So I think we'll probably pick those up here again. The-- I noticed that the first one-- the one that we left off on was from Robert Howard, who asked that he was interested in the rare earth potential for some of these coal names, how much rare earth is in current price is what should we be looking for as that story evolves and those sorts of things. And that actually ties into an event that happened in DC just the other day where Jim Gretch, CEO of Peabody, presented Trump with a very interesting award, which is very advisable if you're shown up to an event at the White House these days. I think so. I think so. Yeah, for the coal industry. And why don't I let you talk about that for just one second. And then I'll--
kind of, you know, dive back into the rare earth side because it is tangentially applicable here. Well, yeah, I mean, we're seeing a lot of support from the administration from four coal and we had the EPA rollback of their endangerment finding on coal. And then we had news that military bases would buy coal-fired power. We've also had the DOE try to keep on some coal plants, keep them running longer. You know, it's interesting. I mean, some of these things will have an impact, the EPA finding. I'm not sure how much an impact it's going to have on coal. It was going to have a really big impact on the transport sector. Frankly, I think the legal basis on that was a little bit tenuous and there were some good reasons to attack that and they the administration did. So they, they, I chatted about it on sub-sack if anybody wants to listen or read the wonky comments on the legal basis around the endangerment finding. But the idea of military bases buying coal and the coal-fired power in the US, and Matt and I were talking about this a minute ago before the podcast. It's, it's a little crazy, but it's not that crazy. I actually was a consultant to the Pentagon on energy matters and under the Biden administration they were buying green power. You can do a PPA for green power. So why can't you do a PPA or specifically pay more for coal-fired power to keep these plants on them to send more revenue to the sector to allow operators to invest in their coal plants. And you can. It doesn't do anything about how the electrons flow. It doesn't add any resiliency to military bases necessarily. But you know, the, the last administration was doing it for clean power. So this administration, you know, might as well do it for coal-fired power. You know, I think, I think we had the winter weather, which we covered a little bit on the last podcast. You know, it makes sense to keep coal plants online and pay them for their capacity. Even if they, even if they don't run, that just seems very logical to me to prevent blackouts. But, you know, I'm sure I don't have to convince listeners of this podcast, but there's a lot of others that aren't convinced. So, you know, that's what's happening in DC. We pay attention, but we try not to think about it too much over here. Yeah, things can change pretty quickly in that town, as I recall. Yes. But I mean, with regard to, you know, PPA agreements and those sorts of things, you know, of course you can buy whatever you want to your point. Electrons don't really know where they came from necessarily. They just go along a power line. But, you know, on the other hand, we like money. And we're happy for, you know, these companies to, you know, to open their wallets to accept donations in that regard. I think it's perfectly fine to do. And it does incentivize on for longer, which is important if we're going to have, you know, power demand growth that was here here to for unseen, unforeseen. And that's a, that's just kind of one of the dynamics here at the next, you know, five years is that if we're going to build out AI data centers on mass, and what they were actually talking about at DC was a government data center, not in necessarily an artificial intelligence data center, you know, building a, even a new coal plant to support that would make a whole lot of sense in the same way that you can build behind the meter solar capacity to offset your grid needs. You can absolutely build behind the meter coal-fired power to support your needs as well. Be able to do that. You could cite your data center right next to an existing coal plant. You know, Matt and I have looked at this and talked about this too. I mean, a lot of the hyper scalers and the, you know, the builders of data centers, they want clean energy. It's just tough to convince them to buy coal. It's tough to do carbon capture and sequestration. I looked very closely at that out in Wyoming at one point. But, but yeah, I mean, I just to close the loop on the buying coal power thing. I did this with green energy. We went to Duke energy and we said, we will pay more to you Duke energy, more than normal electricity rates. If you, if you allocate to these military bases, more green power than your normal grid mix, which has coal on it. And, you know, the US government was paying extra money to utilities, utilities that did not want to, you know, decarbonize. And they waited, right? And now they were getting federal dollars under Biden to buy green power. So, you know, it's the same thing this administration is looking at. Yeah, no, that's that's perfectly correct, right? And then, you know, to go one step forward and also close the loop on Robert's question, you know, regarding the rare earth potential, you know, we have a pretty unique opportunity here at this point in time. I mean, I think the government is correct to look at building a specifically government data center and, you know, powering that with specifically thermal coal from the powder river basin, because, you know, if you think about Wyoming, Wyoming as remote, it has plenty of access to water. It's a great place to put secure place to put a facility like that. You could build a plant that takes, ostensibly, all of Ramaco's Brook Mine output, and then a portion of both Peabody's North Aneloah Prashell Mine and core natural resources black thunder, you know, the big publicly traded companies assets in Wyoming take all of that coal, design a power plant to burn that coal specifically, power a data center, and then on top of that, there's a company that I've talked about in a little bit in the rare earth trader, which the rare earth trader dot sub stack dot com for those of you who aren't already subscribers. So, there's a company called metallium that has a technology called flash dual heating that can process, it was actually tested on coal fly ash, so the byproduct of burning thermal coal at power plants to recover rare earth minerals. Tallium is traded on the Australian exchange under the ticker MTM. It is down 13% over the past month, 17% over the, but up 17% over the past three months, really kind of excellently performing stock, but you could take that technology and build one processing plant on site at that power plant that we would build in the PRB to process all of the fly ash waste coal and recover rare earth from it, you could sequester the CO2 and capture the credits that were issued under the inflation reduction act, and you could have a captive source of coal from these three publicly traded companies and Keywood and other companies who were operating out there as well. So, you know, in my mind, I think this could be a really interesting opportunity to put a catch-all facility in Wyoming, a state that would support it, and again, has plenty of infrastructure to keep it going for the long run and create a lot of jobs in a place that needs them, and also satisfy, you know, US rare earth demand while we're at it. To me, that's kind of a win-win-win, and the worst case scenario is that the coal plant basically becomes replacement capacity for other PRB plants that probably should next five to ten years. So, I think it's a good idea, actually, and would kill a lot of birds with one stone. Yeah, would love to see that happen. Yeah, so interesting DC week, to say the least. Yeah, interesting, interesting things from this administration, absolutely. What else has shaken? You want to do another question, or, you know, we could transition to Australia. We got so many good questions, so you have like 50 replies on the last thread in our refrigerator chat. I picked up on one randomly about, or any read through from AMR to NRP, and since I'm, you know, heavy into NRP, I think, you know, AMR production was okay, realized pricing a little week, you know, the read-through would be, the read-through would be things are, you know, steady, but not stellar for NRP. But really, for me, it's more about what's, what they're going to say about debt paydown, and what they're going to say about the consistency of distribution, distributions to unit holders going forward. Yeah, I mean, I think we could say just broadly it's, it's going to be a rough stretch for central Appalachia in general. It's not just kind of AMR, you know, the higher transportation costs that, you know, that region experiences, by the time you get back to the mine, which is of course offset to some degree by domestic sales. Core, for instance, reported higher domestic sales than usual, which, you know, in general, will be a good thing this year, even though domestic numbers are down a little bit. It's, you know, that's, that's kind of how everybody has to just weather the storm, I think. It's not really a commentary on AMR in particular. That's, I think, Ramaco is going to have some of the same headwinds that really, and I said this last time, it comes down to how much low-vol are you producing, or how much mid-vol can you produce. There isn't an index for US mid-vol coal, but I've heard several transactions that have happened up in the 220.
$25 per ton, $230 per ton range, that is just not reflected in these US East Coast numbers that are put out by plants that are put out by Argus. So I know that the market is higher here, relative to what is being put on the tape, not that steel producers necessarily want to hear that internationally. But I think we're coming down from a point that will wind up with, again, even for the US at a higher low. So I'm more optimistic about central high production. Once we get through this shoulder season and into what I think is going to wind up being the meat of the cycle in late 2026 in early 2027. Yeah, that makes sense. That makes sense to me. I think you can still play NRP. It's a different than playing AMR obviously. Yeah, NRP is going to be steady at it. I mean, regardless of, that's more bent on production than it is on price at this point. So as long as production stays steady, which it looks like it's going to, NRP is going to be just fine. You can collect checks as low price environments or high price environments. And, you know, 7 or 8% of 50 bucks is about the same as 7 or 8% of 55 bucks. Yeah. And NRP has just been under-appreciated, although, you know, it's a, so there's a little bit of alpha in there, but it's a, it's a yield play. Talking about alpha, coal alpha, coal price alpha alpha on coal stocks, there's some interesting things happening in Australia. You want to rotate over there for a moment, Matt? I know Stanmore is down already undervalued. That's, I'd love to get your thoughts on that one. And then, you know, white, even, I think, white, even as down a lot over the last couple of weeks, but I'm not worried about it. I think it's profit-taking, little volatility on the ASX, maybe some rotation activity, but still up on the year, still like it. And then, and another good one to put in portfolio for some alpha, I think. Danmore's back down into value territory down 16.7% over the past month. You know, a little bit of that is due to, you know, just cyclicality in general. I mean, coal prices are going to go down here over the next, on the medical side here over the next few months. But yeah, $2.53 is a pretty, pretty great spot to go pick it up. There is some, scuttle butch, should we say, about Anglo's assets being back on the market and the two companies that are most associated with that purchase right now are Stanmore and Yankels. It's not like there's no acquisition risk there, but Stanmore wound up with those assets to be that was a little bit of a big deal. So, that's what I'm interested in picking up over time. Why do you even, is actually kind of flat on the month, Joe? Thermal coal prices have been, you know, as we pointed out earlier in the podcast, student pretty well, you know, the stock kind of topped out in the $9 range, which is pretty close to where it was a few years ago. So, you know, we kind of have this double top, you know, my suspicion is white haven will make a higher low here over the next few months and then we'll take out those all time highs as we go forward. Yankels still kind of hanging in there at the, at the $6 level, at the Australian dollar $6 level. So, that is, you know, a lot higher than when we first flagged it up at, you know, in the mid $4 range. So, it's had a nice little appreciation and even if they wind up with the Anglo assets to over Stanmore, that'll be transformative for them as well. So, you know, I like those assets changing hands. I think it's time that they got some new ownership Anglo clearly hasn't prioritized them as they've been on the block for a long time. It would be great to get that coal back out into the market. I like to see it come out here this year or next year and kind of just rip off the bandaid with regard to any kind of new supply so that we can move into 2027 with a, you know, completely full market and absolutely, you know, start the next upleg of the cycle. Yeah, you know, both Stanmore and Yankels have performed very well on acquisitions and some of the best to kind of bite off the Anglo assets and, you know, I'm very wary of acquisitions in the coal space. I was talking to a friend earlier today who said, you know, come on, coal the coal space. And I said, you know, it's a different space now, but I can see why people get worried about acquisitions. I'm not, I think these are two of the best companies to possibly do it. Yeah, and the, you know, regardless of what we think about, you know, the Anglo assets, the coal quality is pretty fantastic. It's just they have operational issues right now that could be solved with a, you know, with a management that is more dedicated to doing that with solid access to capital and will Stanmore and Yankels fit that bill. So, you know, for me, I think about that potential acquisition as being a positive for each, although we'd have to see obviously deal terms to determine, you know, just, you know, what the next year or so will look like as they digest the acquisitions. Yeah, it makes sense. What else is shaken out there in the coal world? Well, I suppose we ought to talk about, you know, for just a second about the Indonesian threat to reduce production. I talked about it a little bit. I was on the money and mine podcast with our friends Travis and and and Jonas and in Australia here the other day. But, you know, my sense of that is I'll believe it when I see it, but I'd be curious to have your take as just one final comment here before we wrap up. Yeah, I think, I think, you know, it's a good that you bring it up because it has been helping thermal coal prices. I think it's when you get these announcements from the Indonesian government. It's more of an acknowledgement that the market market conditions are changing more than any kind of a government directive. So I think the targets that get thrown out there are about 50% cuts in production, 60% cuts in production. You know, those are a bit farcical and they always have been, but I think there's already been a little bit of production cutting and you're that's helping prices go up in Indonesia for some of the Indonesian grades and then it's helping Australia, it's helping South Africa a bit. So I think it's I think it's a positive positive thing. A lot of the companies that we talk about have, you know, the higher CV coal exposure in the like 5500 to 6,000 range and that's not not a lot of what Indonesia produces, but but overall, you know, Indonesia pulling back can tighten the market a bit and even help out those high CV coal. So I think it's overall a positive thing. Well, certainly, you know, the thermal coal prices are reflecting that here at the moment, but it's I guess we can probably weigh in on it over time as we see what the net effect is. The last time there wasn't there wasn't much to the threats in terms of production, but there was a really solid net result in terms of price. So my, you know, my base case assumption is we're going to see that again and you know, that might even create a little bit of lift for, you know, at least through March, but you know, usually upon the realization of well and probably not going to do something as drastic as what they're saying, you know, you have the pullback as a result. But I don't think that just changes our normal shoulder season dynamics. Do you? No, I think, you know, you run into shoulder season here. I think the market is just being, you know, frank and objective. I think I kind of have China at flat. I think I have Northeast Asia kind of flat in terms of imports. I'm talking about here for for 2026. I think India's a nice, been a nice bright spot. I think pullbacks from Indonesia help a little bit, you know, Colombian call has pulled back everything points to a little bit higher thermal coal prices, but nothing, you know, no catalysts without a big supply side disruption to really push prices a lot higher. But you know, I think the companies we cover here, ARLP makes its money on U.S. domestic production or, you know, Yancold sells 5,500 and 6,000 great coal into China and Northeast Asian markets. I think, you know, we're looking at another year of solid production and solid to somewhat increasing prices. So that's kind of, that's kind of what I'm looking for here. I think Indonesia helps a lot. I think, you know, the recent news at a Northeast Asia on, you know, skittishness around nuclear, you know, that makes a difference in the short term and in the mid and long term about keeping coal in the mix. So those are some of the things I'm thinking about in addition to Indonesian prices, Indonesian production cuts that will support prices. Now I hear you. And, you know, speaking of the U.S. dynamics don't sleep on Peabody's production in the Illinois basin or in the powder river basin either. I think both of those domestically are set to do, you know, relatively well and they have Centurion coming online. So, you know, I kind of like BTU set up here and that's probably going to move up the list in terms of priorities of acquisitions, you know,
as we head on into shoulder season, hopefully we get a pullback that we can manage here and be locked and loaded and ready for summer, right? - Yeah, that sounds good to me. - All right, well, it sounds good to me too. I think let's wrap it up there for the week. There are a couple of questions that we didn't quite get to for readers, but we will absolutely catch up on those next time. And in the meantime, I wanna thank all of our friends at the ClearCommodity Network. As always, you can follow us on
[email protected]. You can subscribe at thecoltrader.com. You can follow me on Twitter @MMMFWater. And until then, this is Matt Worter and for JoLD, and we will catch you next time on the Foltrader podcast.
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