The day after: a new turn for the industry?

ONLY time will tell what the re-election of US President Barack Obama will mean to the nation’s coal industry, but hopefully it will not be a Groundhog Day repeat of Wednesday’s battered enthusiasm and stocks.
The day after: a new turn for the industry? The day after: a new turn for the industry? The day after: a new turn for the industry? The day after: a new turn for the industry? The day after: a new turn for the industry?


Donna Schmidt

The day after the election began with a freak-out of sorts, sparking a sell-off of stocks for some of the biggest operators. Arch Coal, Alpha Natural Resources, Consol Energy, Peabody Energy and Walter Energy all dropped by 5% or more, according to CNN.

James River Coal, which released third quarter numbers Wednesday that included a net loss and a reined-in sales outlook, was among the mining sector's biggest disappointments in early trading. Shares in the Virginia miner fell more than 22% to $3.63.

There was no doubt in the cause-and-effect theory tying the two together, according to experts.

“[The drop is] 100 per cent related to election results," Penn Capital Management senior managing partner Eric Green told Reuters.

Many, particularly in the industry, had hoped for a turnaround that would come from a Romney election, but a sorely disappointed investor public played their emotional hand by Wednesday morning.

“Romney was quite clear about the need for coal use and coal exploration, while Obama is viewed as more friendly toward environmental regulations," BTIG chief global strategist Dan Greenhaus told CNN, noting those stocks feeling a post-election jump also suffered the hardest.

“If there was a Romney trade yesterday, today is about unwinding those trades,” he said.

At the same time, alternative energy went upward. First Solar, as Forbes noted early Wednesday afternoon, saw an early 2.3% gain.

While Obama’s Environmental Protection Agency already has proposals in place that will change the face of coal-fired power generation, reports of more outlines being prepared in the hours before voters took to the polls have left the nation’s industry biting their nails.

The nailbiting is for good reason. According to a Washington Examiner report that cited an anonymous source inside the US EPA, the agency’s major anti-coal regulations will not be known until the end of November, but will include greenhouse gas emission standards that will, for all intents and purposes, prohibit construction of coal-fired power facilities.

It is the first time, the source added, that such a high level of EPA resources has been focused on a single regulation.

Additionally, estimates from the independent, non-partisan Manhattan Institute earlier this week revealed the federal environmental agency’s outlines could carry a $US700 billion price tag for the US economy.

Whether the US industry is worried or not, the nation’s largest grassroots mining advocacy organization, the National Mining Association, reminded everyone the nation needs to move forward and focus on the significant issue of creating jobs.

“NMA remains committed to working with the administration and the Congress on an 'all of the above' energy strategy that includes coal, our most abundant energy resource, and on policies that support a dependable supply of domestic minerals production to meet the nation's needs,” president and chief executive officer Hal Quinn said.

“With world-class mineral and coal resources, technology and skilled workers, US mining can be a valuable partner in creating a strong domestic economy while also providing the energy and minerals required to stimulate economic growth.

“NMA will continue to pursue public policies that provide reliable, affordable energy and a dependable supply of minerals that are vital to a stronger, more resilient economy and the employment opportunities Americans need and deserve.”

Environmentalists rejoice

As those in coal ponder what’s next and what the industry’s response will be to it, environmentalists affirmed the Obama re-election “in the face of unprecedented spending by big polluters to defeat him”

“We did it,” Sierra Club executive director Michael Brune said.

“Despite the hundreds of millions of dollars the fossil fuel industry dumped into this election to elect Mitt Romney, we proved that corporations are, in fact, not people.”

The group noted that, during his initial term, Obama shared his vision of a clean energy future – one that famously did not include clean coal technology until very late in the administration’s campaign – that also would meet climate disruption challenges.

“Today, American voters chose to give President Obama both an opportunity and a challenge of huge proportions,” Brune said.

“And the President now has four more years to put American solidly on the path to this future.”

Coal’s winners

Some of the coal industry’s supporters were given the public’s vote to continue their work to support mining and jobs, particularly in West Virginia.

While his opponent tried hard to discredit his efforts against the administration relating to coal regulations and policies, US Representative Nick Rahall emerged victorious and will serve his 19th straight term for the Appalachian state.

The re-elected legislator said the coal industry was his top priority, as was putting axed coal miners back to work.

State governor Earl Ray Tomblin, who was endorsed by large advocacy group the West Virginia Coal Association and who ran his campaign as a friend of coal, earned his first full term after defeating Bill Maloney.

“West Virginia is, and, if I have anything to do with it, always will be an energy leader for our country,” Tomblin said earlier this year during his campaign.

While finalized voting totals were still coming in Wednesday afternoon due to absentee ballots, the electoral count at press time (270 needed to win) was 303 for Obama and 206 for Romney.

Wednesday’s coal stock totals at market close are available in today’s ILN.

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