China and Why Coal Prices Will Soar

Filed in coal-prices, economy, lead, New Gold, silver by on June 21, 2010 0 Comments

In Beijing, I saw firsthand the unfolding boom serving China’s new and growing disposable incomes. Besides busy shops and restaurants and 5 million cars on the road in Beijing alone, there is something more basic that underlines all of this. In fact, it is more fundamental to the entire story of Asia’s new consumer. It’s energy. Yes, all those factories require power. But so do iPods and air conditioners. So do cell phones and computers. The modern consumer economy is a plugged-in economy that eats electricity like locusts devour crop fields. As a result, China has added power plants as fast as they can make ‘em. China adds more every day, accounting for about 80% of worldwide construction. The Economist reports that the capacity China adds in 2010 will exceed the entire installed base of Brazil. In the next two years, China will produce more power than the U.S. Where does the power come from? About 80% of it comes from coal. Not just coal, but awe-inspiring amounts of the stuff. Consider that in 2000, China used about as much coal as the U.S. Here we are 10 years later, and China consumes three times as much as coal as the U.S. There are a couple of problems with coal. One won’t surprise you, but one may. First, coal is a dirty fuel. You have to spend only a few days in Beijing or any of the big cities to see what burning so much coal does to the sky. This creates many health problems in China, and the Chinese know this. Hence, there has been a lot of money flowing to alternative modes of power generation — like wind and nuclear. The other problem with coal, which might surprise you, is that China may have hard time making more…

Continue Reading »

Teck Resources (TSE:TCK-B) Gains Back Much of Yesterday’s Losses

Teck Resources (NYSE:TCK) (TSE:TCK-B) has gained back about two thirds of yesterday’s 6 percent loss, as growing concerns over how China’s battle with inflation will affect commodity demand. The EU debt crisis has also generated a lot of questions as to how commodity demand will be impacted by the austerity measures many of the countries in the euro zone will have to take, as well as the

Continue Reading »