Coal sees triple-digit gains despite climate threat

While the start of the COP26 conference will see a discussion on the future of coal, shares in coal mining companies are on the rise.

The United Nations Climate Change conference (COP26) would begin on 4 November and Australia had already been criticised for its reluctance to move away from coal-fired power stations.

However, there was no denying that coal mining was a key driver of Australia’s economy and a big export with Japan as the largest importer of Australian coal followed by China.

According to FE Analytics, shares in Whitehaven Coal had risen by 175% over one year to 28 October compared to returns of 27% by the ASX 200.

New Hope Coal had returned 108% while Yancoal Australia was up 53.8%.

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Share price performance of coal companies versus ASX 200 over one year to 28 October, 2021

Dale Gillham, chief analyst at Wealth Within, said: “Regardless of what you think about coal as a resource, it has certainly performed very well in the last year with pricing rising from around US$60 ($80) a ton to over US$200 a ton although it has eased off slightly in the last month.

“That said, I believe this pullback is only temporary, as stockpiles around the world are low and given that winter is not too far away for Europe, the US and China, demand will increase.

“That said, all three stocks have pulled back at present, which is exciting news for investors, as I believe they will all do well into the first half of 2022. Given this, I recommend investors sit back and wait for a month or so and then look at these stocks with a view to entering once price stops falling.”