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Interview: Jonathan Rose, Managing Director, BMO Capital Markets

Based on his 15 years of investment banking experience focused on the metals and mining sector, Jonathan shares his views on the current coal value.

Coal businesses are valued at a fraction of the price of what they were five years ago: are they currently undervalued?

In this period of such uncertainty, investors are struggling to determine who the winners and losers are going to be.  I think we will look back on this period and discover that absolutely there were many coal businesses extremely undervalued.  On the other hand, some coal businesses unfortunately will not survive and therefore are not undervalued today.

Is the coal industry over or under-reacting to rumours in the industry or do the stock markets already incorporate all the right information?

In general, stock markets reflect the aggregate of what investors anticipate at any given point in time.  The future of the coal industry is going to be driven by a multitude of different and somewhat unrelated factors (domestic environmental regulations, global climate change politics and policies, gas prices, exchange rates, clean coal technology, economic growth levels in the US as well as China, India, and elsewhere, and many other things).  Most of these things are extremely difficult to predict with accuracy. Therefore, I don’t think anybody knows what the “right” information is.  The markets reflect investors’ perceptions, and it’s not right or wrong.

How much value could clean coal technology add to the coal industry and open it up to more investors? Is it critical to the future of the industry?

This is difficult to predict.  It depends on what technology gets developed, what it costs, how it can be applied, etc.  If something is developed that makes coal completely “clean” and cost-effective, then absolutely it would open up the sector to more investors.  I think coal will be in demand for many years to come regardless, but certainly the outlook would be transformed positively if clean coal technology becomes a reality.

What are you most looking forward to at Coaltrans USA in January?

I am most looking forward to getting a full update on the coal sector and hearing a variety of views from experts across the industry.


This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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