The East Coast is Treating Coal Much Better than the West

West Coast coal ports are facing stiff opposition, but the East Coast seems to be building capacity just fine.

Feb 25, 2014 at 9:34AM

Although coal exports in 2013 weren't nearly as robust as U.S. coal miners may have hoped, that hasn't dampened their hopes for the future. Unfortunately, new ports on the West Coast are facing stiff opposition. The East Coast appears to be having better luck with export expansion efforts, which could give eastern miners an added boost.

Not in my backyard
Coal is a dirty fuel. Getting the dusty material from the mine to a port and onto a ship is certainly no clean affair. So it's understandable that there would be opposition to new coal ports and expansions at existing facilities. For example, Arch Coal (NYSE:ACI) just found out that Washington state regulators are taking the most extreme environmental view of a new port it's backing, the Millennium Bulk Terminal.

Instead of looking at just the local impact of the coal port, regulators will also take into consideration the impact of the coal's use in its final destination. That's a big hurdle for the 44 million ton capacity port. Fellow Powder River Basin (PRB) miner Cloud Peak Energy (NYSE:CLD) is also waiting on ports to be built. If Washington's broad environmental view starts a trend, it's going to be harder for all PRB miners to get more coal on the water.

That would be a big problem for Cloud Peak, which has limited port capacity right now. It's waiting on the 46 million ton capacity Gateway Terminal, which is scheduled to be built in 2018. It has a third of that capacity locked up, but only if Gateway gets built.

Easier going in the East
Things seem to be going a little easier on the East Coast, where coal terminals around New Orleans appear to be increasing capacity without much trouble. For example, Foresight Energy looks set to double the capacity of its Convent Marine Terminal, to 25 million tons. United Bulk Terminals is also expanding, even though its shipments were roughly flat between 2012 and 2013. And the new Burnside Terminal just recently started operations.

That's good news for East Coast miners like Alliance Resources Partners (NASDAQ:ARLP) and Alpha Natural Resources (NYSE:ANR). Of the two, Alliance is the better positioned since it operates almost exclusively out of the Illinois coal basin (ILB). This area has been taking market share from the higher cost Central Appalachia region (CAPP) for years. In fact, production out of the ILB was up 5% last year even though U.S. coal markets remain in the doldrums.

More port capacity means more markets into which Alliance can sell its low-cost coal. Alpha, where about 45% of its coal comes out of the CAPP region, isn't as well situated, but more export capacity will be a benefit as it looks for new markets for this coal.

Alpha, for example, just inked a deal to sell four million tons of its CAPP thermal coal into Europe. And it has opened up an office in London. Alpha's export moves, however, show part of the problem for East Coast miners—the West Coast is closer to Asia. That makes Asia a much better market for the West Coast miners to sell to, if they can get the added export capacity.

Winners and losers
Peabody Energy (NYSE:BTU) may be the best positioned of all, with notable operations in both the PRB and ILB. So additional export capacity in either region helps. Not to mention this globally diversified miner also has operations in Australia, so it already has direct access to Asian markets.

That said, if port expansion on the West Coast is slow, it would dampen the outlooks for Peabody, Cloud Peak, and Arch in the PRB. That tilts the export advantage to the East, where miners like Alpha could use a helping hand just about now. Alliance, which posted its 13th consecutive record year last year, doesn't need the help, but will gladly take it, anyway.

Coal isn't the only exportable fuel...

Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Alliance Resource Partners, L.P.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers