James River Coal shares soar nearly 8 percent

Shares of James River Coal Co. soared 7.8 percent Wednesday, as prices for coal in the eastern U.S. climb on strong demand from European customers.

Shares of the Richmond, Va.-based company, which produces steam and industrial coal, rose $3.35, or 7.8 percent, to $46.54 in afternoon trading. That is up from the Aug. 20, 2007, closing price of $4.

Natixis Bleichroeder analyst Jeremy Sussman said in a phone interview that with Europe's traditional coal suppliers like Australia, South Africa and China exporting less, Europe has turned to the eastern U.S. for the commodity.

That demand is pushing up prices in the areas where James River operates, he said.

As an example of rising coal prices, Sussman cited Walter Industries Inc.'s disclosure, before trading began, that it has a deal to sell 1.2 million tons of coal over the next three years for about $100 per short ton. Like James River, Walter Industries operates in the eastern U.S.

"Keep in mind that less than six months ago prices were around $50 per ton," the analyst said.

He also said James River shares are soaring because it "is the most directly levered name to improving eastern coal prices; they are the most unhedged coal producer."