Why Coal Demand is Falling in America

Besides the obvious attack by the government on the coal industry, with regulations resulting in high operational cost designed to cripple coal in America, there are some other reasons why coal has been diminishing in the midst of a surge in coal demand outside of America.

In states like Kentucky and West Virginia, for example, easily accessed coal has already been mined, resulting in higher costs to mine the thinner deposits.

The other major challenge is the discovery and supply of natural gas in America, which has resulted in cheaper energy, putting pressure on coal as a fuel source in the United States.

One area that coal should continue to do very well in is high-grade metallurgical coal, which is used to produce steel. This won't save the coal industry in America, but it will keep some regions of the country in good condition.

Another key element is the lack of export terminals to meet the growing demand of coal in every other country in the world outside of the United States. At this time there are projects in the works to build five coal export terminals in Washington and Oregon to help meet that growing need. Most coal companies benefiting from that will be producing in the western part of the U.S. It is uncertain as to how many of those will be built and how long it'll take to bring them to operational status.

Projections by the International Energy Agency show that coal demand will jump by 1.2 billion tons over the next several years, which should make it the No. 1 global fuel source at that time.

So while coal demand is falling in America, every other country on the face of the planet that uses coal has been increasing it as an energy source for their needs.

China is the driving force behind coal demand, with India boosting its coal usage as well. For the United States, at this time Europe is the biggest importer of coal from the country.

If this continues for years into the future, which it undoubtedly will, coal demand in America could rise again, but it'll take many years before that happens. For now, investors should look for coal companies positioned to primarily serve the Chinese market, as Chinese demand accounts for half or more of all coal demand in the world as of this writing.

Citigroup (NYSE:C), Bank of America (NYSE:BAC), Deutsche Bank (NYSE:DB), ENAM Securities Underwriters on Coal India IPO

Citigroup (NYSE:C), Bank of America (NYSE:BAC), Deutsche Bank (NYSE:DB) and ENAM Securities are lead underwriters for the IPO of Coal India, which is expected to raise about $3 billion for the company.

Coal India, which is the largest coal producing company in the world, generated about $10 billion in revenue in 2009, mostly from non-coking coal, which is sold to the larger power generators in the Asian country.

Over 50 percent of the energy needs of India is provided by coal.

Coal India has an estimated 64 billion tons of overall coal resources, with 11 billion tons of proven reserves.

The coal mining company is owned by the Indian government.

Citigroup (NYSE:C), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS) Managing 'Coal India' IPO

Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) will be among the financial institutions managing the initial public offering of Coal India, which is expected to raise up to $3 billion. The IPO is scheduled for October 18.

Assuming the approximate 632 million shares being offered are sold, it the $3 billion raised would be the largest IPO by a company in India.

The government of India has plans in place to sell stakes in close to 60 companies run by the state in order to tackle high deficits in the country. The divesting will be spread over the next several years.

In their fiscal 2011 year, they hope to raise up to $8.6 billion.

Also participating in the management of the IPO are Kotak Mahindra Capital, Enam Securities and Deutsche Bank (NYSE:DB).

Massey Energy (NYSE:MEE) Not for Sale

Massey Energy (NYSE:MEE) said the rumors and reports stating they're for sale are false, and there is not truth to them whatsoever.

Some of this is evidently being circulated because of moves by the company to sell some assets or enter into some joint ventures with other companies.

Regions where Massey is looking at doing deals in are the United States, Australia, Mongolia and India.

Massey is looking to partner with Jindal Steel & Power (JNSP.BO), based in India, to develop and operate underground coal mines in that country.

Arcelor Mittal (NYSE:MT) India Joint Venture Talks

Arcelor Mittal (NYSE:MT) is reportedly in talks with the state-run Steel Authority of India and Tata Steel to enter into a joint venture.

The Steel Authority of India is also in negotiations with Posco, the largest steel producer in Korea concerning a joint venture as well.

Much of this is probably coming from the high demand for steel, which while slowing some in China, is still poised for significant demand for the year, and into the distant future.

China has a strong and growing steel industry, and this would help India compete better if they could land some joint ventures from strong foreign companies like Arcelor Mittal or Posco.

Citigroup (NYSE:C), Morgan Stanley (NYSE:MS) Managing Coal India IPO

Six investment banks are participating in the IPO of Coal India, including financial giants Citigroup (NYSE:C) and Morgan Stanley (NYSE:MS).

Other banks reportedly to be part of the IPO management include, DSP Merrill Lynch & Co., Deutsche Bank AG, Enam Securities Pvt. and Kotak Mahindra Capital Co.

The Coal India IPO is highly anticipated as it may end up being the largest IPO in the history of the country.

Estimates are the IPO could raise up to $2.9 billion, which would surpass the current record held by Reliance Power Ltd.