ASX coal stocks increasingly isolated with rise of start-ups like MGA Thermal

ASX coal exposed stocks are looking even more unloved as the Hunter Valley looks beyond coal through start-ups like MGA Thermal.

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ASX coal exposed stocks are looking even more unloved as the Hunter Valley looks beyond coal through start-ups like MGA Thermal.

The New South Wales township that was built on the back of the coal industry is sensing a foreboding as the world tries to rid itself from the fuel.

The Australian Broadcasting Corporation (ABC) reported that locals are feeling nervous as residents do not know what work there will be left for their kids.

Hunter on the coal transition path

But Hunter Valley isn’t about to rollover. There’s a view among experts that the Hunter is well placed to secure its future as a sustainable electric powerhouse.

The region’s legacy in coal has left it with extensive electrical infrastructure and easy access to a deep water port.

The locals are also exploring new ways to capitalise on a carbon-free future. The ABC highlighted MGA Thermal as one example with the company using recycled metals to create “bricks”.

Who is MGA Thermal

These bricks are good for storing energy as heat. As MGA Thermal’s Alex Post explained to the ABC:

“We stack the bricks up into large energy storage systems; we heat them with waste heat from industry or with electricity from the grid when we have too much solar, and these bricks store all of that energy as heat.

“Six to eight hours later we can use all that stored heat to drive an industrial process or create steam to run a power plant and put energy back onto the grid.”

Multi-pivots to create new jobs

Even mining services companies in the area that used to focus only on the coal industry are starting to pivot. They are looking at new applications, in areas such as healthcare, to apply their know-how.

The coal-dependent regions of Northern Queensland are also likely to be paying attention. These communities know they have to start planning now while there are still coal jobs to aid the transition.

MGA Thermal sparks questions about ASX coal stocks

There’s little doubt Aussies will find a way, we always have. The key question though is what now for ASX investors in coal stocks.

These include the Yancoal Australia Ltd (ASX: YAL) share price, Whitehaven Coal Ltd (ASX: WHC) and New Hope Corporation Limited (ASX: NHC).

While regions like the Hunter are laying out a transition plan, coal miners have yet to articulate how it will secure the future.

The risk of miners holding stranded assets are real, especially if coal mining communities are looking elsewhere for jobs.

Other ASX stocks exposed to coal

The trio aren’t the only ones on the S&P/ASX 200 Index (Index:^AXJO) that are exposed to coal of course. The BHP Group Ltd (ASX: BHP) share price and South32 Ltd (ASX: S32) share price are also linked but these diversified miners will have an easier time transitioning.

There are also those that service carbon emitters, such as the Worley Ltd (ASX: WOR) share price and Aurizon Holdings Ltd (ASX: AZJ).

Worley is shifting its focus on providing engineering services to renewable energy providers, while rail operator Aurizon doesn’t only haul coal.

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Motley Fool contributor Brendon Lau owns shares of Aurizon Holdings Limited, BHP Billiton Limited, South32 Ltd, and WorleyParsons Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia has recommended Aurizon Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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