S&P/ASX 200 Index (ASX: XJO) coal shares are broadly marching higher today, even as the ASX 200 itself is down 0.8%.
Yancoal Australia Ltd (ASX: YAL) shares are up 3.0% in afternoon trading.
The Whitehaven Coal Ltd (ASX: WHC) share price also moved into the green in early afternoon trade but has since retreated and is now flat at $2.44.
The New Hope Corporation Limited (ASX: NHC) share price is struggling, however. After trading flat at lunchtime, the ASX 200 coal share is down 1.2% at the time of writing.
Going back 12 months, Yancoal shares have gained 37%, New Hope shares are up 75%, and the Whitehaven Coal share price is up 108%. The ASX 200 has gained 14% over that same period.
ASX 200 coal shares unfazed by dire prediction
Some analysts had been predicting tough times for global coal miners, including the ASX 200 coal shares named above, following the global climate talks at the COP26 summit in Glasgow, Scotland.
Indeed, the United Kingdom's Prime Minister, Boris Johnson, appeared to support that assumption. Over the weekend Johnson proclaimed, "Together, it is beyond question that Glasgow has sounded the death knell for coal power. It's a fantastic achievement and it's just one of many to emerge from COP26."
Down Under, where coal continues to vie with iron ore as the nation's No. 1 export earner, Prime Minister Scott Morrison had a decidedly different take.
Addressing Johnson's assertion that COP26 sounded the death knell for coal, Morrison said yesterday, "No, I don't believe it did, and for all of those who are working in that industry in Australia, they'll continue to be working in that industry for decades to come."
The difference of opinion could stem from a last-minute change in language, which saw attending nations agree to 'phase down' their coal power instead of 'phase out' its use.
Judging by global coal prices, there's indeed no shortage of demand.
US coal prices hit 12-year highs
In the United States, coal miners are struggling to keep up with surging demand. And this has seen coal prices reach levels not seen since 2009.
According to S&P Global Market Intelligence prices for Central Appalachia, coal hit US$89.75 per ton on Monday.
As Bloomberg reports, "US miners say demand is going to remain strong through next year, and some already have contracts to sell almost all of their expected output for 2022."
Andrew Cosgrove, a mining analyst for Bloomberg Intelligence, pointed to crimped supplies for driving up the price. "The reason spot prices are so high in the US is because there's no supply, no availability," he said.
ASX 200 coal shares' management speaks out
The top brass of some leading ASX 200 coal shares came out to support the COP26 initiatives, while strongly defending their business models.
Commenting on the summit and the outlook for coal, Whitehaven's managing director Paul Flynn said (quoted by the Australian Financial Review):
The Glasgow Climate Pact is a result of negotiations involving over 190 nations and necessarily strikes a balance between competing interests to achieve the temperature objectives of the Paris Agreement, which we support…
This is not a call to unilaterally end coal production but rightly recognises that decarbonisation must be balanced with the needs of many developing nations for affordable and reliable power.
Yancoal's CEO David Moult was bullish on longer-term global coal demand, and on Australia's role to reduce emissions by delivering high-quality coal to the market.
According to Moult:
Despite the anticipated increase in the proportion of renewables and other non-fossil-fuel energy sources in the global energy mix, which Yancoal supports, the reality is that the demand for both thermal coal and metallurgical coal will remain relatively robust over the next few decades.
We believe the Australian coal mining industry has a key role to play in the energy transition by continuing to supply high-quality coal, which has a lower emissions profile than other exporting countries…
ESG investors could be missing out on some juicy dividends
In addition to the potential for additional share price rises amid surging coal prices, ESG investors choosing to shun ASX 200 coal shares could be missing out on some healthy dividends.
Goldman Sachs, for one, has a bullish outlook for Whitehaven.
As reported by the AFR, "Goldman Sachs expects Whitehaven to deliver a $1.03 billion profit in financial 2022 on an average thermal coal price of $US154 a tonne. Dividends are forecast to reach 28 cents per share on an 11.4 per cent yield."
Whitehaven last paid an interim dividend of 1.5 cents on 6 March 2020.
