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Oil Market Update - consequences of Saudi attacks...
Clive Maund  Sep 18  

Oil Market Update
Clive Maund  Jul 30  

Evaluating US Nuclear Competitiveness and its Future as a Carbon–Free Clean Energy Source
Keith W. Rabin  Jul 25  

Should We Rethink Nuclear Power?
OilPrice  Mar 09  

The $32 Trillion Push To Disrupt The Entire Oil Industry
OilPrice  Feb 28  

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expert analysis & newsletter briefs

NexGen Energy Ltd.

"My top pick for 2016 is NexGen Energy Ltd. . . Arrow is an emerging world-class deposit that is still in the early stages of discovery. The state—it being so early in the delineation and development process—means a lot of upside still remains. . .the company just closed a $21M financing, which means the company has enough cash to carry through 2016 and beyond." (12/23/15) - Gwen Preston, Resource Maven

NexGen Energy Ltd.

"My top pick for 2016 is NexGen Energy Ltd. . . Arrow is an emerging world-class deposit that is still in the early stages of discovery. The state—it being so early in the delineation and development process—means a lot of upside still remains. . .the company just closed a $21M financing, which means the company has enough cash to carry through 2016 and beyond." (12/23/15) - Gwen Preston, Resource Maven

Fission Uranium Corp.

"Fission Uranium Corp. announced it entered into a binding letter of intent with China's CGN Mining, a subsidiary of nuclear giant China General Nuclear Power Group, to acquire 19.99% of Fission as part of an CA$82M strategic investment, along with a potential future offtake agreement on production from Patterson Lake South (PLS). . .we urge investors to bolster positions in Fission as the deal derisks development financing, and in the interim, should fund PLS through full feasibility and permitting." (12/22/15) - David Sadowski,

Energy Fuels Inc.

"Energy Fuels Inc. is the only conventional uranium producer in the U.S. and the second-largest producer overall. It has the potential become #1, given the projects and mines it has on standby or that are close to being in development. At full ramp-up we expect the company to be able to produce 5–7 Mlb/year, in a country currently producing 4–5 Mlb/year. The U.S. consumes 55 Mlb/year, but only about 10% is supplied domestically. U.S. utilities seeking security of supply will greatly prefer U.S. producers over those from Kazakhstan, Russia or Africa. This company is well positioned to benefit from higher uranium prices. We have a Buy rating with a target price of $11.85/share." (12/22/15) - The Energy Report Interview with Rob Chang

Fission Uranium Corp.

"Fission Uranium Corp. announced it entered into a binding letter of intent with China's CGN Mining, a subsidiary of nuclear giant China General Nuclear Power Group, to acquire 19.99% of Fission as part of an CA$82M strategic investment, along with a potential future offtake agreement on production from Patterson Lake South (PLS). . .we urge investors to bolster positions in Fission as the deal derisks development financing, and in the interim, should fund PLS through full feasibility and permitting." (12/22/15) - David Sadowski,


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from the publisher
  Robert J. Moriarty

Welcome to 321energy.



China’s Coal: Consolidating Black Gold


by Scott B. MacDonald
KWR International
November 23, 2005

When the term “black gold” is used, it usually pertains to oil. Coal, one of the oldest sources of energy used by man, has long been a poor cousin. However, in an era of higher oil prices and apprehension over future supply, coal no longer looks so bad. This is certainly the case in China, where the industry is beginning the process of a major overhaul. According to the OECD, the Chinese economy has expanded at an average of 9.5 percent over the past two decades and “seems likely to continue at that pace for some time.” To maintain that pace of growth, China must tap all of its energy resources, including coal.

China is the world’s largest producer of coal. While a small amount of that coal reaches foreign markets, most of it is destined for use at home. Indeed, coal accounts for roughly two thirds of China’s energy needs. And demand for coal has only increased over the past few years. Wholesale coal prices (which have been deregulated) rose 40 percent in 2004, pushed along by world market prices and a 56 percent rise in electricity demand between 1999 and 2003. This heavy rate of demand is not expected to stop anytime soon. According to the China Electricity Council, power consumption in China may rise 11 percent to 2.73 megawatt-hours next year.

Although China’s coal sector has played an important role in the country’s industrialization, it has been a very fragmented business, filled with inefficiencies. At a time of very strong demand, these inefficiencies are constraining the country’s growth potential – old and unsafe mines waste capital and labor, while transportation systems are inadequate for getting get coal to factories and electrical utilities.

Furthermore, the unsafe nature of older mines has made China’s coal industry one of the most dangerous in the world. According to official sources, around 6,000 miners are killed a year in the coal industry, usually due to gas leaks. According to the official Xinhua News Agency (October 14, 2005), the coal industry suffered 2,357 accidents that killed 4,226 people between January 1, 2005 and September 30, 2005.

But change is coming to China's coal industry. The pressing demand for steady sources of energy is forcing Beijing to tighten regulations (ordering the closure of small unsafe mines), curtail the ownership of officials in the sector, and push for consolidation. And consolidation is critical if the coal industry is to support the country economic growth over a sustained period.

The top ten coal mining groups make up just 15 production of the country’s production capacity. At the same time, smaller mines accounted for 38 percent of coal production in 2004. This is hardly an efficient system. In most other major coal producing countries, production is much more concentrated in the upper echelon of companies. Consequently, Beijing announced that it plans to form six to eight large coal-producing groups, each with the capacity of more than 100 million tones per year. Along these lines, in December 2004, Heilongjiang Long Mei Mining Group was formed by the merger of four large coal mines. It is now considering an overseas listing.

China has another reason to consolidate the coal industry – pollution. As the 2005 OECD study on China noted: “The major environmental problem is air pollution that stems from the use of a coal supply that has relatively high sulfur content.” Less polluting coal is possible, but it requires capaital, something well beyond small enterprises.

The coal industry in China as it stands today will not be the same in five years. The sector will be more driven by market forces as the state retreats from ownership and foreign and Chinese private sector ownership becomes more pronounced. The number of companies will shrink and the technology will improve. And demand (which may slump in the short term) will continue to be a strong factor considering China’s need for further economic growth. For the shrewd international investor the coal sector should be worth watching. There is one listed Chinese coal company on the NYSE, Yanzhou Coal Mining – YZC. We expect more to come.

While the information and opinions contained within have been compiled from sources believed to be reliable, KWR does not represent that it is accurate or complete and it should be relied on as such. Accordingly, nothing in this article shall be construed as offering a guarantee of the accuracy or completeness of the information contained herein, or as an offer or solicitation with respect to the purchase or sale of any security. All opinions and estimates are subject to change without notice. KWR staff, consultants and contributors to the KWR International Advisor may at any time have a long or short position in any security or option mentioned.

by Scott B. MacDonald
KWR International
November 23, 2005

Editor: Dr. Scott B. MacDonald, Sr. Consultant

Deputy Editors: Dr. Jonathan Lemco, Director and Sr. Consultant and Robert Windorf, Senior Consultant

Associate Editor: Darin Feldman
Publisher: Keith W. Rabin, President

To obtain your free subscription to the KWR International Advisor, please click here to register for the KWR Advisor mailing list

Please forward all feedback, comments and submission and reproduction requests to: KWR.Advisor@kwrintl.com

© 2005 KWR International, Inc.



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