Metals and Mining: Winners and Losers

NEW YORK (TheStreet) -- James River Coal (JRCC), Peabody Energy (BTU) and Consol Energy (CNX) rallied higher, whereas Mines Management (MGN), Hecla Mining (HL) and MAG Silver (MVG) showed weakness.

Most of the metal and mining winners last week comprised of major coal stocks in the U.S. Industry analysts say that U.S.-based coal miners are set to gain from the growing safety concerns of nuclear energy in major European countries. Furthermore, as nuclear-powered electricity generation diminishes, coal and natural gas will emerge strong viable alternatives.

Leading the advancers' list, James River Coal gained 15.9% last week, as speculation of a nuclear meltdown in Japan mounted. The ongoing nuclear crisis in Japan has renewed political opposition to nuclear power in the U.S. Peabody Energy accumulated 11.2% past week. The U.S. giant revealed that it is keen to invest in Bangladesh's lone coal mine Barapukuria, which has proven reserves of around 389 million tonnes of coal. Peabody expects to extract 10% to 20% of the total reserves through underground mining within the next 30 years.

Most of the coal sourced from the Appalachian mountains in the eastern U.S. will be diverted to European power plants in order to restore an electricity shortfall in Germany, where seven old nuclear reactors have been shut down for three months. Coal miners like Consol Energy, Alpha Natural Resources ( ANR), Patriot Coal ( PCX) and Arch Coal ( ACI) export from the East Coast facilities. These companies now have the opportunity to fill the gap as traditional suppliers of Europe from South Africa, Russia and Colombia have redirected shipments to Asia to leverage the robust demand arising there.

Metallurgical coal constitutes a major portion of Japan's total 101-107 million tonnes coal imports. Following the positive industry happenings, Consol Energy and Cloud Peak Energy were up 10.9% and 9.1%, respectively during the past week. In 2010, Consol Energy sold about 13 million tonnes of metallurgical coal to export markets.

Alpha Natural Resources, Patriot Coal and Arch Coal gained 8.2%, 8.1% and 6.1% last week, respectively. During 2010, Alpha exported 9.6 million tonnes of metallurgical coal, while Arch Coal generated almost 15% ($471.5 million) of its total revenue from exports. Arch Coal also owns a 38% stake in a loading facility near Colombia River, which is currently being expanded to handle 5 million tonnes of coal annually. Meanwhile, for 2011, Patriot Coal has already booked orders of almost one million tonnes of thermal coal from Europe, compared to nil in 2010.

Among other coal producers, Alliance Holdings ( AHGP) and Great Alliance Resource Partners ( ARLP) rose 8.8% and 8.7%, respectively.

POSCO ( PKX), an integrated steel producer, soared 9.2% during the past week as demand for steel is also likely to rise in Japan, once it begins restructuring. Meanwhile, POSCO along with National Pension Service (NPS) and Japanese steel makers Nippon Steel and JFE Steel have entered into an agreement to acquire a 15% stake in Companhia Brasileira de Metalurgia e Mineracao (CBMM). CBMM has the world's largest niobium reserves of approximately 800 million tons. Niobium is used in the production of high-grade steel product.

With the S&P 500 declining 1.9% during the past week, a few metal and mining stocks recorded significant losses. Mines Management led the losers' pack, erasing 21%.

Silver prices faced a slow down last week, thereby pushing silver stocks lower. Hecla Mining and MAG Silver shed 7.3% and 6.2% last week. Silver stocks Silver Wheaton ( SLW), Pan American Silver ( PAAS), Alexco Resources ( AXU) and Silver Standard Resources ( SSRI) dropped 4.8%, 3.4%, 2.9% and 2.6% during the past week, respectively.

Among gold stocks, AngloGold Ashanti ( AU), Gold Fields ( GFI), Harmony Gold Mining ( HMY) and Kinross Gold ( KGC) fell 5.9%, 5.6%, 4.8% and 4.0% during the past week , respectively.

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