This is a pretty amazing story about one of the major coal exporters, from Sightline.
Cloud Peak Energy, one of the major coal producers in the Powder River Basin, is doing its very best to sound upbeat about coal exports. In an investor conference call this past July, the company declared that, even though falling international coal prices had eaten into their earnings, their exports were “still profitable overall.”
But a close look at Cloud Peak’s second quarter financial statements suggests a far stranger story: the company’s export division actually made most of its profits from derivatives trading rather than coal. Stripping away the financial-speak, the implications are striking: Cloud Peak’s export arm made at least 10 times more money betting against coal than it did selling coal.
Obviously some of that is reasonable and companies hedge their bets with these sort of financial instruments all the time. And this is one company. But given that they made $2.6 Million betting against coal and $200,000 on coal, it’s one more reason to not build more coal infrastructure as we look toward the future.