Hey Wouter! Glad you enjoyed it. AMR's price may not be at its exact bottom, but its certainly pulled back a LOT. NRP may be an overall safer bet, and i'm not so sure I have some excellent argument against NRP. They do seem to pay a dividend and I prefer AMR's buyback emphasis. NRP is basically just a royalty collector on the coal harvested from their land. Six Bravo has a good couple write ups on NRP and if suddenly I couldn't buy AMR I would happily buy NRP. Valuation is tricky with a miner. Its not like other companies since the swings in prices of their "product" are totally out of the companies hands. I do believe AMR has more upside potential in a hot coal market than NRP, but NRP has a more stable business (for a while anyway). I would do a lot of digging (pun intended) on both companies before investing. I can't tell you precisely what a good moment to "get in" is? I've been buying, but with the knowledge that I may have to wait a year or two before we see any recovery in coal prices. The thesis is very much still intact though. I would definitely advise caution with this position in particular. You have to understand it enough that you would be happy if the price dropped 25% or something and you could buy more. I hope that helps!
Thanks! For some reason I missed this..? I was reading back your article, as I haven’t pulled the trigger on AMR (yet). Price looks stabile around 110-115, so I am leaning towards opening a position 😅
Hey Nishant, thanks for putting this on my radar. Looks like Accelor is still producing about 70% Virgin steel, and I'd guess in India that's closer to 90%. The interesting thing that I didn't know until just now was that these guys import met-COKE to India rather than met-COAL. Coke is the processed form of met coal that is actually used in the blast furnace. India has recently (January of 2025) implemented HEAVY restrictions on met-coke imports (a decision JV/Nippon is suing them for actually). AMR and Warrior aren't effected because they import met-COAL (cucumbers) rather than met coke (pickles). Seems like before this Accelor had also sold off their met-coal operations in Kazakhstan. Seems like the Indian government has yielded a little to Accelor (allowing another ~74k M/t of met-coke in from Poland) and they've dropped the suit. But I should point out that met-coke is made from met coal, and if Polish met coal mines (which are riddled with debt by the way) are exporting to Accelors furnaces, that means they're not exporting elsewhere, so supply isn't as effected. Since Accelor is primarily interested in steel making I don't have a problem with them being in India, especially if they end up being forced to import Met-coal by the Indian government (who cares about stability, quality, and price more than anything)
Hi guys! Thanks for the article. It surely helped me better understand AMRs odds. Amongst competitors however, you mentioned just Australia and Russia. I read some other articles about Mongolia being also important in this scene and, besides trying to cover Chinese demand, also expanding to... India. What do you think about Mongolian coke?
Mongolia definitely has some solid PLV reserves, and they definitely are a huge supplier to China, but as far as I know their exports to India are extremely minor compared to Australia/the US. One of the main issues with China's overbuild is that they've also flooded the market with their steel which has hurt global steel productions (therefore met coal imports). Mongolia is definitely something to watch, but as far as I know they're primarily just a part of the China story
I made a decent profit in the 2023 tail end of the boom with Alpha and Warrior. That said, while the unit economics was easy and straightforward to figure out, I was struggling to understand certian qualitative aspects of the thesis. Your write up pretty much cleared my doubts. One of the best write ups I have come across in a long time! Thanks.
Great in-depth analysis! I wrote a similar albeit simpler article on Warrior. Thank you for the thorough look thru on the industry. Increased confidence these two companies will be cashflow winners in the long run.
Great article. As a metallurgist in Sheffield in the UK I just want to clarify that Sir Henry Bessemer was British and that the process was used in Britain 😉.
What are your thoughts on Whitehaven Coal in Aus as an investment? They have a large expansion of metal coal ahead however the diversity drive by India may hinder them, plus a local gov imposes taxes
Thank you for the correction! Absolutely correct and my apologies for stealing valor from the great Sir Henry and GB. I haven't looked into Whitehaven or even really considered Australian miners as I think they're a bit less hated (and more appropriately priced) than U.S miners. Plus with Whitehaven they seem to still be deep into Thermal coal which I have more trouble thinking about. The "pure-play" met coal angel is important to me since frankly i'm not smart enough to develop a firm thesis on thermal. Doesn't make it a bad investment - just something I have to put in the "too hard pile." I mean for god's sake I didn't even know Bessemer was British.
Super interesting write up about the coal space which I know little about! I’ve spent more time looking at railroads which I think could be winners of an inflection in coal volumes after 15 years of decline.
They’ve been repaying it quite aggressively since the KCS deal closed 2 years and generate very healthy FCF now with focus on returning more to shareholders (just announced a buyback this year)
Hell yeah! Glad it helped. Took me forever just to get the different coal types straight in my head. Mohnish has said in interviews that if he could only own one coal company he would have no problem with that, and knows which one it would be. Im 80% sure he’s referring to AMR.
It is starting to look that way, although AMR has declined a good bit more than HCC from where he bought, so that is likely part of the weighting difference
I also think I may have been a bit early, but I figure I'll keep building while it's under 140. Warrior Met coal is likely holding up better than AMR in this market
One thing which bothers me is that e.g. Alpha I think underwent already once bankruptcy... That's not a good light onto the company or do I miss something?
Thanks! You’re absolutely right that AMR is the product of a chapter 11 bankruptcy (at the time the company was called ANR - not confusing at all lol). At the time of the bankruptcy coal (both thermal and met) was not having a good time of it. Natural Gas and hefty regulation had crippled U.S thermal coal producers like ANR. They also had billions of dollars in debt. AMR (the company i own), has no debt, a ton of cash, and doesn’t mess around with thermal coal. There are some cool arguments for thermal coal companies as well, but for me its too hard to think about competition from Natural Gas and Nuclear. Met-coal’s future seems more clear in my mind. If I thought there was any chance of bankruptcy on the horizon for AMR I wouldn’t go near it, but i’m not even sure they could get the financing to bankrupt themselves if they wanted to. I touched on this in the article, but yeah banks are restricted from lending to coal miners so they’re sort of forced to keep a more responsible balance sheet. Hope that gives some clarity!
Hi! Great write-up, I’ve been reading up on AMR and HCC also in other articles, NRP is a ‘new name’ for me. I saw prices went up for these stocks, is the thesis stil intact and is it still a good moment to get in? I am ‘new’ in this pond and although the articles I read make a lot of sense, it’s still hard to pull values on it and pull the trigger…and is NRP more interesting than AMR? I am leaning towards AMR (looks like a bit more upside of the cycle turns, also HCC’s price went up)..but looking forward to your reply! Thanks in advance :)
Hey Wouter! Glad you enjoyed it. AMR's price may not be at its exact bottom, but its certainly pulled back a LOT. NRP may be an overall safer bet, and i'm not so sure I have some excellent argument against NRP. They do seem to pay a dividend and I prefer AMR's buyback emphasis. NRP is basically just a royalty collector on the coal harvested from their land. Six Bravo has a good couple write ups on NRP and if suddenly I couldn't buy AMR I would happily buy NRP. Valuation is tricky with a miner. Its not like other companies since the swings in prices of their "product" are totally out of the companies hands. I do believe AMR has more upside potential in a hot coal market than NRP, but NRP has a more stable business (for a while anyway). I would do a lot of digging (pun intended) on both companies before investing. I can't tell you precisely what a good moment to "get in" is? I've been buying, but with the knowledge that I may have to wait a year or two before we see any recovery in coal prices. The thesis is very much still intact though. I would definitely advise caution with this position in particular. You have to understand it enough that you would be happy if the price dropped 25% or something and you could buy more. I hope that helps!
Thanks! For some reason I missed this..? I was reading back your article, as I haven’t pulled the trigger on AMR (yet). Price looks stabile around 110-115, so I am leaning towards opening a position 😅
Hey Nishant, thanks for putting this on my radar. Looks like Accelor is still producing about 70% Virgin steel, and I'd guess in India that's closer to 90%. The interesting thing that I didn't know until just now was that these guys import met-COKE to India rather than met-COAL. Coke is the processed form of met coal that is actually used in the blast furnace. India has recently (January of 2025) implemented HEAVY restrictions on met-coke imports (a decision JV/Nippon is suing them for actually). AMR and Warrior aren't effected because they import met-COAL (cucumbers) rather than met coke (pickles). Seems like before this Accelor had also sold off their met-coal operations in Kazakhstan. Seems like the Indian government has yielded a little to Accelor (allowing another ~74k M/t of met-coke in from Poland) and they've dropped the suit. But I should point out that met-coke is made from met coal, and if Polish met coal mines (which are riddled with debt by the way) are exporting to Accelors furnaces, that means they're not exporting elsewhere, so supply isn't as effected. Since Accelor is primarily interested in steel making I don't have a problem with them being in India, especially if they end up being forced to import Met-coal by the Indian government (who cares about stability, quality, and price more than anything)
Fantastic write up. Really appreciate it. Already long AMR and HCC (hat tip to Matt W on that one) but this adds to my conviction
Big love to Matt W.
Hi guys! Thanks for the article. It surely helped me better understand AMRs odds. Amongst competitors however, you mentioned just Australia and Russia. I read some other articles about Mongolia being also important in this scene and, besides trying to cover Chinese demand, also expanding to... India. What do you think about Mongolian coke?
Mongolia definitely has some solid PLV reserves, and they definitely are a huge supplier to China, but as far as I know their exports to India are extremely minor compared to Australia/the US. One of the main issues with China's overbuild is that they've also flooded the market with their steel which has hurt global steel productions (therefore met coal imports). Mongolia is definitely something to watch, but as far as I know they're primarily just a part of the China story
I made a decent profit in the 2023 tail end of the boom with Alpha and Warrior. That said, while the unit economics was easy and straightforward to figure out, I was struggling to understand certian qualitative aspects of the thesis. Your write up pretty much cleared my doubts. One of the best write ups I have come across in a long time! Thanks.
I'm so glad to hear it! It's a complicated space considering it revolves around a rock
Great in-depth analysis! I wrote a similar albeit simpler article on Warrior. Thank you for the thorough look thru on the industry. Increased confidence these two companies will be cashflow winners in the long run.
Great article. As a metallurgist in Sheffield in the UK I just want to clarify that Sir Henry Bessemer was British and that the process was used in Britain 😉.
What are your thoughts on Whitehaven Coal in Aus as an investment? They have a large expansion of metal coal ahead however the diversity drive by India may hinder them, plus a local gov imposes taxes
Thank you for the correction! Absolutely correct and my apologies for stealing valor from the great Sir Henry and GB. I haven't looked into Whitehaven or even really considered Australian miners as I think they're a bit less hated (and more appropriately priced) than U.S miners. Plus with Whitehaven they seem to still be deep into Thermal coal which I have more trouble thinking about. The "pure-play" met coal angel is important to me since frankly i'm not smart enough to develop a firm thesis on thermal. Doesn't make it a bad investment - just something I have to put in the "too hard pile." I mean for god's sake I didn't even know Bessemer was British.
Great stuff.
Super interesting write up about the coal space which I know little about! I’ve spent more time looking at railroads which I think could be winners of an inflection in coal volumes after 15 years of decline.
Interesting! I'll take a look. I owned some Canadian Pacific a while back but sold it after re-thinking about the debt
They’ve been repaying it quite aggressively since the KCS deal closed 2 years and generate very healthy FCF now with focus on returning more to shareholders (just announced a buyback this year)
You own CP? I haven't checked back in a while on the debt
I do, I think the company is under appreciated by the market with its strong synergy driven growth and could be a reshoring winner
Thank you for this, what do you think of AccelorMittal (MT) which is really ramping up steel production in India via their JV with NipponSteel?
Phenomenal article, possibly my favorite I’ve read so far
wow high praise!! So glad you liked it
Awesome write up, have been following this trade from Monish Pabrai for some time now and this resource was really helpful putting it in perspective!
Hell yeah! Glad it helped. Took me forever just to get the different coal types straight in my head. Mohnish has said in interviews that if he could only own one coal company he would have no problem with that, and knows which one it would be. Im 80% sure he’s referring to AMR.
According to his 13f, looks like he prefers hcc
It is starting to look that way, although AMR has declined a good bit more than HCC from where he bought, so that is likely part of the weighting difference
true. Prob fairly similar weightings with his original cost basis. Great article man.
Thanks man! And for what it's worth I've been adding warrior. Very very solid addition
Great write up. I also have invested in AMR although I went a little early may be. Let’s see when the cycle turns.
I also think I may have been a bit early, but I figure I'll keep building while it's under 140. Warrior Met coal is likely holding up better than AMR in this market
Agree
Supreme answers thx a lot
Great write up!
One thing which bothers me is that e.g. Alpha I think underwent already once bankruptcy... That's not a good light onto the company or do I miss something?
Thanks! You’re absolutely right that AMR is the product of a chapter 11 bankruptcy (at the time the company was called ANR - not confusing at all lol). At the time of the bankruptcy coal (both thermal and met) was not having a good time of it. Natural Gas and hefty regulation had crippled U.S thermal coal producers like ANR. They also had billions of dollars in debt. AMR (the company i own), has no debt, a ton of cash, and doesn’t mess around with thermal coal. There are some cool arguments for thermal coal companies as well, but for me its too hard to think about competition from Natural Gas and Nuclear. Met-coal’s future seems more clear in my mind. If I thought there was any chance of bankruptcy on the horizon for AMR I wouldn’t go near it, but i’m not even sure they could get the financing to bankrupt themselves if they wanted to. I touched on this in the article, but yeah banks are restricted from lending to coal miners so they’re sort of forced to keep a more responsible balance sheet. Hope that gives some clarity!
Hi! Great write-up, I’ve been reading up on AMR and HCC also in other articles, NRP is a ‘new name’ for me. I saw prices went up for these stocks, is the thesis stil intact and is it still a good moment to get in? I am ‘new’ in this pond and although the articles I read make a lot of sense, it’s still hard to pull values on it and pull the trigger…and is NRP more interesting than AMR? I am leaning towards AMR (looks like a bit more upside of the cycle turns, also HCC’s price went up)..but looking forward to your reply! Thanks in advance :)