Coal stocks have gone crazy, short honeymoon for coal miners?

The American largest coal mining companies are raking in cash as demand recovers and prices soar. This suggests that the demise of coal power seems to have been greatly exaggerated.

$Peabody Energy(BTU.US)$, the largest private coal miner in the US, reported its highest quarterly profit in at least 20 years. The company reported net income of $513m for the final three months of 2021, compared with a loss of $129m in the same period last year, marking its most profitable quarter since S&P Global markets began recording data in 1999. Peabody's share price is eight times what it was at the start of last year.

$Arch Resources(ARCH.US)$, the second-biggest coal miner, reported its best result since a massive asset sale five years ago, swinging from a loss to a profit of $227m.

The companies' assets include large mines in Wyoming's Powder River Basin. $Alliance Resource(ARLP.US)$, a coal company with mines in the Appalachia and Illinois basins in the Midwest, said net income rose nearly 50 per cent to $52m.

Over the past decade, the rise of cheap natural gas and renewable energy has cut U.S. coal use in half, from more than 1 billion short tons to about 500 million short tons, marginalizing coal-fired generators.

Last year's rise in natural gas prices upended that dynamic, depleting coal stocks as demand increased, prompting miners to start catching up. The US Energy Information Administration recently forecast that US coal production would rise this year and next.

That's not good news for the climate.

In 2021, the amount of coal burned in U.S. power plants jumped by about 20% to 503 million short tons, the first increase since 2014, according to THE EIA. That pushed energy-related emissions up more than 6 percent in 2021. Coal emits about twice as much carbon dioxide as natural gas when burned.

A joint report by 28 climate groups released earlier this week said financial institutions had provided $1.5 trillion in investment and financing to the coal industry between January 2019 and November 2021, despite increasing commitments by the sector to phase out financing.

But analysts say the second honeymoon for coal miners won't last long, with the Institute for Energy Economics and Financial Analysis estimating that half of the nation's coal-fired power generation capacity will close between 2021 and 2030.

Coal miners may have had a respite this year or two because coal prices have risen so fast, but they will soon face this brutal economic situation again as demand for coal falls.