Print

Email story

Comment

Letter to the editor

A growing addiction

Soaring oil and natural gas prices send the world to back to coal.

JUNGAR QI, China - Almost nonstop, gargantuan 145-ton trucks rumble through China's biggest open-pit coal mine, sending up soot as they dump loads into mechanized sorters.

And as China's appetite for coal is booming, U.S. investors and businesses are cashing in.

The black treasure has transformed the once-isolated crossroads nestled in the sand-sculpted ravines of Inner Mongolia into a bleak boomtown of nearly 300,000 people. Long, dusty trains haul coal east to power plants and factories, fueling China's explosive growth.

Coal is big, and getting bigger. As oil and natural gas prices soar, the world is relying on the cheap, black-burning mainstay of the Industrial Revolution. Mining companies are racing into Africa. Workers are laying miles of new track to haul coal from the Powder River Basin in Wyoming and Montana.

Nowhere is coal bigger than in China. Meanwhile, American pension and mutual fund money is being invested in the Chinese coal industry, which is lucrative but has a poor record for pollution and worker safety.

Look no further than China Shenhua Energy Co., the Beijing giant that produces about 170-million tons of coal a year from 21 mines and builds power plants. While about 80 percent of the company's stock is owned by Shenhua Group in Beijing, the rest of its shareholders reads like a who's who of U.S. investors: Fidelity Investments, OppenheimerFunds, Merrill Lynch, even the Teachers Retirement System of Texas.

The performance of Shenhua's Hong Kong-listed shares explains why U.S. investors love them. They gained almost 65 percent July through September.

But the explosion of coal comes amid rising concern. In America, about 150 new coal-fired power plants are proposed over a decade. In China, there are plans for a plant to go on line nearly every week. Emissions from these alone could nullify cuts made by Europe, Japan and other rich nations under the Kyoto Protocol treaty, according to the Woodrow Wilson International Center for Scholars.

[Last modified October 30, 2007, 00:26:34]