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Dairyxox
1529 posts

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  #776701 8-Mar-2013 10:29
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Kind of shocked by whats happened to Solid Energy. Surely pulling all that supremely valuable and high quality stuff out of the ground is practically a license to print money.'

As for mighty river, I guess the shares would be like a hedge against rising energy prices. I cant see the prices magically dropping anytime soon, even with new technologies etc, they require significant R&D costs and startup capital, plus whoever sets it up is going to want to make good money on them.

If energy prices go up, solid energy should be a reasonable bet, and shareholders benefits are still probably less than the extra energy costs?
If energy prices go down (tui ad), then everyone benefits anyway, non-shareholders slightly more.

minimoke
741 posts

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  #776819 8-Mar-2013 12:31
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Dairyxox: Kind of shocked by whats happened to Solid Energy. Surely pulling all that supremely valuable and high quality stuff out of the ground is practically a license to print money.' 


Coking coal is currently not supremely valuable. After highs of around $330 a ton its now down to something like $165. When your commodity is worth a lot you can borrow a lot. When your commodity drops in value your loans look decidedly fragile.

 

Lignite is extremely invaluable (??). It only has relative value when coal prices are very high. There’s probably more value in the cows that graze the grass above the lignite. That will change if the  bottom falls out of dairying (which it will inevitably do so) coinciding with an increase in steel production, which will inevitable occur. The question is – will those two planets ever align?

 

Digging coking coal from the ground is licence to spend money.

 

So its no surprise SE is in the state it’s in. Once coal prices rebound, which is purely a function of supply and demand, SE will be once again an attractive proposition. In the mean time they are sitting on tons of licences but need the cash to pay their debts.

 
 
 
 


jonherries

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  #776948 8-Mar-2013 14:41
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I feel like a proud father, getting a thread which is potentially divisive to 7 pages with no one mentioning hitler or racism...

Jon

khull
1245 posts

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  #777541 10-Mar-2013 00:04
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I predict a yet to be written biography words to the extent of "....and John rides into the sunset from his concession speech to sit in the board of directors of [insert name of power company here]"

In all seriousness I believe things might become clearer when the prospectus is available

Geektastic
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  #777784 10-Mar-2013 23:48
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Registered me, my wife and our family trust.

I'm very happy with the concept but I'm originally British and went through all this with our state owned utilities in the 80's so perhaps it worries me less as the sky has not fallen on anyone's head there yet...





Geektastic
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  #777785 10-Mar-2013 23:49
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jonherries: I feel like a proud father, getting a thread which is potentially divisive to 7 pages with no one mentioning hitler or racism...

Jon


Aside from you of course...!! ;-)





Geektastic
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  #777786 10-Mar-2013 23:51
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nakedmolerat: government needs money..

they can spend less or sell their asset.

they choose to sell their asset... wait, let us 'sell' it to our own citizen.

in short, the citizen is paying for government expenses.


And who normally pays for government expenses then?!





 
 
 
 


Geektastic
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  #777788 10-Mar-2013 23:57
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Zeon: All I can say is the government shouldn't be in the energy business. Nor most other businesses for that matter *cough* Solid Energy *cough*


100% agree and personally I will be delighted when they sell the other 51%.

Kiwis have a huge double standard when it comes to this sort of thing - many Kiwi Saver funds are invested in shares all over the world in similar businesses and when the UK Competition Commission forced BAA to sell off Stanstead Airport to reduce it's monopoly position, one of the first companies interested in buying it was a NZ company.

Compare that to the whining and whinging as soon as the Ontario Teachers Pension Fund wanted to buy a majority stake in Auckland Airport shares...





nathan
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  #777789 10-Mar-2013 23:58
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Geektastic:
Zeon: All I can say is the government shouldn't be in the energy business. Nor most other businesses for that matter *cough* Solid Energy *cough*


100% agree and personally I will be delighted when they sell the other 51%.

Kiwis have a huge double standard when it comes to this sort of thing - many Kiwi Saver funds are invested in shares all over the world in similar businesses and when the UK Competition Commission forced BAA to sell off Stanstead Airport to reduce it's monopoly position, one of the first companies interested in buying it was a NZ company.

Compare that to the whining and whinging as soon as the Ontario Teachers Pension Fund wanted to buy a majority stake in Auckland Airport shares...


indeed

do as i say, not as i do

and NIMBY




populism, the most important and misunderstood movement of our time


doozy
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  #778179 11-Mar-2013 20:19
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Registered, but upon reflection probably won't buy any, 6% mortgage, better off paying that down with whatever I might spend on MRP, guaranteed return, no risk investment that is!




Tarawera Ultra 2015 done, bring on 2016

networkn
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  #778180 11-Mar-2013 20:22
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doozy: Registered, but upon reflection probably won't buy any, 6% mortgage, better off paying that down with whatever I might spend on MRP, guaranteed return, no risk investment that is!


Smart!


mattwnz
16824 posts

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  #778182 11-Mar-2013 20:32
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Dairyxox: Kind of shocked by whats happened to Solid Energy. Surely pulling all that supremely valuable and high quality stuff out of the ground is practically a license to print money.'


So who is going to invest in Solid Energy :)

mattwnz
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  #778184 11-Mar-2013 20:34
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networkn:
doozy: Registered, but upon reflection probably won't buy any, 6% mortgage, better off paying that down with whatever I might spend on MRP, guaranteed return, no risk investment that is!


Smart!


True. Although some people do borrow money from the bank to buy shares, as the return can be higher than the interest from the borrowings. Although for this share, I don't think it would be a great share to borrow on, as it doesn't appear to be a growth stock.

nathan
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  #778195 11-Mar-2013 20:59
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doozy: Registered, but upon reflection probably won't buy any, 6% mortgage, better off paying that down with whatever I might spend on MRP, guaranteed return, no risk investment that is!


It is worth pointing out that property is not a guaranteed no risk return

But yes you are probably wiser to pay off mortgage




populism, the most important and misunderstood movement of our time


JimmyH
2695 posts

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  #778237 11-Mar-2013 22:11
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Dairyxox: Kind of shocked by whats happened to Solid Energy. Surely pulling all that supremely valuable and high quality stuff out of the ground is practically a license to print money.'


Nope. It requires huge sums of capital invested to up front to dig any out (esp for underground mining), is fairly expensive to dig out (esp for underground mining) and bulky and expensive to ship. Prices are volatile and, when they fall, shareholders can lose their shirts.

Remember if it costs (say) $200 a ton to dig out and transport to an offshore buyer and prices are $330 you may be coining it, but if prices fall below $170 (as they have done), you bleed value.

Why the government is invested in a risky energy business which has zero strategic value eludes me - better that they had sold out and let someone willing and able to bear/manage the risk do so.

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