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Don't let strike fears scare you off mining investments! Strike now while coal's red hot

by , 20 March 2013

Investor confidence in the local mining sector is at an all-time low. Especially as the Exxaro strike continues, despite a court order for miners to return to work. This means coal production and supply have dropped, while demand continues to rise. And that means now is the perfect time to invest in coal! Here are two ways to do so…
Just when you thought the worst was over, the rand weakened towards a new four-year low against the dollar yesterday based on conditions in the local mining sector.
 
Now investors are “fretting about mining strikes that could affect electricity supply and economic growth in Africa's largest economy,” says Moneyweb.
 
That’s because workers at five Exxaro mines have been on an illegal two-week strike.
 
The reason? 
 
They’re demanding bonus payments that Exxaro refuses to pay. 
 
Since Exxaro is the second biggest supplier of coal to state utility Eskom, which generates 85% of South Africa's electricity from coal, this is bad news for the mining sector.
 
But it’s a good thing if you’ve invested in coal.
 
Supply and demand factors show now’s the perfect time to invest in coal
 
Think about it.
 
Less workers mean less supply.  But commodities like coal have almost unlimited demand, says Francois Joubert, Chief Investment Strategist behind The Resource and Scarcity Report.
 
So the current situation of low supply and high demand is sure to drive up the coal price – and you’ll benefit if you’ve already invested!
 
Not sure how to invest in coal? You have two options…
 
You can do this either by investing in a coal mining share or by investing in a coal exchange-traded note or ETN, says FSP Invest
 
The coal ETN is your safer option though, as you won’t be affected if a mining company is affected by more labour issues like the current Exxaro strike saga.
 
The RMB coal ETN, for example, invests in the Richards Bay Coal futures contract, and gives you access to one metric tonne of coal per ETN security. 
 
And the best part is, it trades in rands on the JSE, says ETFSA, so you can trade ETNs on the stock market at any time of the day. 
It’s the easiest way to profit as the coal price gets red hot!
 


Don't let strike fears scare you off mining investments! Strike now while coal's red hot
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