Coal stocks leap on executive orders to boost coal

Investing.com -- Shares of major coal companies surged in today's trading session following a Reuters report that U.S. President Donald Trump is set to sign executive orders aimed at boosting the coal industry. Peabody Energy Corp (NYSE:BTU) led the rally with an 11.7% jump, while Hallador Energy Company (NASDAQ:HNRG), Alliance Resource Partners LP (NASDAQ:ARLP), Cameco Corp (TSX:CCO) (NYSE:CCJ), and NexGen Energy Ltd (NYSE:NXE) also posted significant gains of 10.4%, 5.5%, 3.6%, and 3.1%, respectively.

The executive orders, which are expected to be signed on Tuesday, will prioritize coal leasing on federal lands and direct the Energy Secretary to evaluate whether coal used in steel production qualifies as a critical mineral, according to Reuters, citing a White House Official and two other sources. Additionally, the orders encourage the use of coal to power AI data centers.

This move represents a stark contrast to global efforts to reduce carbon emissions and comes as a response to the declining share of coal in U.S. power generation, which has fallen to less than 20% from over half at the beginning of the century. The resurgence of coal's fortunes in the market is a direct result of the anticipated policy shift.

The Energy Information Administration has noted that the increased production of U.S. natural gas from fracking and drilling, along with the growth of solar and wind power, has significantly reduced coal use in recent years. However, the new executive orders could potentially alter the landscape for coal companies, as federal support for coal leasing and classification of coal as a critical mineral for steel production may bolster the industry's outlook.

Investors are closely watching the impact of these executive orders on the coal sector, which has been struggling to compete with cleaner and more affordable energy sources. The market's reaction indicates optimism for coal companies, as shares have climbed in anticipation of the potential benefits from the new government directives.

As the industry awaits the official signing of the orders, the immediate market response underscores the significance of policy measures on the energy sector. The upcoming actions by the Trump administration could have far-reaching implications for the coal industry and its role in the broader energy mix of the United States.

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