Peabody Energy Corp., the world's largest publicly traded coal producer, fell more than 7 percent after Venezuelan President Hugo Chavez called for the nationalization of the country's coal and natural gas.
Peabody shares fell $2.93 to $38.92 at 12:55 p.m. in New York Stock Exchange composite trading. The stock, which earlier dipped to $38.42, has declined 18 percent in the past year.
A Peabody subsidiary owns coal reserves of 205 million tons through a 25.5 percent stake in Venezuela's largest mine, the Paso Diablo. The mine produces as much as 8 million tons of coal a year, mostly for export to power and steel producers in North America and Europe.
``It's usually not a good thing when someone wants to take reserves away from you,'' James Rollyson, an analyst at Raymond James in Houston with an ``outperform'' rating on the stock, said. ``Relative to their 10 billion tons of reserves, though, this is just not that significant and they may recover some of their investment.''
Chavez's previous nationalizations have stopped short of kicking private companies out of the country. Venezuela generally takes a majority stake in operating projects and compensates partners for the change in ownership, while reserves are generally taken over by the state.
Exxon Mobil Corp. and ConocoPhillips may be near an agreement with Venezuela's national oil company over $5 billion in assets, the country's lead negotiator said yesterday.
Private Ownership
Venezuela forbids private companies from owning oil reserves, and a constitutional change proposed by Chavez yesterday would extend this rule to coal and natural gas.
``The state reserves to itself for reasons of sovereignty and development in the national interest the exploitation of liquid, solid and gaseous hydrocarbons,'' Chavez said last night, reading from his draft of a revised constitution.
Peabody, based in St. Louis, doesn't break out its profit from the Venezuelan operations. A unit of London-based Anglo American Plc also holds a 25.5 percent stake in the mine, with the remaining 49 percent held by Venezuela's state-owned Carbozulia.
Beth Sutton, a Peabody spokeswoman, wouldn't comment on Chavez's plan to nationalize the company's coal reserves, or whether the company has held talks with Venezuela officials about a possible sale.
Peabody shares fell $2.93 to $38.92 at 12:55 p.m. in New York Stock Exchange composite trading. The stock, which earlier dipped to $38.42, has declined 18 percent in the past year.
A Peabody subsidiary owns coal reserves of 205 million tons through a 25.5 percent stake in Venezuela's largest mine, the Paso Diablo. The mine produces as much as 8 million tons of coal a year, mostly for export to power and steel producers in North America and Europe.
``It's usually not a good thing when someone wants to take reserves away from you,'' James Rollyson, an analyst at Raymond James in Houston with an ``outperform'' rating on the stock, said. ``Relative to their 10 billion tons of reserves, though, this is just not that significant and they may recover some of their investment.''
Chavez's previous nationalizations have stopped short of kicking private companies out of the country. Venezuela generally takes a majority stake in operating projects and compensates partners for the change in ownership, while reserves are generally taken over by the state.
Exxon Mobil Corp. and ConocoPhillips may be near an agreement with Venezuela's national oil company over $5 billion in assets, the country's lead negotiator said yesterday.
Private Ownership
Venezuela forbids private companies from owning oil reserves, and a constitutional change proposed by Chavez yesterday would extend this rule to coal and natural gas.
``The state reserves to itself for reasons of sovereignty and development in the national interest the exploitation of liquid, solid and gaseous hydrocarbons,'' Chavez said last night, reading from his draft of a revised constitution.
Peabody, based in St. Louis, doesn't break out its profit from the Venezuelan operations. A unit of London-based Anglo American Plc also holds a 25.5 percent stake in the mine, with the remaining 49 percent held by Venezuela's state-owned Carbozulia.
Beth Sutton, a Peabody spokeswoman, wouldn't comment on Chavez's plan to nationalize the company's coal reserves, or whether the company has held talks with Venezuela officials about a possible sale.
Via: Bloomberg
by Christopher Martin
by Christopher Martin
