Coal news and updates

From a nondescript office block close to London’s Victoria station, EDF, the French utility company, has quietly built one of the world’s largest and most profitable commodity trading businesses.

Over nearly two decades EDF Trading has made billions of euros of profit from trading coal, gas and electricity — markets in which it has grown to rival some of the industry’s biggest names including Glencore and Vitol.

 

But now EDF, keen to promote its low-carbon credentials and strengthen its balance sheet, is looking to sell the trading division’s huge coal operation to a joint venture involving Tokyo Electric Power and Chubu Electric Power, two Japanese utilities. Rivals say the move raises questions about whether state-controlled EDF will retain the remainder of its trading business.

 

EDF and the two Japanese utilities declined to comment, but people familiar with the talks about the coal trading business say they are progressing towards a sale. A deal could be concluded before Christmas.

 

The expected disposal by EDF has shone a light on its little-known trading business, which has morphed from supplying the utility’s fleet of coal-fired power stations into a much larger concern with a record of profitability that compares favourably to competitors.

 

Over the past five years, EDF Trading’s annual net income has averaged €324m per annum. By comparison Gunvor, the world’s fourth-largest independent oil trader, has recorded post-tax profits closer to $300m per annum over the same period. EDF Trading has paid €2.8bn of dividends since 2005 to the parent company.

SOurce: FT