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German E.ON, US Murray Energy set up coal, power trader Javelin

German utility E.ON, US coal producer Murray Energy, and traders have together set up Javelin Global Commodities, an international commodities marketing and trading company, they said Monday.

The venture, to be based in London, will focus on coal and electric power, but also expand into other commodities.

It has a long-term export marketing and domestic advisory agreement with Murray Energy -- the largest privately-owned coal company in the US -- and a long-term hedging and credit line with E.ON, one of Europe's biggest power producers.

Javelin will be able to leverage E.ON's coal and freight hedging expertise with Murray's coal production and marketing team.

After acquiring Consolidation Coal Company in 2013, Murray Energy has grown to produce over 62 million mt of thermal coal in 2014.

It has also invested this year in Foresight Energy, and agreed to manage its 25 million mt/year of production, giving it a combined volume of around 87 million mt/year, primarily from the Illinois and Northern Appalachian basins.

Javelin CEO Peter Bradley said: "We could not be off to a better start with such key players in the coal and other commodities markets supporting us", adding the move was partly a reaction to competition from the shale gas market.

"The onset of shale gas production has changed the energy landscape in the US and abroad, and we aim to provide services to clients to better manage their business in this dynamic environment," he said.

Robert Moore, executive vice president of Murray Energy, said: "We are no longer just competing with fellow coal producers. Today, we are also in a head-to-head battle with low natural gas prices."

Javelin would provide customers with offers including "variable pricing and volume fuel options, and contracts that include physical power offtake, tolling, and power price hedging to lock-in margins", he said.

source: http://www.platts.com