On the one hand (a favourite opening line from all consultants), there is a need for companies to adapt to climate change, an opinion from McKinsey which formed the backbone of a report published in July.

On the other hand there is another McKinsey report released two weeks ago which shows that one of the minerals likely to be a big winner over the next five years is coal.

If Homer Simpson was looking at those two documents side-by-side he would probably deliver his popular verdict: “doh!” – and then slap his head like the cartoon character he is.

On a more serious note, and the Paris conference is undoubtedly a serious affair given that every world leader of any standing is in town for the gabfest, there is something to be considered in what look like very different views from a consultancy staffed by some of the smartest people in business.

Before getting to the comments on coal, which are mainly to be found in a table of mining’s winners and losers between now and the year 2020, a quick look back at the July report on adapting to climate change and the secondary heading in the document: “Taking effective action can turn risk into competitive advantage”

Essentially, McKinsey has used a matrix to assign the expected impact of climate change on different sectors of industry. Coal is not specifically assessed but oil and gas are, and using them as a proxy for coal the obvious high risk categories of risk are regulation (government) and reputation.

But, having estimated the risks involved with climate change the over-arching observation is that climate change is really just another business risk that needs to be managed and if managed well it might not be such a big risk after all.

Delegates to the Paris conference could not possibly take offence with that observation, but when it comes the next McKinsey paper titled “Is there hidden treasures in the mining industry?” the reaction in certain quarters could be uproar.

What McKinsey has done with its analysis of the mining industry is note how prices for most minerals and metals have crashed over the past four years, led by metallurgical coal which is down by more than 70%.

With so much gloom surrounding mining it was only a matter of time before someone argued the case for an inevitable turn-around as low prices drive material from the market with the inevitable result of shortages and higher prices – and the need for new mines.

“Our commodity-by-commodity modelling suggests that stock market sentiment may have over-shot, once again,” McKinsey said.

“In many commodities declining ore quality and limited accessibility of new deposits will squeeze supply in coming years, potentially driving a commodity-price rebound as global demand continues to rise.

“If lessons of previous cycles hold, mining equity prices could be expected to spike as well.”

De-coded, and that’s always a necessary step after absorbing a management consulting report, McKinsey is saying that the big slide in prices for commodities (and shares) will almost certainly go too far with a big rebound to come.

But, where it gets quite interesting for coal is in the McKinsey matrix of which shows how it expects 11 leading minerals to react over the next five years using four types of price assumptions, or price regimes.

The first price regime is “cash cost”, commodities operating at around their current cash cost with little or no incentive to expand because there are no profits to be made.

After cash cost comes the “brownfield” price regime, a price level sufficient to incentivise expansion of existing mines, followed by “greenfield” incentive pricing and finally a wonderful price regime called “fly up” which most people would call a price spike.

As at the end of last year thermal and metallurgical coal (plus aluminium) where in the cash cost regime – lowest of the low with no incentive to expand.

But, as we move toward 2020 something marvellous happens, according to McKinsey because both types of coal (as seaborne exports) rush out of the cash cost category directly into greenfields, bypassing brownfields, in a rush not matched by any other commodity on the consultant’s list.

By 2020 coal will be on par with gold, phosphate and zinc as commodities wanted by consumers and with prices high enough to justify the development of new mines. Only copper is in a higher category – half-way to fly-up.

McKinsey does not say it’s time to buy coal, either as a commodity or via the shares in a coal-mining company, but it’s awfully hard to not arrive at that conclusion.

What The Hog would really like to hear is how that view might explained at the Paris climate change conference.