Consol Energy plans to sell its five longwall mines in West Virginia to Murray Energy Corporation for US$ 3.5 billion, as part of a plan to advance its growth strategy.
The agreement will consist of a payment of US$ 850 million in cash, plus the transfer of US$ 2.1 billion in pension and other liabilities.
The five mines are McElroy Mine, Shoemaker Mine, Robinson Run Mine, Loveridge Mine, and Blacksville No. 2 Mine. Collectively, the mines make up the Consolidation Coal Company portfolio, which produced approximately 28.5 million t of thermal coal in 2012, and has approximately 1.1 billion t of Pittsburgh No. 8 seam reserves.
Consol's River and Dock Operations are also included in the transaction. In 2012, the fleet of 21 towboats and 600 barges transported 19.3 million t of coal and other commodities along the upper Ohio River system.
“While this transaction furthers Consol’s […] growth strategy, the sale of these five mines – assets that have long contributed to America’s economic strength and our company’s legacy – was a very difficult decision for our team,” said Consol CEO J. Brett Harvey. “The employees at these mines are among the safest and most productive miners anywhere in the world. In the end, we concluded that the time had come to sell these mature assets to ownership whose strategic direction is more aligned with those mines," Harvey added.
The sale will enhance the company’s ability to grow its gas production, enabling Consol to extend its gas growth production targets beyond 2014. "In advancing our growth strategy, we expect that West Virginia will continue to play an important role," continued Harvey. "We have a sizeable Marcellus Shale footprint in West Virginia, which will take a significant amount of labour and capital to develop."
Consol Energy announced that it is retaining coal assets that align with its long-term strategic objectives. With the retained mines, Consol will continue to participate in the growth of the world's thermal and metallurgical coal markets.
Earlier this month the International Energy Agency (IEA) forecast meaningful continued growth in world demand for thermal coal. The ability to serve both domestic and international markets with premium thermal and metallurgical coal provides “tremendous optionality” for Consol Energy.
Adapted from press release by Katie Woodward
Read the article online at: https://www.worldcoal.com/mining/28102013/consol_to_sell_five_coal_mines_194/