Alpha Natural Resources, Foundation Coal Holdings Plan Merger

Article excerpt

Alpha Natural Resources Inc. and Foundation Coal Holdings Inc., each with substantial operations in Pennsylvania, announced a $2 billion merger Tuesday that will create the nation's third-largest coal mining company.

Alpha's acquisition of Foundation Coal combines the nation's largest metallurgical coal producer in Alpha with one of the nation's largest steam coal producers in Foundation. Metallurgical coal is used in steelmaking, while steam coal is used by utility companies to generate electricity.

The combined company will be named Alpha Natural Resources, based at Alpha's home in Abingdon, Va. It will be the third-largest producer in the United States, trailing Peabody Energy Corp. and Arch Coal Inc.

"We've been pretty forthright in that we want to grow," Alpha CEO Michael Quillen said during a conference call. "This is exactly the sort of transforming event we've been talking about for some time. It's a giant leap forward for both businesses."

The merged company will control 59 coal mines and 14 preparation plants and have combined reserves of more than 2.3 billion tons of coal.

Within Pennsylvania, Foundation's assets include two of the nation's 35 largest mines, Emerald and Cumberland, both located south of Waynesburg in Greene County. Both are underground operations and in 2007 produced nearly 13 million tons of coal, according to Energy Information Administration figures. Cumberland employs 741 workers and Emerald, 708.

Alpha Natural Resources, through its Amfire Mining Co. in Latrobe, operates five underground and 13 surface mines in Western Pennsylvania. In 2008, they produced 3.3 million tons of coal and employed about 450.

Among its area operations are the Ondo Extension Mine, the Nolo Mine and the Gillhouser Run Mine, all in Indiana County.

The deal gives Alpha a much broader geographic base, as it will encompass operations in the Northern and Central Appalachian Basins, along with the Powder River Basin in Montana-Wyoming, plus reserves in the Illinois Basin. …