James River To Pay $475 Million For International Resource Partners
07 March 2011 - 1:25PM
Dow Jones News
NEW YORK--U.S. coal producer James River Coal Company (JRCC)
will pay $475 million cash for International Resource Partners LP
in an effort to tap the increasingly lucrative coal export
market.
The deal gives Richmond, Va.-based James River access to thermal
coal used by power plants as well as the higher-quality
metallurgical coal used by steel companies from nine underground
and surface mines operated by privately held International
Resource, headquartered in Charleston, W. Va.
Those mines, in southern West Virginia and eastern Kentucky,
produced 1.9 million tons in 2010, including 1.2 million tons of
metallurgical coal and 0.7 million tons of thermal coal.
James River produced 9.8 million tons of coal in 2009, the
latest yearly figures available, with approximately 92% of revenue
from sales to electric utilities.
The purchase of International Resource "increases our offerings
of metallurgical coal," and "it provides us with greater access to
the international seaborne coal markets," James River's Chief
Executive, Peter Socha, said in a statement.
International Resource has total reserves and resources of
approximately 136 million tons, including approximately 61 million
tons of metallurgical coal and 75 million tons of thermal coal.
The acquisition--which also includes International Resource's
marketing and trading subsidiary, Logan & Kanawha Coal Company
LLC--is expected to close in the first half of 2011.
The purchase is the latest coal deal seeking to capitalize on
soaring prices for metallurgical coal.
U.S. coal producers are particularly well-positioned to take
advantage of strong Asian demand for the steelmaking ingredient, as
Australian flooding has disrupted global supplies.
In January, Massey Energy Co. (MEE) agreed to be acquired by
Alpha Natural Resources Inc. (ANR) in a deal valued at $7.1 billion
that would make Alpha the world's third largest steelmaking coal
producer.
Kinder Morgan Energy Partners LP (KMP) in February agreed to
handle up to 6 million tons of Massey coal a year through a
Louisiana terminal.
-By Matt Whittaker, Dow Jones Newswires; 212-416-2139;
matt.whittaker@dowjones.com