Coal Tattoo

Murray confirms purchase of CONSOL mines

murrayhorizont2We wrote about two weeks ago regarding the widespread speculation that Murray Energy was going to buy CONSOL Energy’s major coal operations in Northern West Virginia, and this morning that deal was made official.

The first thing I saw was Pittsburgh-based CONSOL’s statement saying:

CONSOL Energy Inc. (NYSE: CNX) has taken a transformative step to advance its E&P growth strategy. The company has entered into an agreement to sell its Consolidation Coal Company (CCC) subsidiary, which contains all five of its longwall coal mines in West Virginia, to a subsidiary of Murray Energy Corporation (Murray Energy) for $3.5 billion in value.

“While this transaction furthers CONSOL’s E&P growth strategy,” commented J. Brett Harvey, CONSOL’s chairman and CEO, “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. 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.”

The CONSOL statement explained:

The CCC mines being sold are McElroy Mine, Shoemaker Mine, Robinson Run Mine, Loveridge Mine, and Blacksville No. 2 Mine. Collectively, these mines produced 28.5 million tons of thermal coal in 2012. Murray Energy is acquiring approximately 1.1 billion tons of Pittsburgh No. 8 seam reserves.

CONSOL’s River and Dock Operations are included in the transaction.  In 2012, the fleet of 21 towboats and 600 barges transported 19.3 million tons of coal and other commodities along the upper Ohio River system.

Murray Energy issued its own statement, quoting company president Bob Murray saying:

No Company has developed a better legacy with its employees, with its customers, with the financial markets, with the regulatory agencies, or with the public in general, over many decades, than has CONSOL and Consolidation Coal. Murray Energy intends to preserve this well-earned legacy.

The Murray statement has some figures that explain the size of this deal:

Murray Energy direct employees:  3,300 before the transaction, and 7,100 after the transaction; annual coal production, 30.1 million tons before, and 58.6 million tons after; coal reserves of 859 million tons before the transaction, and 2,396 million tons after the transaction.

Murray  said:

This is truly a momentous time for the combined employees of Murray Energy Corporation and for our company.

The United Mine Workers of America, which represents 2,800 miners at the operations Murray is buying from CONSOL, issued its own statement:

This changes nothing for our members with respect to the terms and conditions of their employment. Our collective bargaining agreement does not go away with this transaction, and our members remain covered by its provisions. There will be no changes in pay, benefits, insurance, schedules, working conditions, safety provisions, grievance procedures or any other language in the contract.