Alpha Natural Resources is a large American producer of
metallurgical coal
Metallurgical coal or coking coal is a grade of coal that can be used to produce good-quality coke. Coke is an essential fuel and reactant in the blast furnace process for primary steelmaking. The demand for metallurgical coal is highly coupled ...
("met coal") for the industrial production of steel and iron and low-sulfur thermal
coal
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when dea ...
("steam coal") to fuel steam boilers for the production of electrical power. In November, 2018 the company was acquired by
Contura Energy
Alpha Metallurgical Resources, formerly Contura Energy (January 2021), is a leading coal supplier with underground and surface coal mining complexes across Northern and Central Appalachia. Contura owns large coal basins in Pennsylvania, Virginia ...
.
The company also provides industry services relating to equipment repairs, road construction and logistics, with domestic operations and coal reserves within the states of
Virginia
Virginia, officially the Commonwealth of Virginia, is a state in the Mid-Atlantic and Southeastern regions of the United States, between the Atlantic Coast and the Appalachian Mountains. The geography and climate of the Commonwealth ar ...
,
West Virginia
West Virginia is a state in the Appalachian, Mid-Atlantic and Southeastern regions of the United States.The Census Bureau and the Association of American Geographers classify West Virginia as part of the Southern United States while the Bur ...
,
Kentucky
Kentucky ( , ), officially the Commonwealth of Kentucky, is a state in the Southeastern region of the United States and one of the states of the Upper South. It borders Illinois, Indiana, and Ohio to the north; West Virginia and Virginia to ...
, Wyoming, Utah, Illinois, Tennessee, and
Pennsylvania
Pennsylvania (; ( Pennsylvania Dutch: )), officially the Commonwealth of Pennsylvania, is a state spanning the Mid-Atlantic, Northeastern, Appalachian, and Great Lakes regions of the United States. It borders Delaware to its southeast, ...
. Alpha Natural Resources does not produce all of the coal it sells; much of the coal sold by Alpha Natural Resources is purchased from independent mining operations and then resold in the worldwide market.
The 2009 takeover of Foundation Coal provided Alpha Natural Resources with the ability to directly access the
Cumberland Mine Railroad and to rail transport coal in Pennsylvania.
In 2014, Alpha Natural Resources settled on a $27.5 million fine and $200 million to reduce illegal toxic discharges into hundreds of waterways across five
Appalachia
Appalachia () is a cultural region in the Eastern United States that stretches from the Southern Tier of New York State to northern Alabama and Georgia. While the Appalachian Mountains stretch from Belle Isle in Newfoundland and Labrador, Ca ...
n states. According to the EPA it was the largest environmental fine ever made against a coal company: "This is the largest one, period. It's the biggest case for permit violations for numbers of violations and size of the penalty, which reflects the seriousness of violations."
[
]
Corporate history
Alpha Natural Resources, Inc
2002
Alpha Natural Resources was established in 2002 by management (original CEO Michael Quillen played a major role) and First Reserve
First Reserve Corporation is a private equity firm specializing in leveraged buyouts and growth capital investments in the energy industry, energy sector. First Reserve was founded in 1984 and is the oldest and largest private equity fund dedicat ...
Stockholders (though it officially incorporated in November 2004).[ Around the same time it made its first major acquisition, ]The Brink's Company
The Brink's Company is an American private security and protection company headquartered outside Richmond, Virginia. Its core business is Brink's Inc.; its sister brand Brink's Home Security company operates separately and is headquartered in ...
's Virginian coal business, for $62.9 million (Virginia is currently a significant source of primary production). Immediately after that it took over Coastal Coal Company (January 2003), followed by American Metals and Coal International's coal business (March) and Mears Enterprises, Inc (November).
Alpha Natural Resources exists today primarily as the result of two mergers, one in July 2009 ( Foundation Coal and Alpha Natural Resources, Inc.) and another in January 2011 (US$7.1 billion acquisition of Massey Energy).
2004, IPO
Alpha Natural Resources filed for an IPO during December 2004 in an attempt to raise US$250 million to repay debt (strong coal prices also affected the timing of this). At the time, coal was selling for about a quarter of the price of natural gas ($1.5 versus $5.0 per million BTU); however, the ratio has since become much smaller (as of 2010, coal has tripled in price to $4.63/mil BTU
The British thermal unit (BTU or Btu) is a unit of heat; it is defined as the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit. It is also part of the United States customary units. The modern SI u ...
while gas is still at $5.189). (Natural gas is used as an alternative to thermal coal in electricity production.)
The takeover of Foundation Coal was a reverse takeover
A reverse takeover (RTO), reverse merger, or reverse IPO is the acquisition of a public company by a private company so that the private company can bypass the lengthy and complex process of going public. Sometimes, conversely, the public compan ...
, in that Foundation Coal was the company left standing and it was immediately renamed Alpha Natural Resources. Foundation Coal added 7.5 million tons of annual coal shipments to its Eastern Coal operations, and expanded the company's presence in Wyoming. Although acquisitions helped Alpha expand rapidly since its founding in 2002, it also burdened it with debt ($185.6 million in 2004, $754.15 December 31, 2010).[
]
2011, Massey Energy acquisition
On January 31, 2011 Alpha Natural Resources acquired coal producer Massey Energy
Massey Energy Company was a coal extractor in the United States with substantial operations in West Virginia, Kentucky and Virginia. By revenue, it was the fourth largest producer of coal in the United States and the largest coal producer in Centr ...
for US$7.1 billion, completed in June 2011, creating the second biggest coal miner by market capitalization. The merged company (54% owned by Alpha Natural Resources) would be the leading producer of metallurgical coal in the US and have the second largest reserves of coal (5.1 billion tons). Merging operations with Massey is estimated to reduce combined operating costs by $150 million.[ 7,000 of the 14,000 employees are in West Virginia.][ In 2010, demand for thermal coal rose while metallurgical coal demand was flat; it made up only 14% of coal sales, down from 17% in 2009.][
Massey Energy had become a takeover target after suffering large income losses and negative publicity following an explosion at West Virginia's Upper Big Branch mine that killed 29 employees. Direct costs related to the incident amounted to $128.9 million.][ Federal regulators and the Mine Safety and Health Administration blamed the explosion on Massey's poor practices; however, the company contested the findings, citing a methane leak.
The corporate takeover of Massey Energy was completed in June 2011 after shareholders of both companies voted for the merger. 99% of Massey shareholders voted for the deal (77% of them voted), while 98% of Alpha's shareholders supported it (83% of them voted). Alpha secured $3.3 billion in financing for the takeover from ]Citigroup
Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking ...
and JPMorgan Chase
JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the ...
. The combined entity will be the world's number three producer of metallurgical coal, behind BHP
BHP Group Limited (formerly known as BHP Billiton) is an Australian multinational mining, metals, natural gas petroleum public company that is headquartered in Melbourne, Victoria, Australia.
The Broken Hill Proprietary Company was founded ...
and Teck Resources
Teck Resources Limited, known as Teck Cominco until late 2008, is a diversified natural resources company headquartered in Vancouver, British Columbia, that is engaged in mining and mineral development, including coal for the steelmaking indust ...
.
Alpha Natural Resources settled Massey's Upper Big Branch Mine disaster liabilities with the U.S. Attorney for $209 million on December 6, 2011. The settlement included $41.5 million to the survivors and families of the deceased. The Mine Safety and Health Administration additionally assessed a $10.8 million fine for 369 citations and orders, the largest fine for a mine accident in US history.
2012 election year layoffs
On September 18, 2012, Alpha announced a plan to idle eight coal mines and to lay off 800 employees before the November 2012 federal elections in the United States. The plan would reduce Alpha's yearly coal production by ~16 million tons and reduce costs by $150 million.
2014, settlement with the EPA
In 2014, Alpha Natural Resources settled on a $27.5 million fine and $200 million to reduce illegal toxic discharges into hundreds of waterways across five Appalachian states. According to the EPA, it was the largest environmental fine ever made against a coal company: "This is the largest one, period. It's the biggest case for permit violations for numbers of violations and size of the penalty, which reflects the seriousness of violations."
2015, bankruptcy
The firm suffered four years of losses, laid off 4,000 workers, and closed all but 50 mines. Due to its "abnormally low" stock price, ANR was delisted from the NYSE on July 16, 2015. With debts of $3 billion dating from its acquisition of Massey Energy for $7.1 billion in 2011 the firm filed for Chapter 11 bankruptcy
Chapter 11 of the United States Bankruptcy Code (Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, whe ...
on August 3, 2015.
Alpha Natural Resources had used more than $1 billion in "self-bonding" to guarantee it could pay for its mine reclamation
Mine reclamation is the process of modifying land that has been mined to ecologically functional or economically usable state. Although the process of mine reclamation occurs once mining is completed, the planning of mine reclamation activiti ...
obligations under the Surface Mining Control and Reclamation Act of 1977
The Surface Mining Control and Reclamation Act of 1977 (SMCRA) is the primary federal law that regulates the environmental effects of coal mining in the United States.
SMCRA created two programs: one for regulating active coal mines and a second ...
. After the firm declared bankruptcy, the Wyoming Department of Environmental Quality The Wyoming Department of Environmental Quality (DEQ) founded in 1973, is a Wyoming state agency to protect, conserve and enhance the environment of Wyoming "through a combination of monitoring, permitting, inspection, enforcement and restoration/re ...
agreed to accept $61 million in place of the firm's $411 million in self-bonding liability to the state. In West Virginia, Alpha's bankruptcy plan is to offer $240 million in collateral for its self-bonding liabilities and to continue holding $100 million in liability without collateral. The plan would commit $209 million to reclamation in Illinois, Kentucky, Tennessee, Virginia, and West Virginia.[ Bankruptcy negotiations are complicated by large hedge funds, such as ]Highbridge Capital Management
Highbridge Capital Management, LLC is a multi-strategy alternative investment management firm founded by Glenn Dubin and Henry Swieca in 1992. In 2004, it was purchased by JPMorgan Chase; as of 2019, it had about $3.9 billion in assets under m ...
and Davidson Kempner Capital Management
Davidson Kempner Capital Management LP (“Davidson Kempner”) is a global institutional alternative investment management firm with over $38 billion in assets under management. Davidson Kempner is headquartered in New York City, with additional ...
, who own both the company's debt and liens on Alpha's operating cash.[
On July 26, 2016, the company successfully emerged from bankruptcy as a privately held company.
]
Operations
Only about 40% of coal is produced directly by the company, and 60% comes from subsidiaries. Three-fourths of the company's 60 mines are underground operations. In 2008 the biggest source of coal production, the Powder River Basin
The Powder River Basin is a geologic structural basin in southeast Montana and northeast Wyoming, about east to west and north to south, known for its extensive coal reserves. The former hunting grounds of the Oglala Lakota, the area is very s ...
(53% = 49.2mt), was home to only 32% of coal reserves (behind U.S. Northern Appalachia (35% = 800mt) and Central Appalachia (32%, thermal coal). After the merger with Massey, the company controlled 150 coal mines and 40 preparation plants, which was up significantly from the 65 mines under its control at the end of 2007.[ For 2011, Massey expected to ship 10 to 14 million tons of metallurgical coal, about the same as Alpha (in 2010 this was 11.88 million tons or 14% of total production).] In its last annual report (2009) Massey Energy reported coal sales of 38 million tons (ranking sixth in the US), compared to 84.8 million tons sold by Alpha Natural Resources in 2010. In the fourth quarter of 2010 Massey Energy had a coal shipment shortfall of 1.4 million tons, half of which was due to rail problems, and the other half a result of misproduction.[
]
Headquarters
The Alpha Natural Resources-leased corporate office building in Bristol, Virginia was reportedly sold in February 2015 for $28 million to One Alpha Place LLC, registered in Delaware and owned by the publicly traded Kuwait Petroleum Corporation
Kuwait Petroleum Corporation ( ar, مؤسسة البترول الكويتية) is Kuwait's national oil company, headquartered in Kuwait City.
The activities of Kuwait Petroleum Corporation (KPC) are focused on petroleum exploration, produc ...
. The deal will apparently have no impact on the building's sole tenant (Alpha Natural Resources, LLC), which at the time had 22 years remaining on a 25-year lease.
Mines
Before the merger with Massey Energy, Alpha Natural Resources had over 60 active mines in four US states. After the merger the number of mines reached 110-150.[ Notable ones include Belle Ayr Mine and Eagle Butte Mine (both in Wyoming).
In Coal River East, Kingston Mining, located in Kingston, West Virginia, has some of the world's most sought-after met coal.
Currently, Alpha affiliates operate approximately 60 mines and 22 prep plants.
Black Bear Surface Mines was previously operated, but more recently is one of the company's two ]land restoration
Land restoration, which may include renaturalisation or rewilding, is the process of ecological restoration of a site to a natural landscape and habitat, safe for humans, wildlife, and plant communities. Ecological destruction, to which land resto ...
projects. The project was featured on the Discovery Channel
Discovery Channel (known as The Discovery Channel from 1985 to 1995, and often referred to as simply Discovery) is an American cable channel owned by Warner Bros. Discovery, a publicly traded company run by CEO David Zaslav. , Discovery Channe ...
.
Competition
* Cliffs Natural Resources
Cleveland-Cliffs Inc., formerly Cliffs Natural Resources, is a Cleveland, Ohio-based company that specializes in the mining, beneficiation, and pelletizing of iron ore, as well as steelmaking, including stamping and tooling. It is the largest ...
, a coal producer of comparable size
* Patriot Coal Corporation
Patriot Coal Corporation was a coal-mining company based in St. Louis, Missouri in the United States. The company is a spin-off of most of the Eastern U.S. operations of Peabody Energy.
Patriot is the second largest coal miner east of the Missi ...
, a producer that also mines in Appalachia and West Virginia
See also
* Pittston Coal strike
The Pittston Coal strike was a United States strike action led by the United Mine Workers Union (UMWA) against the Pittston Coal Company, nationally headquartered in Pittston, Pennsylvania. The strike, which lasted from April 5, 1989 to Febr ...
— Pittson Coal, which was once the seventh largest US coal producer (1987), contracted in size substantially since a 1990 employees' strike. In 2002, Alpha Natural Resources purchased what remained of its coal business.
References
{{reflist, 2
Coal companies of the United States
Companies based in Virginia
Non-renewable resource companies established in 2002
2002 establishments in Virginia
Companies formerly listed on the New York Stock Exchange
Companies that filed for Chapter 11 bankruptcy in 2015