Murray Growing As National Coal Player
ST. CLAIRSVILLE – Once the $3.5 billion deal to acquire five Consol Energy mines in West Virginia is complete, likely by the end of this year, Murray Energy will join Peabody Energy, Arch Coal, Alpha Natural Resources and Cloud Peak Energy as one of the top five coal producers in the nation, according to coal production figures from the U.S. Energy Information Administration.
Not bad for a company owned and operated by Belmont County native Robert E. Murray, who founded Murray Energy Corp. by purchasing a single continuous mining machine in 1988 after having worked in the coal industry for many years.
“For comparison purposes, Murray (Energy) will go from 30 million tons per year (of coal production) to almost 60 million tons per year,” said Christopher Bise, chairman of the Robert E. Murray Department of Mining Engineering at West Virginia University.
Murray already operates the Century Mine near Beallsville and the Powhatan No. 6 mine near Alledonia. The company recently announced plans to complete the closure of the RedBird West Mine near Brilliant, due to a lack of commercially mineable reserves there. Murray operates several other mines across Appalachia, as well as one in Utah.
Adding the five West Virginia Consol mines, including McElroy and Shoemaker in Marshall County, to allow the company’s production to reach nearly 60 million tons of coal per year would rank Murray Energy as the fifth largest producer of U.S. coal, according to federal statistics.
The most recent federal listing show that St. Louis-based Peabody Energy produced 202.24 million tons of coal in 2011 to lead the pack. This company is followed in production by St. Louis-based Arch Coal, which yielded 160.28 million tons in 2011.
Bristol, Va.-based Alpha Natural Resources mined 116.4 million tons of coal in 2011. Alpha acquired the former Massey Energy early that year, less than 12 months after Massey’s Upper Big Branch Mine disaster. Meanwhile, Cloud Peak Energy, based in Gillette, Wyo., was the fourth largest 2011 producer with 95.6 million tons.
Consol produced 62.1 million tons of coal in 2011 to rank as the fifth largest mining company in terms of production, but roughly half of this production, about 28 million tons, will now go to Murray. Murray Energy itself produced 26.84 million tons of coal in 2011 and about 30 million tons of coal in 2012.
Because the sixth largest company produced only 33.3 million tons in 2011, Murray’s acquisition of the five Consol mines would rank the company as the fifth-largest coal producer in America.
John Deskins, director of the Bureau of Business & Economic Research at WVU, said there are at least 20 years worth of reserves in each of the five West Virginia mines Murray is buying. However, because of enhanced regulations from the U.S. Environmental Protection Agency, burning coal in this country is becoming more difficult and expensive.
In fact, over the past few years, Murray has often accused President Barack Obama and Congressional Democrats of waging a “war on coal,” which he said will cause electricity rates to skyrocket because of severe limitations on pollution from coal-fired power plants.
However, Thomas Morrison, associate vice president of Wheeling-based financial firm Hazlett, Burt & Watson, said spiking energy demands in Asian cities such as Beijing and New Delhi should keep the coal market viable.
“Foreign markets for coal are increasing because of the expansion of power plants, especially in China and India where there are plans to build even more plants,” he said.
“Exports are becoming incredibly important for coal as coal exports have exploded in recent years. Much of the future demand for coal is in export markets,” Deskins added.