Alpha Metallurgical Resources

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Alpha Metallurgical Resources is a coal company headquartered in Tennessee.[1]

The company produced 14 million tonnes of coal in 2020.[2]

Background

Alpha Natural Resources (ANR) is America's third-largest coal producer, with production capacity of nearly 126 million tons of steam and metallurgical coal. Steam coal is primarily purchased by large utilities and industrial customers as fuel for electricity generation and manufacturing, and metallurgical coal is used primarily to make coke for steel. ANR produces, processes, and sells steam and metallurgical coal from more than from approximately 150 active mines and 40 coal preparation plants located throughout Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming.[3] (The company's 2010 annual report stated that after the takeover of Massey Energy in mid-2011 the number of active mines would jump from 66 to 110. The discrepancy between the company's figures of 110 mines in the 2010 annual report and 150 on the website is not readily apparent.)[4]

In 2010, nearly 60% of Alpha's coal production came from its two huge surface mines in the Powder River Basin of Wyoming: the Belle Ayr Mine and the Eagle Butte Mine, which together added up to just under 49 million tons in 2010.[5] The company states that approximately 86% of its 2010 sales of 84.8 million tons of coal was steam coal for utilities and industrial customer of electricity generation. In 2010 its coal revenues were 3.5 billion.[4]

In 2011, following the Massey takeover, the Rainforest Action Network ranked Alpha as the single largest mountain top removal company in the country, responsible for fully 25% of coal production from MTR mines."[6]

Access Alpha Natural Resources' corporate rap sheet compiled and written by Good Jobs First here.

Growing big, fast with merger mania

Alpha Natural Resources was founded in 2002 by "members of management and by affiliates" of First Reserve Corporation, a private equity firm. In December 2002 it bought the "majority of the Virginia coal operations" of the Pittston Coal Company, a subsidiary of The Brink's Company. The following month it bought the Coastal Coal Company, and less than two months later, in mid-March 2003, Alpha bought the U.S. coal production and marketing operations of American Metals and Coal International. In November the same year it bought Mears Enterprises, and affiliated entities.[7]

The pace of mergers barely let up. In April 2004 Alpha bought the Moravian Run Reclamation Company "including four active surface mines and two additional surface mines under development" and the following month a "coal preparation plant and railroad loading facility located in Portage, Pennsylvania and related equipment and coal inventory from Cooney Bros. Coal Company and an adjacent coal refuse disposal site from a Cooney family trust."[7]

In October 2005 Alpha bought the Nicewonder Coal Group including three surface mines and a road construction and coal recovery business in southwestern Virginia and southern West Virginia. Then in May the following year Alpha bought a number of coal mining operations in eastern Kentucky from Progress Fuels Corporation. All up, in just three years Alpha had bought coal operations with 73 million tons of coal reserves.

For a while the pace of takeovers slowed. Then in June 2008 Alpha bought the Mingo Logan-Ben Creek coal mining assets in West Virginia from Arch Coal Inc. A little over a year later, in July 2009, Alpha took over Foundation Coal Holdings Inc. With the completion of the deal in just seven years Alpha had become the third-largest coal company in America.[7][8]

On January 29, 2011, Alpha announced it agreed to buy Massey Energy for $7.1 billion, creating a company with 110 mines and combined coal reserves of 5 billion tons.[9] Alpha Natural Resources' chief executive said the planned $7.1 billion buyout of Massey will create a "global company" built on exporting U.S. coal for steelmakers.[10] On June 1, 2011, shareholders approved Alpha Natural Resources’ $7.1 billion purchase of Massey Energy, creating the nation’s largest metallurgical coal company.[11]

In August 2011 the board of Alpha Natural Resources Inc. (ANR) approved the repurchase of $600 million worth of common share. The company sought to increase shareholder value and demonstrate its capital position after its $7.1 billion acquisition of Massey Energy Co.[12]

While Alpha may have global aspirations, its current production is solely from mines in the US. However, in 2010 approximately 35% of its coal revenues combined with freight and handling revenues came from sales outside the US, largely to buyers in Brazil, Italy, India, Turkey and Ukraine.[13] In March 2011, Alpha Natural Resources announced that, in response to the increase in demand for metallurgical and thermal coal in Asia, it planned to establish new offices in Sydney, Australia and New Delhi, India. The offices are expected to open by mid-2011.[14]

Purchase of Massey Energy

Massey put itself up for sale in November 2010 after posting a wider-than-expected third-quarter loss, attributed to the Upper Big Branch Mine Disaster, an explosion that killed 29 miners in April 2010. Massey shares lost more than half their value, hitting a low of $25.87 in July 2010. Shares bounced back above pre-explosion levels after reports that the company would likely be acquired, which increased with the departure of Chief Executive Don Blankenship at the end of 2010, who had reportedly been opposed to selling the company.[9] Morgan Stanley was lead adviser for Alpha on the $7.1 billion buyout, with Citigroup also advising the company. Perella Weinberg and UBS advised Massey on the sale. Alpha obtained $3.3 billion in committed financing from Morgan Stanley and Citi, which it plans to use, along with its existing cash balance, to pay for the cash portion of the deal as well as refinance some debt of both companies.[9]

On May 25, 2011, a group of Massey Energy shareholders filed a petition with the West Virginia Supreme Court, seeking to stop the $8.5 billion transaction that would make Massey part of Alpha Natural Resources. In similar lawsuits filed in West Virginia and Delaware district courts, lawyers for Massey shareholder groups argue that top Massey executives and board members arranged the sale to avoid personal liability for the deaths of the 29 miners killed in the Upper Big Branch explosion; that the proposed buyout greatly undervalued Massey; and that Alpha and Massey had not disclosed the complete motivation for and history of the proposed deal to shareholders.

Documents in the Delaware lawsuit also showed that Alpha CEO Kevin Crutchfield was prepared to provide Massey's former, controversial chief executive, Don Blankenship, with a job as an Alpha consultant. The records also showed that experts who examined Massey as part of Alpha's "due diligence" for the transaction found major problems with Massey's safety practices and the company's management, with one Alpha document stating: "The entire Massey organization appears to be managed by an autocratic central command and control structure." The documents allege that the mine disaster has reduced Massey's economic value by more than $1 billion, along with more than $165 million in out-of-pocket costs and $320 million in lost coal revenues.[15]

On May 31, 2011, Justices announced their 3-0 vote (with Justices Davis and Benjamin disqualified) declining to issue the requested injunction. However, the justices also voted to unseal at least certain documents in the case, as had been requested in a legal motion filed by the Charleston Gazette and NPR. Unsealed documents filed with the West Virginia Supreme Court showed that lawyers for Massey Energy shareholders alleged that Alpha Natural Resources]] CEO Kevin Crutchfield made a secret deal to hire key Massey executives linked to the [[Upper Big Branch Mine Disaster. Ken Ward Jr. wrote that "faced with the prospect of a hostile takeover by Alpha and loss of control of the company’s internal investigation and its exculpatory ‘supernatural cause of the explosion … the board, led by Defendant [Bobby] Inman, entered into a secret pact with Alpha CEO Kevin Crutchfield that the Massey Energy officers who were directing the internal investigation would be promised high-ranking positions within the post-merger company. Not coincidentally, the Massey Energy officers in charge of the internal investigation are the ones most culpable for the Upper Big Branch explosion … Defendants have hidden these and other key facts from the company’s shareholders, who are scheduled to vote on the merger at a special meeting set for June 1, 2011, by issuing a materially false and misleading Proxy statement."[16]

On June 1, 2011, shareholders approved Alpha Natural Resources’ $7.1 billion purchase of Massey Energy, creating the nation’s largest metallurgical coal company.[17]

As a result of the merger, Alpha stated in their 2010 annual report that the company's proven and probably coal reserves on land they owned or leased would jump from approximately 2.3 billion to 5.1 billion.[4]

Alpha topped the list of a 2012 RepRisk report on the world's "most controversial" mining firms, which compares company performances against the UN Global Compact and other environmental, social, and governance principles. RepRisk wrote that Alpha qualified for the number one spot after its 2011 purchase of the leading mountaintop removal coal producer Massey Energy, had a well-documented history of appalling health and safety abuses, fraud, and environmental violations. Alpha now far outleads other US companies in total number of MTR mines and mine safety violations.[18]

Coal seam fracking deal

In February 2010 Alpha entered into a 50/50 joint venture with Rice Energy to develop "a portion" of its 20,000 acres of land in south-west Pennsylvania underlain by Marcellus Shale.[19] In announcing its 2009 results Alpha stated that "the initial phase of development is underway, and we are currently drilling the first of four wells planned for 2010. Rice Energy brings technical and managerial expertise with extensive experience drilling and fracturing wells in the Marcellus, and this partnership enables Alpha to capture value from our Marcellus shale asset without diverting focus away from our coal business."[20]

Export Terminal

In its 2010 annual report Alpha states that, through its Alpha Terminal Company subsidiary, it holds a 41% interest in Dominion Terminal Associates (DTA) which operates a 20 million-ton a year coal export terminal in Newport News, Virginia. Alpha states that it shipped a total of 2.2 million tons of coal through the terminal in 2010. The terminal, which was constructed in 1984, is held in a partnership with subsidiaries of Arch Coal and Peabody Energy.[21]

Mountaintop removal

The Rainforest Action Network estimated that in 2010 Alpha mined 15.595 million tons of coal from mountaintop removal in 2010 and that it got 36.4% of its Central Appalachian coal by the method. (Note: The 2010 data pre-dates the company's takeover of Massey. The 2010 data for Massey was that it mined 14.6 million tons of coal by mountaintop removal, accounting for 47.6% of its production.)[22]

In its 2010 annual report Alpha bemoaned that "mountaintop removal mining is a legal but controversial method of surface mining." "Certain anti-mining special interest groups," the company complained, "are waging a public relations assault upon this mining method and are encouraging the introduction of legislation at the state and federal level to restrict or ban it and to preclude purchasing coal mined by this method. Should changes in laws, regulations or availability of permits severely restrict or ban this mining method in the future, our production and associated profitability could be adversely impacted."[23]

The campaign against mountaintop mining, Alpha conceded was having the effect of increasing the risks and potential costs associated with continuation of the practice. "In recent years, the permitting required for coal mining, particularly under the Surface Mining Control and Reclamation Act and the Clean Water Act to address filling ephemeral and intermittent streams and other valleys with materials from mountaintop coal mining operations and preparation plant refuse disposal has been the subject of increasingly stringent regulatory and administrative requirements and extensive litigation by environmental groups against coal mining companies and environmental regulatory authorities," Alpha stated in its 2010 annual report.[24]

"Congress has also considered legislation to impose additional limitations on surface mining. It is unclear at this time how the issues will ultimately be resolved, but for this as well as other issues that may arise involving permits necessary for coal mining and other operation, such requirements could prove costly and time-consuming, and could delay commencing or continuing exploration or production operations. New laws and regulations, as well as future interpretations or different enforcement of existing laws and regulations, may require substantial increases in equipment and operating costs to us and delays, interruptions or a termination of operations, the extent of which we cannot predict."[24]

2008 Poll shows Americans oppose mountaintop removal

Stop Mountaintop Removal

The results of nationwide poll on mountaintop removal conducted in October 2008 showed that Americans oppose mountaintop removal coal mining by a wide margin. Researchers questioned 1,000 likely voters nationwide. Half the participants were asked if they supported or opposed mountaintop removal, without any additional information on the subject. 39 percent opposed mountaintop removal, versus 15 percent who supported it. 46 percent were undecided. The other half of partipants were given a short definition of mountaintop removal; of these voters, 61 percent opposed mountaintop removal, versus 16 percent who supported it. 23 percent were undecided. Other findings included:[25]

  • Opposition to mountaintop removal was highest in the Northeast, where 79 percent of people polled were against it. In the South, which included the biggest eastern coal states of Kentucky and West Virginia, opposition was 59 percent.
  • By a margin of more than 2 to 1, voters polled disagreed that environmental protections are bad for jobs and business. 47 percent believed environmental protections are good for the economy, versus 20 percent who believed such protections are bad for the economy.
  • Two-thirds of Americans are against the repeal of the stream buffer zone rule, which bans mining activities within 100 feet of streams.

Lawsuits

The Rainforest Action Network notes that in 2010 "property owners in West Virginia sued the company for subsidence damage and ruined groundwater due to 'reprehensible, intentional, and grossly negligent' conduct in mining operations."[22]

On July 16, 2012, the Ohio Valley Environmental Coalition, West Virginia Highlands Conservancy, and Sierra Club filed a lawsuit against Alpha Natural Resources Inc. over selenium pollution in Logan, McDowell, Boone, and Kanawha counties in West Virginia, saying the company is violating the federal Clean Water Act and state-issued discharge permits. The claim asks for a judge to order the operations to comply, and fine Alpha as much as $37,500 per day of violation, some of which date to 2007. They also seek monitoring and sampling to determine the extent of the environmental damage, and a cleanup and restoration order.

The affected mines are: Alex Energy's Whitman No. 2 Surface Mine; Aracoma Coal Co.'s Camp Branch Mine; Bandmill Coal Corp.'s Tower Mountain Mine; Highland Mining Co.'s Freeze Fork Surface Mine; Independence Coal's Twilight Surface Mine; Jack's Branch Lady Dunn Preparation Plant, Hughes Creek Surface mine, and Stockton Mine; and Kanawha Energy's Fourmile Fork Mine.

In May 2012, the three groups sued two Alpha subsidiaries over the same issue. That case involved Independence Coal's Crescent No. 2 Surface Mine in Boone County and Marfork Coal's 7-billion-gallon Brushy Fork coal sludge impoundment in Raleigh County.

Alpha settled a similar lawsuit with the same three groups in December 2011, ending a fight over three other mines. That plan called for a $50 million cleanup effort and fines at the Twilight and Red Cedar operations in Boone County and the Kanawha Division along the Kanawha-Fayette county line.[26]

Alpha Metallurgical Resources Coal Mines

Below are the mines owned and operated by AMR.[27]

  • Virginia
    • Surface
    • Underground
      • Deep Mine 41
      • Deep Mine 44
      • No. 10 (Bear Ridge Upper Banner) (contract mine)


Coal Resources

Resource Details

Category Reserve Classification Quantity Units Data Year
Commercial Reserves Total Reserves (Proven and Probable) 623.5[2] million tonnes 2020
Commercial Resources Total Resources million tonnes

Coal Production

Coal Exports

Revenue and Profits

2020

Revenue:

Gross Profit:

2019

Revenue:

Gross Profit:

Contact

Company Website: https://alphametresources.com/

References

  1. "Contact Us". Alpha Metallurgical Resources. 2021. Retrieved July 19, 2021.
  2. 2.0 2.1 Alpha Metallurgical Resources (2021) Form 10-K . United States Exchange and Securities Commission. Report.
  3. "ANR: About Us" Alpha Natural Resources website, accessed July 2011.
  4. 4.0 4.1 4.2 Alpha Natural Resources, "Form 10-K Annual Report", U.S. Securities and Exchange Commission, February 25, 2011, page 5. (Pdf)
  5. Alpha Natural Resources, "Form 10-K Annual Report", U.S. Securities and Exchange Commission, February 25, 2011, page 12. (Pdf)
  6. Rainforest Action Network, "Policy and practice: 2011Report Card on Banks and Mountaintop Removal: Executive Summary", Rainforest Action Network, April 2011. (Pdf).
  7. 7.0 7.1 7.2 Alpha Natural Resources, "History", Alpha Natural Resources website, accessed July 2011.
  8. Mark Peters, "Alpha Natural Resources 2Q Results Soar On Acquisition", wsj.com, August 4, 2010.
  9. 9.0 9.1 9.2 Mario Parker and Zachary R. Mider, "Alpha Natural Agrees to Buy Massey Energy for $7.1 Billion", Bloomberg, January 29, 2011.
  10. Tim Huber, "Alpha CEO says Massey deal is about coal exports", Bloomberg', January 31, 2011.
  11. Clifford Kraus, "Shareholders Approve Massey Energy Sale to Alpha" New York Times, June 1, 2011.
  12. "Alpha Natural Approves $600M Share Buyback >ANR" The Wall Street Journal, August 22, 2011.
  13. Alpha Natural Resources, "Form 10-K Annual Report", U.S. Securities and Exchange Commission, February 25, 2011, page 7. (Pdf)
  14. Alpha Natural Resources, "Alpha Natural Resources Plans to Establish Two International Offices", Media Release, March 2, 2001.
  15. Ken Ward Jr., "Massey-Alpha merger challenge hits state Supreme Court", Charleston Gazette, May 25, 2011.
  16. Ken Ward Jr., "Documents: Alpha CEO Crutchfield made secret deal to hire Massey execs linked to UBB disaster", Coal Tattoo, May 31, 2011.
  17. Clifford Kraus, "Shareholders Approve Massey Energy Sale to Alpha", New York Times, June 1, 2011.
  18. "Most Controversial Mining Companies of 2011," RepRisk report, 2012.
  19. Alpha Natural Resources, "Form 10-K Annual Report", U.S. Securities and Exchange Commission, February 25, 2011, page 18. (Pdf)
  20. Alpha Natural Resources, "Alpha Natural Resources Announces Results for Fourth Quarter and Full Year 2009", Alpha Natural Resources, February 9, 2010.
  21. Alpha Natural Resources, "Form 10-K Annual Report", U.S. Securities and Exchange Commission, February 25, 2011, page 18. (Pdf)
  22. 22.0 22.1 Rainforest Action Network, Policy and practice: 2011Report Card on Banks and Mountaintop Removal", Rainforest Action Network, April 2011, page 5. (Pdf).
  23. Alpha Natural Resources, "Form 10-K Annual Report", U.S. Securities and Exchange Commission, February 25, 2011, page 23. (Pdf)
  24. 24.0 24.1 Alpha Natural Resources, "Form 10-K Annual Report", U.S. Securities and Exchange Commission, February 25, 2011, page 35. (Pdf)
  25. "Americans oppose mountaintop removal, according to poll," The Charleston Gazette, October 23, 2008.
  26. "West Virginia Selenium Pollution: Lawsuit Filed Against Alpha Natural Resources," AP, July 16, 2012.
  27. "About Us". Alpha Metallurgical Resources. Retrieved July 19, 2021.