One of the most indebted US coal miners, Arch Coal Inc, has agreed to sell off three of its most profitable mines located in Utah for the price of US$435 million. The move is aimed to cut down costs in a period of falling coal prices.
Arch Coal would be selling off the Dugout Canyon, Skyline and Sufco mines and its projected 105 million tons of reserves. The purchaser of these mines is Bowie Resources LLC, according to a statement by the mining company. Because of the deal, Arch also disclosed a US$120 million pretax gain for itself.
As US consumption of coal decreases, the company has posted two straight years of net losses and its outstanding debts have increased. This was attributed to the declining consumption of coal for electricity purposes and a slowdown of demand for coal by mills and makers of industrial steel.
According to data compiled by Bloomberg, this transaction is the largest in the US coal acqusition market since 2011. With more funds available, the mining company can focus on its 'value-enhancing' business areas, suchas its thermal coal operations and metallurigical coal mines in the Appalachian mountain range.
Because of the announcement of the sale, Arch share values rose 4.7% to US$3.77 per share in the New York Stock Exchange.
Join the Conversation