Coal follow-up
A year ago we documented the gradual consolidation of the US coal industry. That consolidation has taken further steps as top companies gain market share and smaller ones continue to go bankrupt and or sell out. (See chart below). That's in spite of the reality that coal is more valuable than ever before, with the rise in prices of oil and natural gas and the relaxation of environmental rules fort coal burning utilities.
But the coal industry has a new force that will hasten consolidation: Wilbur Ross. He's the guy who invested in dying steel companies like Bethlehem. LTV, and Weirton Steel, combined them into International Steel Group, made them profitable, and then sold them off at a major profit recently to the newly-formed Mittal Group. That deal put plenty of money into the hands of the investment group run by this turnaround artist, whose main aim is to profit from consolidating and upgrading older industries.
Last summer, his group acquired Horizon Resources, the #7 US coal company, which had gone bankrupt for the second time in five years. And he has announced that he is on the lookout for other coal companies. The company is being combined with other, smaller WL Ross Group coal holdings Anker Coal and CoalQueest. The new entity will be called International Coal Group,
According to a CBS MarketWatch report, Ross said "We like commodity-type companies that benefit worldwide growth and demand….The United States has more energy value with coal than all of Arab countries put together."
[Note that Dow Jones recently announced it would buy out CBS MarketWatch, but that's another story.]
It doesn't hurt that the price of coal has doubled since Ross bought Horizon. Ross will doubtless, as he did in the steel industry, restructure union deals and foist off pension obligations to the federal government to increase profits. Ironically, this comes as the supply of experienced coal miners has bottomed out, due to retirements and younger workers abandoning this until recently flat industry.
US Coal Market
| Company |
US market share, 2002 |
US market share, 2003 |
Notes |
| Peabody Energy |
13.7 |
16,5 |
Acquired Black Beauty Coal |
| Arch Coal |
10.1 |
14.0 |
Acquired Vulcan Partners |
| Kennecott Energy |
10.2 |
10.7 |
A subsidiary of Australian company, Rio Tinto |
| Foundation Coal Holdings |
6.4 |
5.9 |
Was RAG American Coal, spun off by that German company |
| CONSOL Energy |
5.6 |
5.5 |
Owned by Grerman company RWE |
| Massey Energy |
4.0 |
3.7 |
Spun off from FLUOR Corporation in 2001 |
| Horizon Natural Resources |
3.6 |
3.1 |
Bought in 2004 by WL Ross Group, a holding company |
| North American Coal |
2.7 |
3.0 |
Subsidiary of NACCO Holdings, which owns forklift and houseware companies, including Proctor-Silex and Hamilton Baach |
| Westmoreland Mining |
|
2.6 |
|
| TXU |
2.2 |
2.3 |
Australian ownership |
| Vulcan Partners |
3.9 |
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Acquired by Arch Coal |
Figures from US Department of Energy
12:43:32 PM 
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