An April 26 Bloomberg report said that Arch Coal (NYSE: ACI) has hired financial advisers and is seeking buyers for several of its steam coal mines in the U.S., which together may command a price of $600m or more.
The report, citing unnamed sources, said that first-round bids for the mines, located in Kentucky, Illinois and Utah, are expected to come in late May. The mines will probably be sold in separate deals, said one unnamed person. Financial advisers including Deutsche Bank AG were hired in recent weeks by Arch to help sell the mines, said the Bloomberg sources. The mines are attracting interest from private-equity investors as well as U.S. and foreign coal producers, one of the people said.
An Arch spokesperson declined comment April 26 on the Bloomberg report when contacted by GenerationHub.
The fact that Arch would be willing to sell some mines is no big surprise. In June 2011, it bought International Coal Group, which had mines in Northern Appalachia, Central Appalachia and one mine, the Viper deep job, in Illinois. Some observers had been expecting that Arch would deal some of those ICG mines that it found less desirable. Viper is the company’s only current mine in Illinois, though it does own 49% of Illinois coal producer Knight Hawk Coal and all of the undeveloped Lost Prairie deep mine in Illinois.
Utah, mentioned in the Bloomberg story, is interesting since the three Arch mines there – the Sufco, Skyline and Dugout Canyon longwall jobs – have been owned by Arch for many years. Kentucky as a state with for-sale mines is not particularly distinctive, since Arch owns mines there it has had for some time and other mines that came in the ICG takeover.
Arch has been willing to deal big blocks of coal mines before. In 2006, it sold several union-represented mines in Central Appalachia to clear union liabilities off its books, with those mines now belonging to Patriot Coal (NYSE: PCX). There doesn’t seem to be any major need to shed unionized mines this time.