SunCoke to sell Virginia coal operations to Omega Holdings

SunCoke Energy (NYSE: SXC) said Dec. 22 that its wholly-owned subsidiary, Jewell Resources Inc., executed a definitive agreement to sell 100% of its interest in the entities that make up the Harold Keene Coal companies (HKCC) to Omega Holdings LLC for about $9.5m.

The deal, which is subject to Omega obtaining acceptable third-party financing, is expected to be comprised of a combination of cash, future tonnage-based royalty payments and the assumption of $2.5m of estimated reclamation obligations. Omega, a privately held firm located in Cedar Bluff, Virginia, is a holding company for various coal mining operations.

The U.S. Office of Surface Mining database shows Omega Holdings, with affiliate companies like Omega Highwall Mining LLC, as 50-50 owned by Bobby Berry and Jeff Taylor.

“Given the ongoing difficult coal price environment, we made the strategic decision early in 2014 to sell or downsize our coal mining operations,” said Fritz Henderson, Chairman and Chief Executive Officer of SunCoke Energy. “Today’s sale aligns with this strategy. With their nearby coal mining activities and familiarity with our operations, Omega is a natural fit for this portion of our coal business. We will continue to implement our Coal Mining business downsizing plans while simultaneously pursuing a sale of all or other portions of our remaining coal mining operations.”

HKCC has nearly 20 million tons of proven and probable coal reserves located on approximately 250 acres in Russell and Buchanan counties, Virginia. HKCC’s operations, which were largely idled in 2013, consist primarily of highwall and deep mine reserves of high-vol A and high-vol B metallurgical coals and thermal coal. This sale also includes HKCC’s warehouse, two idled coal preparation plants and certain coal loadout facilities.

The closing of this transaction will be conditioned upon Omega’s ability to obtain adequate, third-party financing and is subject to regulatory approvals and other customary closing conditions, including working capital adjustments. This transaction is expected to close in the first quarter of 2015.

SunCoke Energy is the largest independent producer of coke in the Americas, with 50 years of experience supplying coke to the integrated steel industry. Its U.S. cokemaking facilities are located in Virginia, Indiana, Ohio and Illinois. Its coal mining operations, which have more than 110 million tons of proven and probable reserves, are located in Virginia and West Virginia.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.