Goldman Sachs has exited the coal mining business by selling its Colombian La Francia and El Hatillo Mines, 3 undeveloped mines, interest in a Colombian railroad, and 184 million tons of coal reserves to Murray Energy, based in St. Clairsville, a small town in Ohio’s Appalachian foothills southeast of Columbus. Murray’s Colombian mines will be operated under a subsidiary known as Murray Colombian Resources, LLC.
“This is truly a transformative transaction for Murray Energy. Acquiring assets in Colombia will broaden our international presence in an attractive market and position ourselves to better serve our customers around the world,” said Robert D. Moore, Executive Vice President, Chief Operating Officer, and Chief Financial Officer of Murray Energy.
Murray Energy is the largest privately owned, underground coal company (as opposed to strip, or surface mining) in the United States, with active mining operation in six states. The action comes as the Obama administration continues with its policies that are widely considered hostile to the domestic coal industry. “If someone wants to build a new coal-fired power plant they can, but it will bankrupt them because they will be charged a huge sum for all the greenhouse gas that’s being emitted,” said then candidate Obama, in 2008. Earlier this month, President Obama announced restrictive new measures targeting coal burning power plants in the US.
“As the United States coal industry continues to be under attack for elimination by the Obama Administration, we must look to international markets to ensure our survival,” stated Mr. Robert E. Murray, Chairman, President, and Chief Executive Officer of Murray Energy. “We are very excited about this new venture, which solidifies Murray Energy’s position as a premier coal producer and exporter in the international marketplace.”
Low commodity prices combined with domestic energy policy have threatened prospects for the US domestic coal industry. The move by Murray Energy is seen as diversification outside of the US market. Along with E.On Global Commodities SE of Germany and a group of operators, Murray Energy has established Javelin Global Commodities to market coal and other commodities on a global basis. Based in London, England, Javelin has entered into a long term export marketing and domestic advisory agreement with parent Murray Energy, and a long term hedging and credit line with E.ON.
“The low sulphur, excellent blending Colombian coal, which Murray Energy will now produce at Murray Colombian Resources, is an ideal complement to the high heating value, low cost coal from Murray Energy’s mining operations in the United States,” said Peter Bradley, Javelin’s new CEO.
“We’re no longer just competing with fellow coal producers. Today we’re also in a head-to-head battle with low natural gas prices. Javelin will assist Murray Energy in offering new products to our customers to allow them to compete in the electric power marketplace, such as variable pricing and volume fuel options, and contracts that include physical power offtake, tolling, and power price hedging to lock-in margins,” said Moore.