Virginia-based Alpha Natural Resources Inc. announced this week that it will acquire Foundation Coal Holdings Inc. for $1.5 billion, making Alpha the third-largest US coal producer.
Alpha had been focused primarily on metallurgical coal, which is used in producing steel and is a volatile commodity. Acquiring Foundation will provide the company with a new balance of steam coal resources, which are used by electric utilities and are a more predictable commodity.
While both coal resources are experiencing a downfall right now, Michael Quillen, chief executive and chairman of Alpha Natural stated, "Last year, we were all euphoric about the steel industry and a lot of the emphasis was there. But we actually looked at this when met coal was rocketing along."
According to Alpha, the combined company would operate 59 coal mines and 14 preparation plants across the United States, with reserves of more than 2.3 billion tons of coal.