Canyon Consolidated Resources purchases largest coal company in Utah
A new consolidated coal company formed by Murray Energy and the outgoing chairman of Bowie Resource Partners has purchased the largest coal company in Utah and its three mines.
The new company, Canyon Consolidated Resources (CCR) purchased the Sufco, Skyline and Dugout Canyon mines in Utah for an undisclosed price. The Salt Lake Tribune reported that the three mines for 8.6 Mt (9.5 million st), or almost 85 percent, of the 10.1 Mt (11.2 million st) of coal mined in Utah last year.
“We are very familiar with Bowie’s coal mines and with coal markets both domestically and internationally,” said Murray Energy executive Bob Murray, whose company operates the Lila Canyon mine in Carbon County. “This partnership will generate tremendous cost synergies, which will allow these mines to be extremely competitive in the domestic and international coal marketplace.”
A Murray Energy subsidiary also co-owned and managed the Crandall Canyon mine in Emery County until it was closed in 2007, after a pair of implosions killed nine men and injured six others.
Bowie Resources had been owned by Galena Private Equity Resource Fund, a subsidiary of a Netherlands-based, multinational commodity trading company called Trafigura. Galena sold its stake to the partnership, with Murray Energy and former Bowie Resources boss John Siegel each acquiring 30.5 percent interests in CCR.
Another 28 percent ownership share will be held by various lenders, Murray said in a news release, while much smaller portions will be owned by Javelin, which markets and trades thermal coal and other commodities, and CLISA, a trading and investment firm in Mexico that focuses on the energy industry.
Murray said the three newly acquired Utah mines will give CCR about 195 Mt (215 million st) of coal reserves, with expectations of producing and selling about 11.7 Mt/a (13 millions stpy) in domestic and foreign markets.
All coal cut at Murray Energy’s Lila Canyon mine will be sold to CCR, Murray noted, adding that his company’s personnel also will help oversee daily operations at Sufco, Skyline and Dugout Canyon.
“We have long maintained that our industry must undergo significant consolidation in order to survive in what have been extraordinarily depressed coal markets,” said Rob Moore, Murray Energy’s chief operating officer. “This CCR partnership will provide this necessary consolidation, which will substantially benefit all interested parties.”
Outside of Salina, Sufco has been the state’s most productive mine for years. Last year, it yielded 4.9 Mt (5.4 million st) of coal and is not too far off that pace this year, with 387 employees involved in its operations at the end of September.
Skyline, which is on the Carbon/Emery county border, produced 3.1 Mt (3.5 million st) of coal last year and has 355 employees. About 590 kt (650,000 st) of coal were cut last year at Carbon County’s Dugout Canyon mine, which had 94 employees this fall, according to federal Mine Safety and Health Administration records.