CONSOL Energy Inc. to Sell All Five WV Longwall Coal Mines

The State Journal
28 October 2013

CONSOL Energy Inc. announced Oct. 28 it will sell all five of its West Virginia longwall coal mines and related assets for $3.5 billion in value to a Murray Energy Corporation subsidiary.

The mines being sold are McElroy Mine, Shoemaker Mine, Robinson Run Mine, Loveridge Mine and Blacksville No. 2 mine. CONSOL operates 12 bituminous mining complexes in four states.

Both Shoemaker and McElroy are located in the Northern Panhandle. Blacksville, Loveridge and Robinson Run are located in the North-Central portion of West Virginia.

Collectively, the mines produced 28.5 million tons of thermal coal in 2012.

"While this transaction furthers CONSOL's E&P growth strategy, the sale of these five mines — assets that have long contributed to America's economic strength and our company's legacy — was a very difficult decision for our team," CONSOL Chairman and CEO J. Brett Harvey said in a news release. "The employees at these mines are among the safest and most productive miners anywhere in the world.
"In the end, we concluded that the time had come to sell these mature assets to ownership whose strategic direction is more aligned with those mines."

CONSOL's River and Dock Operations are included in the transaction. Murray Energy also is acquiring CONSOL's UMWA 1974 pension trust obligations. Under a contract with the UMWA, CONSOL Energy currently services that obligation through a $5.50 per hour contribution, which amounts to approximately $33 million per year.

The UMWA International President Cecil E. Roberts issued a statement, saying the news that Murray Energy is buying five active operations in West Virginia and one closed operation in Pennsylvania from CONSOL Energy comes as "no great surprise," Roberts said.

"This changes nothing for our members with respect to the terms and conditions of their employment," Roberts said. "Our collective bargaining agreement does not go away with this transaction, and our members remain covered by its provisions.

"There will be no changes in pay, benefits, insurance, schedules, working conditions, safety provisions, grievance procedures or any other language in the contract."

Roberts said there are some 2,800 active hourly workers represented by the UMWA at the five West Virginia operations that have been sold to Murray Energy. Some 23,000 retirees, dependents and surviving spouses are affected by this transaction.

"This sale enhances CONSOL Energy's ability to grow its gas production, enabling the company to extend its gas growth production targets beyond 2014," a news release from CONSOL states.
Harvey said he expects West Virginia to continue to play an important role in CONSOL's growth strategy.

"We have a sizeable Marcellus Shale footprint in West Virginia, which will take a significant amount of labor and capital to develop," he said.

CONSOL is retaining its Buchanan Mine in southwestern Virginia as well as the Miller Creek Mining Complex in southern West Virginia.

The parties expect to close the transaction by the end of the year.

In a press release issued Oct. 28, Robert E. Murray, Chairman, President and Chief Executive Officer of Murray Energy, said, "no company has developed a better legacy with its employees, with its customers, with the financial markets, with the regulatory agencies, or with the public in general, over many decades, than has CONSOL and Consolidation Coal. Murray Energy intends to preserve this well-earned legacy."

Robert D. Moore, Executive Vice President, Chief Operating Officer and Chief Financial Officer of Murray Energy, continued, "we will be able to efficiently operate the acquired Consolidation Coal mines and provide their employees with an opportunity for long term employment."

Murray Energy currently operates six underground longwall mining systems and 23 continuous mining units.

U.S. Sen. Jay Rockefeller, D-W.Va., issued a statement Oct. 28 saying he was monitoring the sale because he wants to make "absolutely sure that West Virginia's coal miners are treated fairly and with the total respect they deserve."

"Murray Energy must make it their priority to focus directly on the thousands of West Virginia workers and retirees impacted by this deal -- their workplace safety, their job security and the health and pension benefits they've earned with tough and dangerous work over many years," Rockefeller said. "I have spoken with the senior leadership of CONSOL about the sale, and I have asked Mr. Murray and his team to meet with me as soon as possible to discuss their plans and address our miners' concerns.

"I intend to do everything I can to make sure every step of this transition keeps the best interests of West Virginia's coal miners and their families in mind."