As if anyone needed more confirmation that coal has come back in a big way, the fourth week of January served up the biggest merger in U.S. coal mining history.
- Alpha Natural Resources announced it would buy Massey Energy at a 21% premium, and merge the two companies into a US$15-billion U.S.-based coal mining behemoth, with ownership split 54-46 between current Alpha and Massey shareholders.
Alpha was only incorporated in 2004 but already stands as one of America’s largest producers of thermal and metallurgical coal, and is the largest supplier of metallurgical coal to U.S. steelmakers. It bought Foundation Coal Holdings in 2009, and is clearly hungry for more top-line growth.
Massey Energy began its corporate life as a coal broker in the 1920s, and bought its first mine in 1945. But Massey started on its trajectory to become one of America’s biggest coal miners with the appointment of Don Blankenship as chairman and CEO. Known in Appalachia for his ruthless, independent and hard-driving leadership style, Blankenship only retired a couple of months ago, which seems to have paved the way for the current selling of the company.
Massey Energy made headlines around the world in April, when 29 miners died in an explosion at its Upper Big Branch coal mine in Montcoal, W. Va., which was the worst U.S. mine disaster in more than two decades.
In stark contrast to the recession-induced coal crash of 2008-09, coal prices and coal mining stocks have been very strong in the new year, as more investors gain confidence in the global economic recovery and the devastating torrential rains and resulting floods in northeast Australia severely curtail coal output from one of the world’s great coal exporting nations.
- One of Canada’s biggest unions for miners, the United Steelworkers had a busy week.
In Labrador, Brazilian mining giant Vale struck a new, five-year collective agreement with the United Steelworkers Local 9508, which represents 120 workers at the Voisey’s Bay nickel-copper mine and mill.
The settlement, which has been ratified by workers, puts an end to a strike that began in August 2009. Operations had continued during the strike at a reduced capacity using replacement workers.
Vale says highlights of the agreement are improvements to employee wages and defined-contribution pension plan, a cost-of-living allowance roll-in, and changes to the employee bonus program. Thrown in are a $2,000 “return-to-work” payment and a $2,000 retention bonus payable in three months.
Unionized employees expect to be back at the Voisey’s Bay site within seven weeks following the completion of training and reorientation sessions in Happy Valley-Goose Bay, Labrador.
Vale looks to be doing okay: it’s just proposed a minimum US$4-billion dividend for 2011.
In B.C., the United Steelworkers’ Local 9346, which represents 700 workers, served strike notice at Teck Resources’ Elkview open-pit metallurgical coal operations located in the province’s southeast corner.
The previous collective agreement had expired three months ago, and Teck says it’s committed to negotiating a new contract with unionized workers. The union says that outstanding issues that need to be resolved are the employer’s contribution levels to the workers’ retirement plan and retiree benefits.
Meanwhile the Steelworkers’ head office in Pittsburgh reported that Manny Armenta, a Steelworker sub-district director in Albuquerque, N.M., was arrested by Mexican customs officials while on his way to meet with attorneys for the Mexican mineworkers’ union Los Mineros. The Steelworkers have been supporting the Los Mineros mineworkers in their nearly four-year strike against Grupo Mexico at the Cananea copper mine in Mexico’s Sonora state.
The Steelworkers say Armenta has been falsely accused of driving a stolen vehicle, which they describe as actually being a car leased by the union. Further, they accuse the arresting officer as having attempting to extort a “fine” of about US$15,000, and other petty misdeeds.
The Steelworkers’ Sudbury, Ont.-raised president Leo W. Gerard said in a statement that this “outrageous treatment by Mexican federal authorities shows the extent of the government’s corruption.”