Walter Energy said Tuesday that it has bought the Mobile River Coal Terminal Co. from a subsidiary of US Steel in a move to secure export shipping capacity and hold down port costs for its export business.
Terms of the deal, which came on the heels of Walter's $3.8 billion purchase of Western Coal, were not disclosed.
The acquisition of the Mobile, Alabama, terminal gives Walter ready access to the Gulf of Mexico at a time when eastern coal producers are scrambling to tap into high-priced international markets, but are faced with tight capacity.
"This acquisition will help ensure that we will have unconstrained shipping capacity to support our long-term coking coal production plans in Alabama," interim CEO Joe Leonard said in a statement. "In addition, this facility should help maintain low mine-to-port costs and make us less reliant on third parties."
The river terminal, located on the Mobile River, annually handles 3.2 million short tons of iron ore, 1 million st of furnace coke and 500,000 st of other products including pig iron, steel slabs, mill scale and steel coils for export, according to its website. The terminal has a maximum draft of 40 feet and capability to load and discharge Panamax-class vessels.
Walter sold 1.12 million st of coal through the first nine months of the year and 346,000 st of coke.
The company is not the first eastern producer this year to snap up transportation facilities. Massey Energy bought a West Virginia barge-loading terminal in July with capacity to load up to 7 million st of coal, an acquisition designed to free it from congested railroad networks.
Mobile is a major import point for domestic utilities buying coal from South America. The largest of three terminals in the area is the McDuffie Coal Terminal, which has annual capacity of 30 million st, and handled 15.6 million st of primarily import coal during the 2010 fiscal year. Walter currently ships all export coal bound for South America and Europe through McDuffie, the company said.
--Peter Gartrell
Terms of the deal, which came on the heels of Walter's $3.8 billion purchase of Western Coal, were not disclosed.
The acquisition of the Mobile, Alabama, terminal gives Walter ready access to the Gulf of Mexico at a time when eastern coal producers are scrambling to tap into high-priced international markets, but are faced with tight capacity.
"This acquisition will help ensure that we will have unconstrained shipping capacity to support our long-term coking coal production plans in Alabama," interim CEO Joe Leonard said in a statement. "In addition, this facility should help maintain low mine-to-port costs and make us less reliant on third parties."
The river terminal, located on the Mobile River, annually handles 3.2 million short tons of iron ore, 1 million st of furnace coke and 500,000 st of other products including pig iron, steel slabs, mill scale and steel coils for export, according to its website. The terminal has a maximum draft of 40 feet and capability to load and discharge Panamax-class vessels.
Walter sold 1.12 million st of coal through the first nine months of the year and 346,000 st of coke.
The company is not the first eastern producer this year to snap up transportation facilities. Massey Energy bought a West Virginia barge-loading terminal in July with capacity to load up to 7 million st of coal, an acquisition designed to free it from congested railroad networks.
Mobile is a major import point for domestic utilities buying coal from South America. The largest of three terminals in the area is the McDuffie Coal Terminal, which has annual capacity of 30 million st, and handled 15.6 million st of primarily import coal during the 2010 fiscal year. Walter currently ships all export coal bound for South America and Europe through McDuffie, the company said.
--Peter Gartrell
