Monday, March 1, 2004
Steamboat Springs Peabody Energy moved a step closer Monday to acquiring the biggest coal mine in Routt County and Colorado.
Peabody announced in late December 2003 that it had reached an agreement in principle to purchase Twentymile Mine from Ruhrkohle AG, a German company. On Monday, Peabody announced it had signed definitive agreements to buy Twentymile mine along with two other coal mines in Queensland, Australia. Company officials predicted the closings would take place within three months.
Peabody owns the Seneca Coal Company, not far from Twentymile in West Routt County. Twentymile employs about 365 people, spokesman Ron Spangler said.
Seneca, which is engaged in surface mining, employs up to 90 people and produces about 1.9 million tons a year. Seneca is the primary supplier of coal to the Hayden Station Power Plant.
The two mines collaborated this year when Seneca found itself unable to meet the full amount of its monthly contract to supply coal to Hayden Station. Twentymile trucked coal to the power plant to make up the shortfall.
Twentymile produces 7.5 million tons of coal for electricity generators. The two Queensland mines combined to produce 7 million tons of coal used by steel producers in countries in the Pacific Rim.
Peabody reported it is paying $441 million in cash for Twentymile and the Australian mines. Their combined earnings in 2003 were about $95 million.
"We are acquiring high-quality assets which allow us to accelerate our rate of growth," Peabody Chairman and CEO Irl F. Engelhardt said. "We look forward to welcoming the talented RAG employees and management to the Peabody team."
The acquisition of Twentymile may signal some form of reconciliation between two corporate cultures; Peabody workers are union miners, Twentymile miners are not unionized.
Peabody is the world's large private sector coal company with 2002 sales of 198 million tons of coal and $2.7 billion in revenues.