Oct. 1, 2009 (PR Newswire) --
ST. LOUIS, Oct. 1, /PRNewswire-FirstCall/ -- Arch Coal, Inc. (NYSE: ACI) today announced that it has completed the acquisition of Rio Tinto's Jacobs Ranch mine for a purchase price of approximately $764 million, which includes an estimate for working capital adjustments. In 2008, Jacobs Ranch produced 42.1 million tons of high-quality sub-bituminous coal for sale to U.S. power generators.
"We are enthusiastic about completing the acquisition of Jacobs Ranch," said Steven F. Leer, Arch's chairman and chief executive officer. "This transaction further expands Arch's size, scale and strategic position in the Powder River Basin - the largest, fastest growing and most cost-competitive coal supply region in the nation. Arch plans to integrate Jacobs Ranch - which is the third largest coal mine in the United States based on 2008 production - into the company's existing Black Thunder mine, creating what we believe will be the largest single coal-mining complex in the world."
The acquisition includes 381 million tons of low-cost, low-sulfur coal reserves (as of Dec. 31, 2008) that are contiguous to Arch's Black Thunder mine. Other assets acquired in the transaction consist of a high-speed rail loadout, an overland conveyor and near-pit crushing system, a 120-cubic-yard dragline, eight large electric shovels, more than 40 large haul trucks and a dedicated and experienced workforce. Additionally, Jacobs Ranch has 35 million tons of production committed and priced in 2010 - and 21 million tons of production committed and priced in 2011 - under existing sales contracts.
"Jacobs Ranch is the perfect addition to Arch's flagship Black Thunder operation as the mines share a six mile property line and have adjacent mining facilities along with complementary pit operations," said Leer. "In many respects, Jacobs Ranch already exemplifies Arch's existing operations in the PRB - a low-cost, highly productive mine with little geologic risk, a low level of legacy liabilities and an impressive safety and environmental stewardship record. Thus, the integration of Jacobs Ranch into Black Thunder will build upon Arch's strong foundation and allow the combined mine to realize substantial operational and financial synergies."
Once integrated, the enhanced Black Thunder mine will control six draglines, 22 shovels, more than 130 haul trucks, three rail loadouts and 20 train landing spots. The combined mine also will have assigned coal reserves of 1.6 billion tons (as of Dec. 31, 2008) and productive capacity of more than 140 million tons per year should market conditions warrant.
Arch estimates synergies from the transaction of between $45 million and $55 million annually, beginning in 2010.
