U.S. coal producer Alpha Natural Resources has been in the news after it announced the deal to buy Massey Energy in January for $7.1 billion. The company recently announced a large increase in quarterly profits as well. However profits fell short of what analysts expected.
The company saw its stock drop by 4.2% as the shares traded on New York Stock Exchange for $55.18. This figure is down by $2.39 for the company shares which have gained about 19% in the last year. The shares may also have dropped in response to Massey Energy having reported its fourth consecutive quarterly loss.
Kevin Crutchfield the Chief Executive Officer for Alpha Natural Resources said that lower mining costs in the latter half of the year would boost the production of metallurgical coal which was essential for the making of steel. It would also make the coal stock available at the right time making it earn high prices.
He based this on the fact that China was likely to import between 45 million tons to 50 million tons of metallurgical coal in 2011. Also Japan would need more steel to help in its rebuilding after the earthquake and tsunami. The US steel industry was also producing more than anticipated levels of steel and would be in need of metallurgical coal.
The CEO said that with the acquisition of Massey Energy the metallurgical coal shipments would double for the company to 30 million coal tons by the year 2013. The combination of the two companies will place them in a good position to benefit from the increasing demand of coal required for steel production.