Thursday, December 11, 2014

Controversial coal mogul Robert Murray cashing in on industry's decline

One of the most vocal opponents of the "War on Coal" has been profiting the most from the industry's decline, Tim Loh reports for Bloomberg. While the industry's marketing capitalization has shrunk from $78 billion in 2011 to about $25 billion today, Robert Murray, chief executive officer of Murray Energy, has catapulted his Ohio-based company into the country's fifth-largest coal producer, while making Murray Energy the largest privately held coal producer in the U.S.

Last year Murray Energy doubled in size by spending $3.5 billion to acquire five of Consol Energy's West Virginia operators. In September, Murray—who owns 12 active underground coal mines in Ohio, Illinois, Kentucky, Utah and West Virginia—told industry members to expect more coal producers to go bankrupt.

In a 1988 interview, Murray referred to President George H.W. Bush and the Clean Air Act and "blasted proposals to toughen U.S. emission standards as 'criminal fraud' being perpetrated by a 'terrible government and a terrible president,'' Loh writes. "All the while Murray was devising a strategy to capitalize off of it. He recognized early that power plants had a choice to make: either install expensive 'scrubbers' to reduce sulfur-dioxide and other emissions to comply with the law or start buying low-sulfur coal from as far away as Wyoming."

Murray "identified which plants were likeliest to install scrubbers then went about buying as much of the coal reserves those retrofitted plants would require as he could," Loh writes. "He told plant owners he'd be able to sell them coal so cheap they'd wind up coming out ahead, even after they invested in the scrubber technology."

Murray hasn't looked back since, Loh writes. This year he said he expects to mine 64 million tons of coal, worth about $3.6 billion, up from a revenue of $1.3 billion in 2012.

And while Murray is cashing in on the coal industry, safety remains a concern, Loh writes. In 2013, the company ranked 22 out of the 25 largest U.S. coal producers for incident rates, and Powhatan No. 6 in Alledonia, Ohio had an incident rate 2.4 times higher than the national average for that type of mine. In 2007, Murray subsidiaries agreed to pay $1.15 million in civil penalties for mines in Utah that burst. (Read more)

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