- Arch Resources (ARCH) and Consol Energy (CEIX) announced early Wednesday that the two coal companies have agreed to an all-stock merger. The new company, Core Natural Resources, will reportedly have a market capitalization of approximately $5 billion.
- The merger will create a company controlling 11 mines, including some of the largest, lowest-cost, and highest-calorie domestic assets.
- Both companies have experienced a challenging year, with Consol Energy's shares dropping by 5.8% and Arch Resources' shares declining by 24%, reflecting industry struggles as coal faces increasing competition from renewable energy sources.
St. Louis-based Arch Resources has a market value of around $2.3 billion. Meanwhile, the Pennsylvania-based Consol Energy has a market capitalization of about $2.8 billion. Both companies produce metallurgical and thermal coal. The merger is expected to close by the end of the first quarter of 2025, according to the press release. Core Natural Resources will trade under a new ticker.
Metallurgical, or coking coal, is a critical ingredient in traditional blast-furnace steel production. U.S. met coal comes from Appalachian region mines and earns a hefty premium to the thermal coal used in power generation.
In 2023, 60% of Arch Resources revenue came from met coal and 40% thermal coal. Meanwhile, Consol reported 48% of revenue from thermal coal, 37% industrial coal and 15% metallurgical coal.
