Coal attracting overseas buzz
Overseas metal and mining companies are eyeing a number of U.S. coal companies as strong demand for steel around the world has resulted in higher prices and short supply for the coal used in steelmaking.
China Coal gains but Shanghai debut worst in monthsIndian and Russian firms in particular are looking to snap up assets in order to gain a foothold in the U.S. metallurgical coal market. Metallurgical coal, also called met or coking coal, is used to make coke, the material used to fuel blast furnaces at steel mills.
"Metallurgical coal is used for steelmaking and it doesn't look like demand for steel is going away," said Gordon Howald, analyst at Calyon Securities. "Coking coal is in relative short supply. Steelmakers are getting squeezed and they are just looking to add vertical integration to take care of their own coking coal needs."
Two assets that could be on the market are privately-owned U.S. coal producers United Coal and Bluestone, one source familiar with the matter said.
Virginia-based United Coal said it has engaged UBS as a financial advisor, but denied it has put the company up for sale.
UBS has been hired "as a strategic financial advisor and we've been examining a lot of options open to us in the new world of increased demand for commodities," said Vice President Brian Sullivan. "Obviously there are commodity companies - mining companies and steel companies - all over the world looking at American assets because of the value of the dollar and so on," he said.
Sullivan said a sale was neither out of the question nor a foregone conclusion for the company.
United Coal could be valued at less than $2 billion, said a second source. It is likely to have attracted interest from firms in India, Russia and the Ukraine, the first source said.
About two-thirds of United Coal's 6 million tons of production is met coal, and that ratio is expected to rise to around 75 percent in coming years.
Privately-owned Bluestone Coal Corp, is another coal firm that has been marketed, according to a source familiar with the situation. The source said the process was run by Goldman Sachs. It was unclear how far that has progressed or if it is continuing.
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