Acquisitions, infrastructure key to NRP growth

THE strategic changes made by Natural Resource Partners in its past five years have the company poised for both current success and continued growth, according to chief operating officer Nick Carter.
Acquisitions, infrastructure key to NRP growth Acquisitions, infrastructure key to NRP growth Acquisitions, infrastructure key to NRP growth Acquisitions, infrastructure key to NRP growth Acquisitions, infrastructure key to NRP growth

Courtesy Alpha Natural Resources.

Donna Schmidt

In an interview chronicled by the Wall Street Transcript, Carter noted that the size of its reserves for holdings in Appalachia, the Illinois Basin and the western US has more than doubled since going from private to public in October 2002, a feat that has shown itself on the Alpha balance sheet.

"We have a five-year history with 18 increases in distributions and 17 straight increases in distributions," he said.

"We are a company that's made smart acquisitions and then been able to integrate those acquisitions in part because of the way we do due diligence.

"When performing due diligence we have the people who will be in charge of managing the property actively working on the acquisition team. We've used our revenue streams from those acquisitions to increase distributions."

Carter added that its acquisitions total more than $US1.1 billion.

NRP's infrastructure is also on a growth path, he told the publication. In a half decade, the company has taken on four preparation plants, transport facilities and loadouts as well as handling facilities.

Carter pointed out that, as the largest operator that buys and sells properties for the purpose of leasing them to other mining outfits, Alpha has developed ties with 70 different producers through its current lease sheet of 189 complexes.

This trend will continue as producers consolidate, he said.

"There are a number of private companies that have historically, over a period of 100 years or more, owned coal properties, [and] we know all of those companies. We work with them because they own properties adjacent to ours," he said.

"We've been able to purchase some of those companies and believe that in the future we will continue to be able to purchase additional private companies and further consolidate our space within the coal sector."

Carter cited NRP's management team for its solid ability to manage relationships and bring potential deals to the table.

The plan for NRP in the short-term future, from his perspective, is to continue doing exactly what it is doing now.

"We need to always keep our eye on the ball and actively manage the properties that we already have," he said.

Maintaining strong revenue from those current properties is key to that, he added.

"We will be in the field actively managing those, making sure that the mine plans, which we have the right to approve, maximise the use of our resource," he said.

Another large part of its plan over the next year or so is to continue its "relationship-building mode" with its lessee companies, as Carter said NRP believes that much of its future business leads stem from current holdings.

"Either they want to expand their business or they know somebody that is, and may refer them to us," he said.

At the same time, looking at new acquisition prospects will be the complementary half of NRP's strategic coin.

"We've had a very strong deal flow and continue to have a strong deal flow and anticipate that the coal industry consolidation that we think will occur will afford us the opportunity to do a substantial number of deals over the next few years," Carter said.

"We need to be geared up and prepared to do that, for every aspect of our business."