Boston-based ArcLight will retain a 62.5% stake in Magnum, to be created in the Central Appalachian region, while St. Louis-based Arch will own 37.5%.
Arch president Steven Leer said in August this would substantially reduce Arch’s legacy liabilities. It is also expected to have a positive impact on Arch’s 2006 earnings.
The companies have said an initial public offering will occur, but neither said when.
Four of Arch’s West Virginia operations will be involved in the Magnum deal, while ArcLight is contributing Trout Coal, a group of coal sales and mining organizations.
The largest of the included mines will be Panther, followed by Remington, Dakota and Jupiter from ArcLight and Samples, Hobet 21 and the Arch of West Virginia site from Arch.
The mines had a collective production of about 21 million tonnes last year.
Arch will retain ownership of its Mingo Logan, Lone Mountain, Pardee and Coal-Mac facilities, as well as the Mountaineer II mine in Logan County, West Virginia, and neighboring Spruce, totalling 372 million tonnes of reserves.
Arch Coal was established after Arch Mineral and Ashland Coal joined forces in a 1997 merger. Trout Coal Holdings was formed in 2001 by ArcLight and Cline Resource & Development.