Glennies Creek interest sold

DIVESTING itself of all Australian coal assets, U.S. coal giant Consol Energy yesterday announced it would sell its 50% share in New South Wales’ longwall mine Glennies Creek to joint venture partner AMCI Inc.
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Glennies Creek coal mine

Angie Tomlinson

AMCI, a privately-held company based in Greenwich, Connecticut, bought the 50% share for US$27.5 million as well as the assumption of Consol Energy's 50% share of debt in the mine.

"Although Glennies Creek was a good long-term investment, it will require additional time and capital to reach its full potential," said Consol CEO J. Brett Harvey.

"Even with world coking coal fundamentals currently are favourable, our domestic coal and gas opportunities are even stronger, provide better rates of return, and have lower risk."

Consol purchased its interest in the Glennies Creek Mine for US$14 million in December 2001 as the underground mine was being expanded to add a longwall mining system. Consol had agreed to spend US$100 million on expansion of the mine.

The mine produces a high-fluidity coking coal sold primarily to steel makers in the Asia-Pacific region. In 2003, the mine produced 1.1 million tons of coal, of which Consol Energy's share was 50 percent.

The mine is located 12 kilometres north of Singleton and at June 2000 had mineable reserves of 140 Mt.

The move by Consol marks an inwards focus by the company as it directs energies on its core domestic assets.

"Our immediate objective is to improve the performance of our core mining business in the United States and to grow our domestic gas business," said Harvey. "Shareholders' capital and management's time need to be focused in that direction."

The transaction is expected to close in the first quarter of 2004.

Consol has also sold its 50% interest in its Universal Aggregates joint venture to its joint venture partner, SynAggs, a privately held Pittsburgh-based company, in December 2003.

Universal Aggregates is constructing a commercial facility in Virginia that will convert coal-fired power plant fly ash waste into a synthetic aggregate. CONSOL Energy developed the technology for producing the aggregate material.

"Our goal for Universal Aggregates was to launch a commercially-viable company that could help coal users such as power plants to turn a waste stream into a valuable product," Harvey said.

"We have succeeded with our goal and it is an appropriate time to allow Universal Aggregate to move ahead on its own."

He said CONSOL Energy received cash at closing and also will receive various royalty payments as new plants are built and aggregate is produced.

"As we announced last year, we will continue to review the sale of non- core assets as a means of enhancing our financial flexibility," he said.