Arch Resources and CONSOL Energy announced that they have entered into a definitive agreement to combine in an all-stock merger of equals to create Core Natural Resources. With mining operations and terminal facilities across six states, the combined company will own 11 mines, including one of the largest, lowest cost, and highest calorific value thermal coal mining complexes in North America and one of the largest, lowest cost, and highest quality metallurgical coal mine portfolios in the United States.
“We are excited to bring our companies together to create a new industry leader that is ideally positioned to meet the rising demand for critical resources and energy around the world,” said Jimmy Brock, chairman and CEO of CONSOL. “Our assets are highly complementary, resulting in increased diversification across coal types, end uses, and geographies. In addition, Core Natural Resources is expected to have a strong balance sheet, ample liquidity, and robust free cash flow to deliver industry-leading capital returns.”
Arch and CONSOL sold an aggregate of approximately 101 million tons of coal in 2023. The combined company will have ownership interests in two export terminals on the U.S. Eastern seaboard, along with strategic connectivity to ports on the West Coast and Gulf of Mexico. Pro forma, Core Natural Resources would have a market capitalization of approximately $5.2 billion.
“This merger will join two proven leadership teams and best-in-sector operating platforms to establish a premier North American coal producer with worldwide reach and world-class mining and logistics capabilities,” said Paul Lang, CEO of Arch. “Core Natural Resources will enjoy the benefits of CONSOL’s growing seaborne thermal business focused on industrial applications coupled with Arch’s significant exposure to attractive global metallurgical coal markets. Together, we expect to realize meaningful operating synergies through the optimization of support functions, greatly enhanced marketing opportunities, and a significantly expanded logistics network, which will enhance our ability to deliver coal reliably and efficiently.”
Core Natural Resources will be able to provide a range of coal qualities and blends. The combined company will now operate eight low-cost longwalls, including CONSOL’s Pennsylvania Mining Complex (5 longwalls) and Arch’s Leer, Leer South and West Elk mines, which collectively produced more than 35 million tons last year. It would have export capacity of more than 25 million tons per year with the potential to expand.
Brock will serve as executive chairman of Core Natural Resources’ board, and Lang will serve as CEO and as a member of the board. Mitesh Thakkar, president and CFO, CONSOL, will serve as president and CFO of the combined company. George Schuller Jr., COO for Arch, Bob Braithwaite, senior vice president of marketing for CONSOL, and Deck Slone, senior vice president of strategy for Arch, will each serve in the same capacity at Core Natural Resources.
The board for the combined company will have eight directors. Four directors will be selected by CONSOL, including Brock. Four directors will be selected by Arch, including Lang and Richard Navarre, currently independent chairman of the Arch board, who will serve as lead independent director on the Core Natural Resources board.
Core Natural Resources will be headquartered in Canonsburg, Pa., and it will maintain a presence in St. Louis, Mo.
Under the terms of the agreement, which has been unanimously approved by the boards of both companies, Arch stockholders will receive 1.326 shares of CONSOL common stock for each share of Arch common stock owned. Arch stockholders will own approximately 45% of Core Natural Resources, and CONSOL stockholders will own approximately 55% on a fully diluted basis. The merger is expected to close by the end Q1 2025, subject to approval by both companies’ stockholders, regulatory approvals, and the satisfaction of other customary closing conditions.
