The Wall Street Journal has more on the Jim Justice-led acquisition of National Coal Corporation.
National Coal announced yesterday that it is being acquired by Ranger Energy, which Justice uses as an acquisition vehicle.
NCC made a splash in the Cumberlands in the middle part of the decade, sinking millions of dollars into investments, including the establishment of the first-ever cross-ridge mine (Tennessee’s equivalent of mountaintop-removal mining in West Virginia) and purchasing the former Tennessee Railroad line from Oneida to Devonia in Anderson County.
But NCC has been strapped for cash in recent years, and its revenue flow was severely hampered when it lost a major contract in Alabama. In the spring, Justice’s firm purchased a large portion of National Coal’s assets, including the rail line and the coal preparation plant at Devonia.
The new purchase, which will be completed in mid December, is for the remainder of National Coal’s assets. Ranger Energy will pay $1 per share of the company’s stock, which is a 54% premium on the trading price at close on Monday, which was 65 cents.
In just a few short years, NCC had gone from trading at better than $4 per share to being booted from the market after its trade value declined so low.
So what does the acquisition of NCC mean for coal mining in this region?
It’s only speculation, but one would have to believe it will greatly heighten it. NCC, or now Ranger, if you prefer, has leases on a significant chunk of lands in the Cumberland Mountains, including several mountaintops on the North Cumberlands WMA that have been designated as potential sites for cross-ridge mines.
In recent years, NCC’s fight for survival seemed to limit its production potential. In the 2nd Quarter of this year, NCC produced 117,000 tons of coal through its Tennessee operations.
But Justice is currently building a new company—Southern Coal—which the Wall Street Journal says plans to produce 10 million tons of coal annually. The Tennessee operations will factor heavily into that plan, which means coal production here would have to escalate substantially. Does this mean more surface mines coming to our backyard? Probably.
Who is Jim Justice? He’s one of the wealthiest men in the Appalachians, and is also a noted philanthropist. He inherited Bluestone Industries, one of West Virginia’s largest coal operations, from his father, and served as the company’s president and CEO until selling it to a Russian steel firm, Mechel, for $346 million early last year. He still has large coal holdings in eastern Kentucky. He also owns Justice Family Farms, which is distinguished as the largest cash grain producer on the East Coast with operations in the Virginias and the Carolinas.
James C. Justice Companies, a firm Justice founded to acquire coal companies, was headquartered in Tennessee at one point before moving to Wise County, Va.
Most recently, Justice acquired the famous Greenbrier mountain resort out of bankruptcy.
Cross-ridge mining practices have been under fire in Tennessee in recent years. Knoxville-based LEAF, a faith-based environmental group, has led the charge to ban surface mining above 2,000 ft. in Tennessee. Legislative efforts to ban the practice have created a splash in each of the last two sessions but have ultimately fallen short.
Term-limited Gov. Phil Bredesen has stated his support for such a legislative ban but did not actively work to support the legislation. Tennessee is on the verge of electing a Republican governor who has stated his preference for a “common sense approach” to the subject, but one that appears to include support for a ban on cross-ridge mining.
Since much of the legislative resistance to the proposed mining ban has come from GOP members, it will be interesting to see whether Bill Haslam, as a fellow Republican, has any more influence on the issue than Bredesen had.
Not all of the opposition has come from Republicans, however. Two years ago, outgoing state Sen. Tommy Kilby, a Wartburg Democrat, managed to stave off the ban efforts by keeping the legislation bottled up in committee.