Massey Coal keeps growing, report shows
A.T. Massey Coal Co. continues to strengthen its position as one of the nation's top five coal producers, according to Fluor Corp.'s new annual report and the company's 10K report to the U.S. Securities and Exchange Commission.
Massey, a subsidiary of the Irvine, Calif.-based Fluor Corp., produced coal at 20 mining complexes in Southern West Virginia, Kentucky, Virginia and Tennessee.
Last year, Massey increased operating profits by 12 percent from $155 million to $173 million.
Fluor's annual report stated this was due to "continued cost reduction and increased volume of higher-margin metallurgical coal sales which more than offset a modest decline in realized prices."
Since 1988, Massey coal production increased from 11.1 million tons in 1988 to 37.6 million tons. Of this total, 19.4 million tons were sold to power plants and 18.2 million tons to steel mills.
Total coal revenues increased from $784 million to $1.1 billion during the same decade.
Massey also phased out its practice of reselling coal purchased from other companies. In 1988, Massey bought more than 10 million tons of coal from other producers. By 1995, it stopped selling coal purchased from independent other producers.
Employment in the Massey's own mines jumped from 1,232 people in 1988 to 3,094 last year.
Since 1991, Massey more than doubled its coal reserves to more than 1.8 billion tons. Massey now controls about three-fourths of all metallurgical coal reserves in the United States, some of which it exports to Europe and South America.
The company usually tries to acquire new reserves near existing mining complexes and coal preparation plants, which have transportation facilities already in place.
Fluor's annual report said the coal market was strengthened by last year's hot summer, despite a decline of 3 percent in prices for steam coal burned in power plants.
For years, Massey has worked to buy low-sulfur reserves that can comply with ever-tougher federal Clean Air Act standards. Even more stringent regulations will go into effect in 2000, which will increase the value of low-sulfur coal even further.
In West Virginia, the Twilight mining complex achieved full-scale production at about 4 million tons annually. It is the company's largest surface mine.
Massey also made two major purchases in the Mountain State last year, both in the Logan County region.
The Elkay property, purchased from Pittston Coal, added 30 million tons in coal reserves. That deal also included two long-term coal supply contracts with American Electric Power.
Massey also traded coal properties it owned in Pennsylvania for coal lands near Holden, near the border of Logan and Mingo counties. That coal has a lower sulfur content.
Massey achieved its ability to produce low-cost coal in part by removing the United Mine Workers from some of its operations and successfully fighting unionization at several other mining complexes.
The company, however, still has five separate labor agreements with the UMW. Last year, agreements were reached with all five, as contracts were about to expire. The annual report added that "a host of individual labor disputes were amicably resolved."
The company's two main coal offices are in Richmond, Va. and Charleston, W.Va.