Alpha Coal
Handbook
A reference guide for coal, ironmaking, electricity generation, and emissions control technologies.
2012 Edition
Forward-Looking Statements
Statements in this document which are not statements of historical fact are “forward-looking statements” within the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance. Many factors could cause our actual results, performance or achievements, or industry results to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. These factors are discussed in detail in our filings with the SEC. We make forward-looking statements based on currently available information, and we assume no obligation to update the statements made herein due to changes in underlying factors, new information, future developments, or otherwise, except as required by law.
Who Is Alpha?
Alpha Natural Resources is one of the world’s premier coal suppliers with coal production capacity of greater than 120 million tons a year. Alpha is the United States’ leading supplier of metallurgical coal used in the steelmaking process and third-largest in the world. Alpha is also a major supplier of thermal coal to electric utilities and manufacturing industries across the country. The Company, through its affiliates, operates mines and coal preparation facilities in Appalachia and the Powder River Basin. More information about Alpha can be found on the Company’s website at www.alphanr.com.
Third Party Information
This document, including certain forward-looking statements herein, includes information obtained from third party sources that we believe to be reliable. However, we have not independently verified this third party information and cannot assure you of its accuracy or completeness. While we are not aware of any misstatements regarding any third party data contained in this document, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in detail in our filings with the SEC. We assume no obligation to revise or update this third party information to reflect future events or circumstances.
Definitions and Descriptions
The definitions, descriptions, formulas and other data used in, or referenced by, this document are not binding for purposes of interpreting any other document, including without limitation agreements to which Alpha Natural Resources, Inc. or any of its affiliates is a party. Neither Alpha Natural Resources, Inc. nor any of its affiliates is responsible for any liabilities arising from a reliance upon the data in this document.
Design: McKenna Daniels Design
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About Alpha
About Alpha
- Our Purpose
- What is RUNNING RIGHT ?
Running Right is an important piece of our culture, a part of who we are and how we operate. At Alpha, we believe every employee should have a seat at the table and participate actively in all aspects of our business.
We fuel progress around the world.
Our Values
Embedded within Running Right is a robust observation process that relies
on participation from each and every employee to conduct observations.
All employees are encouraged to cite safe behaviors, at-risk behaviors and operational improvements every day in order to improve the safety, efficiency, and productivity of all of our locations in Alpha.
We conduct our business safely, ethically, honestly and with integrity at all times. We care. Caring for one another helps us all return to our families safe and healthy.
We treat each other how we want to be treated.
Safe and at-risk behaviors are part of Alpha’s behavior-based safety approach.
The reason why we focus so much on at-risk behavior is that research has shown that 88 percent of workplace accidents can be attributed to at-risk behavior. At-risk behavior is often the precursor to workplace accidents.
We trust our people and work together as a team. All employees have an opportunity to contribute their ideas and share in our success.
We communicate openly, build on what we know and learn, and make informed decisions to keep us ahead of the competition.
Observations are reviewed daily. In many cases action can be taken right away and employees are encouraged to take action when observations occur.
We embrace change, continuously improving ourselves and our business.
Running Right is a big part of who we are and what we do and employee involvement and engagement are the keys to Running Right at Alpha. “We fuel progress around the world...and we do this through the energy of our people.”
RGeotutornCtoonCteonnttsents
About Alpha
About Alpha
In July 2009, Alpha consummated its largest business venture to date by completing a merger with Foundation Coal Holdings Inc. The Alpha-Foundation merger resulted in the third-largest coal company in America.
History
Alpha was formed in 2002 by members of management and by affiliates of First Reserve Corporation, a private equity firm.
In June 2011, Alpha acquired Massey Energy Company in a $7.7 billion transaction. The acquisition brought together highly complementary assets, which included more than 150 mines and combined coal reserves of approximately 5 billion tons, including one of the world’s largest and highest-quality metallurgical coal reserve bases.
We acquired the majority of the Virginia coal operations of Pittston Coal Company, a subsidiary of The Brink’s Company, in December 2002.
On January 31, 2003, we acquired Coastal Coal Company, and on March 11, 2003, we acquired the U.S. coal production and marketing operations of American Metals and Coal International. In November of that year, we acquired Mears Enterprises, Inc. and affiliated entities.
U.S. Leader in Metallurgical Exports
Alpha Natural Resources is the largest exporter of metallurgical coal in the United States. In 2011, metallurgical export shipments exceeded 14 million tons and we expect to see growth going forward.
In April of the following year, we acquired substantially all of the assets of Moravian Run Reclamation Co., Inc., including four active surface mines and two additional surface mines under development, operating in close proximity to and serving many of the same customers as our AMFIRE business unit located in Pennsylvania. That May, we acquired a coal preparation plant and railroad loading facility located in Portage, Pennsylvania and related equipment and coal inventory from Cooney Bros. Coal Company and an adjacent coal refuse disposal site from a Cooney family trust.
Alpha ships export coal on the East Coast through Norfolk Southern’s Lamberts Point facility in Norfolk, VA; through Dominion Terminal Associates (DTA) in Newport News, VA; through Pier IX Terminal in Newport News, VA; and through CSX Chesapeake Bay piers located in Baltimore, MD. Coal is also moved through United Bulk Terminal and International Marine Terminals, both located in New Orleans, LA.
In October 2005 Alpha acquired the Nicewonder Coal Group including their three surface mines and a road construction and coal recovery business in southwestern Virginia and southern West Virginia.
International Sales and Development Offices
In 2010, Alpha opened a European sales office in Lugano, Switzerland. In early 2011, Alpha opened two international sales and development offices: one in New Delhi, India and one in Sydney, Australia. Each office is focused on increasing Alpha’s sales of coal to high-growth markets through our existing export platform, as well as unique optimization opportunities. Both offices also serve to further develop and enhance trading opportunities, market intelligence, and strategic relationships in the Asian markets.
In May 2006, Alpha completed the acquisition of certain coal mining operations in eastern Kentucky from Progress Fuels Corp. Collectively the acquired businesses controlled 73 million tons of coal reserves. In December of that year, an Alpha subsidiary, Palladian Lime LLC, acquired a 94% ownership interest in Gallatin Materials LLC, a start-up lime manufacturing business in Verona, Ky. That interest was subsequently sold in October 2008.
In June 2008, Alpha acquired the Mingo Logan-Ben Creek coal mining assets in West Virginia from Arch Coal Inc. Mingo Logan consists of coal reserves, one deep mine and a load-out and coal processing plant.
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About Alpha
About Alpha
Alpha Natural Resources U.S. Locations
Alpha Shipping and Chartering, LLC
Alpha Shipping and Chartering, LLC, a subsidiary of Alpha Natural Resources, was formed in 2010 to provide ocean shipping services for overseas customers. Alpha is the disponent owner of two Panamax Gearless Bulk Carriers available to transport coal or other dry bulk commodities worldwide.
Alpha Coal West
2 Surface Mines
Export Capacity
Alpha’s total export capacity from all U.S. terminals is approximately 25-30 million tons per year via multiple ports and terminals that provide unique blending, storage and transportation advantages.
Pennsylvania Services
2 Deep Mines 2 Plants & LOs
Amfire
6 Deep Mines 10 Surface Mines 2 Plants & LOs
Through our subsidiary, Alpha Terminal Company, LLC, we hold a 41% interest in Dominion Terminal Associates. The DTA facility consists of state-of-the art blending and sampling systems along with ground storage capability, allowing us to provide outstanding service to customers worldwide. We also have access to additional export capacity at Chesapeake Bay piers, Gulf of Mexico/New Orleans, and Great Lakes terminals.
PA
Coal River East
11 Deep Mines 1 Surface Mine 3 Plants & LOs
Coal River West
1 Deep Mine 1 Surface Mine 2 Plants & LOs
Brooks Run West
5 Deep Mines 6 Surface Mines 4 Plants & LOs
Brooks Run North
9 Deep Mines 3 Surface Mines 4 Plants & LOs
WV
VA
KY
Corporate Office
Northern Kentucky
7 Deep Mines 1 Surface Mines 3 Plants & LOs
Southern Kentucky
12 Deep Mines 2 Surface Mines 2 Plants & LOs
- Virginia
- Brooks Run South
14 Deep Mines 6 Surface Mines 4 Plants & LOs
Coal River Surface
7 Surface Mines 4 Plants & LOs
20 Deep Mines 6 Surface Mines 4 Plants & LOs
Total Mines: 132* Underground: 87 Surface: 45 Prep Plants: 34
Western Coal Operations – 2011
49.9 million tons thermal
Eastern Coal Operations – 2011**
37.2 million tons thermal 19.2 million tons met
*As of March 31, 2012 **Includes Massey
LO = Loadout
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About Alpha
About Alpha
- Alpha Natural Coal Loading Facilities, 2011
- Alpha Natural Resources Coal Exports, 2011
- Barge Terminal Access***
- Stockpiling
Europe
- Business Unit
- Loadout
- State
- Railroad
7.1mm tons
Asia
3.5mm tons
Canada/Mexico
2.0mm tons
Long Fork Prep Plant Martin County Prep Plant Sidney Prep Plant Cave Branch Prep Plant Roxana Plant
KY KY KY KY KY
NS NS NS CSX CSX Truck NS
Northern KY Southern KY
Clearfield Clymer Plant
PA PA
AMFIRE
Homer City
Portage Plant
PA PA
Truck NS
X
Cumberland Plant Emerald Plant Virginia Energy
PA PA VA
NS/Mon River
CSX NS
PA Services Brooks Run South
X
Knox Creek Prep Plant Mcclure Plant Pigeon Creek Prep Plant Toms Creek Plant Erbacon Plant Green Valley Prep Plant Mammoth Prep Plant Power Mountain Prep Plant Ben Creek (Black Bear Plant) Kepler Plant
VA VA VA VA
NS CSX NS
X
Virginia
XX
XX
NS
WV WV WV WV WV WV WV WV WV WV WV WV WV WV WV WV WV WV WV WV WY WY
CSX CSX NS NS NS
South America
1.7mm tons
Africa
2.0mm tons
X
Brooks Run North Brooks Run South Brooks Run West Coal River East
X
XXX
NS NS
XXXXXX
XX
XX
2011 Export Shipments
14.2mm tons met exports 2.1mm tons steam exports 16.3mm tons total exports
Litwar Plant Stirrat Prep Plant Bandmill Prep Plant Delbarton Prep Plant Holden 29 Loadout Rockspring Plant Elk Run Prep Plant Goals Prep Plant Kingston Plant Marfork Prep Plant Pax (Hopkins) Loadout Homer Iii Loadout Liberty Prep Plant Omar Loadout
CSX CSX NS CSX NS CSX CSX CSX CSX CSX CSX CSX CSX UPR UPR
XX
XX
XX
- X
- X
Coal River Surface Coal River West
XXX
XX
Belle Ayr Loadout Eagle Butte Loadout
Alpha Coal West
- *
- Marmet is owned by Alpha
** Wheelersburg is run by NS and rails in/out for Alpha stockpiles. Coal is typically used for our Great Lakes business serviced by Sandusky/Toledo terminals. *** We ship barges direct to customers, or down to the Gulf for export all over the globe.
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About Alpha
Table of Contents
- Coal Supply & Demand
- 3
- Electricity
- 53
World Coal Overview 4 Coal 54 U S Coal Overview 12 Natural Gas 60
Nuclear 64 Renewables 70
- Coal
- 19
Cooling Systems 84 Turbines and Generators 86 Transmission and the Grid 88 Energy Storage 92
Formation of Coal 20 Mining 22 Mining Laws and Regulations 30 Mine Reclamation 32 Preparation and Processing 34 Transportation 36
- Emissions Control Technology
- 95
Emissions Control 96 Particulate Emissions 98 SO2 & NOx 100 Carbon Dioxide (CO2) 104 Mercury (Hg) 106
Coal Combustion Laws and Regulations 108
- Metallurgical Coal
- 39
Metallurgical Coal 40 Coke 46 Iron Making 48 Finished Steelmaking 50
- Additional Information
- 111
Definitions 112 Abbreviations 126 OTC Specifications 131 Conversions and Formulas 132 Useful Websites 141
Coal Supply & Demand
- World Coal Overview
- 4
- U.S. Coal Overview
- 12
World Coal Overview
Coal Supply & Demand
2011 Global Coal Top 10
World Coal Overview
- Reserves (M tons)
- Production (M tons)
- Consumption (M tons)
World recoverable coal reserves are currently estimated at 948 billion tons, according to the U.S. Energy Information Agency (EIA), which at current consumption rates is enough coal to last 118 years. Recoverable coal reserves represent coal that can be economically extracted at today’s prices using current technology. The U.S. has more coal reserves than all other countries (29%), followed by Russia (19%), China (14%), and Australia (9%). Anthracite and bituminous coal represent half of the world’s recoverable reserves, subbituminous is 32%, and lignite is 18%.
- United States 260,551
- China
United States
India
3,523 1,085 623
China United States
India
3,695 1,048 721
Russia China
173,074 126,215 84,217 66,800 44,863 37,339 37,038 33,241 15,179
948,000
Australia India
Australia Indonesia Russia
- 463
- Russia
- 257
- 370
- Germany
South Africa Japan
256
Germany Ukraine Kazakhstan South Africa Serbia
- 357
- 206
South Africa Germany Poland
- 281
- 206
- 201
- Poland
- 149
- 146
- Australia
South Korea