We are one of the world’s largest coal producers. For the year ended
December 31, 2017, we sold approximately 98 million tons of coal, including
approximately 1.5 million tons of coal we purchased from third parties. We sell
substantially all of our coal to power plants, steel mills and industrial facilities.
At December 31, 2017, we operated 9 active mines located in each of the major
coal-producing regions of the United States. The locations of our mines and
access to export facilities enable us to ship coal worldwide.
We were organized in Delaware in 1969 as Arch Mineral Corporation. In July
1997, we merged with Ashland Coal, Inc., a subsidiary of Ashland Inc. that was
formed in 1975. As a result of the merger, we became one of the largest producers
of low-sulfur coal in the eastern United States.
In June 1998, we expanded into the western United States when we acquired the
coal assets of Atlantic Richfield Company. This acquisition included the Black
Thunder and Coal Creek mines in the Powder River Basin of Wyoming, the West
Elk mine in Colorado and a 65% interest in Canyon Fuel Company, which operated
three mines in Utah. In October 1998, we acquired a leasehold interest in the
Thundercloud reserve, a 412-million-ton federal reserve tract adjacent to the
Black Thunder mine.
End users generally characterize coal as thermal coal or metallurgical coal.
Heat value, sulfur, ash, moisture content, and volatility, in the case of metallurgical
coal, are important variables in the marketing and transportation of coal. These
characteristics help producers determine the best end use of a particular type
of coal. The following is a description of these general coal characteristics:
Heat Value. In general, the carbon content of coal supplies most of its heating
value, but other factors also influence the amount of energy it contains per
unit of weight. The heat value of coal is commonly measured in Btus. Coal is
generally classified into four categories, lignite, subbituminous, bituminous
and anthracite, reflecting the progressive response of individual deposits of
coal to increasing heat and pressure. Anthracite is coal with the highest carbon
content and, therefore, the highest heat value, nearing 15,000 Btus per pound.
Bituminous coal, used primarily to generate electricity and to make coke for
the steel industry, has a heat value ranging between 10,500 and 15,500 Btus
per pound. Subbituminous coal ranges from 8,300 to 13,000 Btus per pound and
is generally used for electric power generation. Lignite coal is a geologically
young coal which has the lowest carbon content and a heat value ranging between
4,000 and 8,300 Btus per pound.
Sulfur Content. Federal and state environmental regulations, including regulations
that limit the amount of sulfur dioxide that may be emitted as a result of combustion,
have affected and may continue to affect the demand for certain types of coal.
The sulfur content of coal can vary from seam to seam and within a single seam.
The chemical composition and concentration of sulfur in coal affects the amount
of sulfur dioxide produced in combustion. Coal-fueled power plants can comply
with sulfur dioxide emission regulations by burning coal with low sulfur content,
blending coals with various sulfur contents, purchasing emission allowances
on the open market and/or using sulfur dioxide emission reduction technology.
Ash. Ash is the inorganic residue remaining after the combustion of coal. As
with sulfur, ash content varies from seam to seam. Ash content is an important
characteristic of coal because it impacts boiler performance and electric generating
plants must handle and dispose of ash following combustion. The composition
of the ash, including the proportion of sodium oxide and fusion temperature,
is also an important characteristic of coal, as it helps to determine the suitability
of the coal to end users. The absence of ash is also important to the process
by which metallurgical coal is transformed into coke for use in steel production.
Moisture. Moisture content of coal varies by the type of coal, the region where
it is mined and the location of the coal within a seam. In general, high moisture
content decreases the heat value and increases the weight of the coal, thereby
making it more expensive to transport. Moisture content in coal, on an as-sold
basis, can range from approximately 2% to over 30% of the coal’s weight.
Other. Users of metallurgical coal measure certain other characteristics, including
fluidity, swelling capacity and volatility to assess the strength of coke produced
from a given coal or the amount of coke that certain types of coal will yield.
These characteristics may be important elements in determining the value of
the metallurgical coal we produce and market.
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