Coal Mogul Plans to Buy Coal-fired Power Plants

Murray Energy CEO Bob Murray wants to buy power plants, an acquisition that could happen sometime in 2018. The purchase would allow the company to mine coal, transport it to plants and then burn it to generate power.

Murray has attempted the purchase for over a decade, but has run into monetary issues. Since utilities typically sell off capacity payments when they close coal-fired plants, it creates cashflow problems for potential buyers.

“It’d be the culmination of my life’s work,” Murray said. “It’s a new concept. If you control the fuel supply, you can price it how you want it.”

Currently, Murray has his sights set on several different plants, including assets from now-bankrupt FirstEnergy Solutions, owned by FirstEnergy (NYSE:FE).

FirstEnergy’s W.H. Sammis plant in Ohio and the Bruce Mansfield facility in Pennsylvania are currently for sale. Also appealing is the company’s Pleasants power station, which is scheduled to close in early 2019.

Last summer, Murray stated that his company might be “dragged into restructuring” by FirstEnergy Solutions, but with the recent news from FirstEnergy, he has dismissed that possibility.

Murray Energy sits in a better position this year due to a boom in its overseas sales. The company has plans to export 22.5 million tons of coal this year — the most ever.

Much of the credit goes to Javelin Global Commodities, a joint venture Murray helped form in 2015. The company has the potential to grow as global coal demand continues to shift toward Asian markets.

If Murray is successful in the acquisition of as many as five coal-fired power plants over the next 10 years, the company could produce 110 million tons of thermal coal a year.

However, he noted that this stat is based on the US thermal coal output not falling below 650 million tons a year by then, and that will depend on leaders of America’s utilities getting behind coal.

But what would happen if coal slips below 25 percent of the country’s power mix? Murray thinks “people are going to freeze in the dark.” According to government forecasts, coal is expected to account for 29 percent of utility-scale power generation in 2018.

On Tuesday (April 10), Murray addressed the future of coal, putting its capability to flourish on the Trump administration. He spoke to Fox Business, stating, “we have a crisis in this country of unreliable low cost generation, and it needs to be dealt with.”

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.