Massey Energy Continues Expansion Trend on Coal Market Optimism

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The following is an advisory by Industrialinfo.com (Industrial Information Resources, Inc.; Houston, Texas). Massey Energy Company (NYSE: MEE) (Richmond, Va.) has doubled their coal production over the last several years and today they are the fifth largest coal producer in the U.S. Historically, Massey Energy's growth has been the result of an aggressive industry consolidation plan initiated over a decade ago by its former parent, Flour Corporation (Aliso Viejo, Ca.). In late 2000, Massey Energy separated from Flour Corporation and became a publicly traded company. More recently the company has concentrated on new mines and the expansion of existing operations. Massey is currently starting up six surface coal mines, which will add approximately 2.6 million tons year of coal production capability. The company is also completing construction of the $100 Million Aracoma underground coal mine in Stollings, WVa., which will produce three to four million tons of coal per year by late 2001. Despite production set backs related to its subsidiaries Marfolk Coal Company and Martin County Coal Company, the company hopes to produce close to 50 million tons of coal in 2002, and is moving ahead with expansion plans.

Why the increase in capital spending after years of industry cutbacks and mine closures? Several factors are contributing to the improved coal market. The industry wide increase in coal usage has caused a reduction in coal stockpiles at power generation plants. This in turn has led to increases in spot market coal prices, which are currently hovering in the $35-45 per ton range for Appalachian Coal. This is spurring increased interest in coal production expansion. With new coal market optimism, Massey Energy is planning an additional $50 million in coal preparation and distribution projects at its subsidiaries in West Virginia, Kentucky, and Tennessee, over the next two years.