Wyoming sides with Arch, Peabody in coal joint venture case
CASPER, Wyo. (AP) — The state of Wyoming is siding with two major coal companies as U.S. regulators try to block their efforts to merge operations in the nation’s top coal-producing region.
The benefits of a joint venture between Arch Resources and Peabody Energy, both based in St. Louis, would outweigh “unlikely anti-competitive effects,” Deputy Attorney General James Kaste wrote in a court filing Tuesday in U.S. District Court in St. Louis.
“It just does not make sense to Wyoming that the merged entity can or will raise prices; effectively cutting off its nose to spite its face,” Kaste added.
The companies have five mines in the Wyoming portion of the Powder River Basin. The basin extends into southeastern Montana and supplies around 40% of the nation’s coal.
The joint venture would save the companies $120 million a year, they assert.
The Federal Trade Commission filed a preliminary injunction in February to prevent the regional merger, saying it could stifle competition and hurt the public by hiking up prices for coal.
The cost-saving attempt comes as coal’s share of U.S. electricity generation dwindles from about 50% a decade ago to half that now, the Casper Star-Tribune reported.
Powder River Basin production has meanwhile dropped from over 400 million tons (362 million metric tons) a year to 267 million tons (242 million metric tons) in 2019.
Republican Gov. Mark Gordon in February called the federal attempt to stop the merger “a nail into an industry which is struggling to adapt to a rapidly changing marketplace.”
The basin’s coal mines have shed hundreds of jobs in recent years and hundreds more this year as more people working from home and less economic activity due to the coronavirus reduce demand for electricity and coal.