US-based coal producer Arch Coal has closed the sale of its subsidiary, Canyon Fuel Company, to Bowie Resources for $423m.
The sale comprises Arch’s Utah operations including the Sufco and Skyline longwall mines, the Dugout Canyon continuous miner operation and about 105 million tons of bituminous coal reserves.
Arch Coal CEO John Eaves said that the sale of Utah operations allows the company to monetize assets in its portfolio that are not core to its long-term strategic plans.
"We are pleased with the value this transaction creates, as the sale puts Arch in a strong position for an evolving domestic coal market," Eaves added.
Along with the cash proceeds received, Arch expects to record a pre-tax profit of about $120m in Q3 2013 related to the Canyon Fuel sale.
The company also projects cumulative capital and administrative cost savings of over $200m from 2014 through 2017 due to the divestiture of its Utah assets.
Following the Canyon Fuel transaction, Arch expects further streamlining of its operations to achieve an additional $10m in annual administrative cost reductions.