Peabody Energy, Arch Coal form JV to combine PRB, Colorado assets

Peabody Energy (NYSE:BTU) and Arch Coal (NYSE:ARCH) say they will combine their Powder River Basin and Colorado assets in a joint venture aimed at strengthening the competitiveness of coal against natural gas and renewables.

BTU will be the operator of the JV and own a 66.5% stake, while Arch will own 33.5%.

Among other assets, the JV will combine two productive and adjacent U.S. coal mines – BTU’s North Antelope Rochelle Mine and Arch’s Black Thunder Mine, which share a property line of more than seven miles – into a single, lower-cost complex.

The companies expect the JV to produce average synergies of ~$120M/year over the initial 10 years.