Czech Sev.en Energy aims for lead in US met coal consolidation

By Chris Johnstone, S&P Global

Czech -based mining and energy company Sev.en Energy is looking at further US mining company acquisitions that could take it from current second placed producer of metallurgical coal for the steel industry to US market leader, the director of company operations in charge of international expansion Alan Svoboda told S&P Global Platts in an emailed reply to questions July 8.

"Today we are second on the market for coking coal, so-called metallurgical coal. If we are able to conclude just one of the other opportunities from negotiations we are involved in then we would rather become number one and push forward consolidation of the sector," Svoboda said in the email. He declined to give further details of the specific ongoing negotiations apart from saying that Sev.en Energy is prepared to invest "hundreds of millions of dollars" in the sector. "Just like in the case of Blackhawk [Mining], we are prepared to continue," Svoboda added.

Sev.en Energy bought US coal mining company Blackhawk Mining in June 2020, which has annual production capacity of 7 million-8 million mt of metallurgical coal from its five underground and open pit mines sited in West Virginia and Kentucky. The acquisition price was not disclosed at the time.

The Czech company also has a 17% stake in Corsa Coal Corp., which has capacity to produce 1.6 million mt/year of metallurgical coal at its Pennsylvania and Maryland mines. In 2020, overall coal output was 1.192 million mt, according to the company's website.

"We are looking at opportunities in the US metallurgical coal sector," Svoboda said in the email. "The sector is still very fragmented and is in need of consolidation. In the meantime we have seen significant consolidation on the demand side, in the steel sector, with the creation of one large unit and it is time that the metallurgical mining sector takes the same path and that is what we want to take part in," Svoboda said in the email.

Svoboda added that prices for metallurgical coal had risen on markets by more than 100% since Sev.en Energy's acquisition of Black Hawk Mining just over a year ago thanks in part to the recovery of the global steel sector and economic rebound since the worst of the coronavirus pandemic.

China 's unofficial ban on imports of coal from Australia , imposed in April 2020 after the Australian prime minister called for an investigation into the possible Chinese origins of the pandemic, was also a factor, Svoboda said. "Market disturbance caused by China 's ban on Australian coal imports has in the meantime become the new status quo," he said in the email.