Alpha Natural Resources

Abstract

It was June 2010, and Kevin Crutchfield, CEO of Alpha Natural Resources, and his team of senior executives were facing several critical issues for the coal business. These issues were top of mind as he prepared a presentation he was expected to deliver the following Monday to ANR shareholders at the annual meeting. For fiscal year 2009, the company had revenues of $2,495 million, an increase of 1% compared with 2008, and $58 million in net income. This was relatively good considering the economic environment, but the company's long-run future was what had Crutchfield really concerned. Excerpt UVA-F-1631 Nov. 30, 2011 Alpha Natural Resources It was June 2010, and Kevin Crutchfield, CEO of Alpha Natural Resources (ANR), and his team of senior executives were facing several critical issues for the coal business. These issues were top of mind as he prepared a presentation he was expected to deliver the following Monday to ANR shareholders at the annual meeting. For fiscal year 2009, the company had revenues of $ 2,495 million, an increase of 1% compared with 2008, and $ 58 million in net income. This was relatively good considering the economic environment, but the company's long-run future was what had Crutchfield really concerned. ANR was the third-largest coal producer in the United States, with a production capacity of close to 100 million tons of steam and metallurgical coal. Although it was a young company, founded in 2002, it had become through acquisitions one of the largest players in the coal industry, employing almost 6,400 people and operating primarily in five states—Virginia, West Virginia, Kentucky, Pennsylvania, and Wyoming. During the previous few years, environmental concerns related to greenhouse gases (GHGs) had grown. Society's desire to reduce carbon dioxide (CO2) emissions from coal-fired power plants was putting pressure on the U.S. Congress to pass legislation addressing this issue. Two proposed cap-and-trade bills had been discussed, and if passed, either of these bills would mean a radical change in the coal business. Some of the more severe estimates forecast that utilities' demand for coal in the United States could drop 80% by 2030. . . .