A couple sweet little excerpts from Bloomberg It was 2002, and he and a competitor were on the phone lamenting how hard it was to find big deposits in central Appalachia, the stretch of rolling hills that extends from West Virginiato eastern Tennessee.
Cline, a miner’s grandson, knew where to look instead, Bloomberg Markets magazine reports in its November issue. The next day, he decided to spend $300 million for mining rights, land and equipment in Illinois, betting on coal his rivals were abandoning. Cheap, plentiful and energy-rich, Illinois coal had a major drawback: It contained too much acid-rain-producing sulfur to be burned in mostpower plants.
Cline foresaw that the dwindling Appalachian supply, coupled with what he expected would be rules to force all power plants to add scrubbers to remove pollutants, would make Illinois coal attractive. If plants had to clean the coal anyway, Cline reasoned, why not use inexpensive Illinois stock?
He was right. Three years later, the U.S. Environmental Protection Agency required power plants to add scrubbers to cut emissions, reviving the stagnant market for high-sulfur coal. The value of Illinois deposits quintupled during the next five years, helping Cline raise $1.2 billion to build the mines that he’s now parlaying into a fortune.
Cline says mining rights to his 4 billion tons of Illinois coal are worth at least $3 billion. Dennis Kostic, president of Weir International Inc., a Downers Grove, Illinois-based consulting firm, puts the value at $4 billion -- a level of affluence Cline’s grandfather couldn’t have imagined.
“Chris knows how to mine coal,” says Nick Carter, president of Natural Resource Partners LP, a Houston-based owner of coal reserves, who has provided Cline with $315 million in financing since 2005 and has promised $205 million more. “I want him gambling with my money.”
Cline says he aspires to run the safest, most efficient and most environmentally friendly U.S. coal company. If he achieves those goals, he says, profits will follow.
At Pond Creek, with its conveyor brimming with coal, Cline says he’s making an operating profit of $28 per ton this year. Peabody averages $5.99 per ton, says Seth Schwartz, president of Arlington, Virginia-based consulting firm Energy Ventures Analysis Inc.