Massey Energy to Team With India's Essar
www.yahoo.com 2007-11-29
Massey Energy Shares Jump Following Strategic Partnership Deal With Essar Group of India
Shares of Massey Energy Co. surged Wednesday after the coal producer said it will work with Essar Mineral Resources Ltd. to develop joint projects, with an initial focus on coal reserves and equipment, for a power plant in India.
In the near term, the deal with Essar, a division of Essar Group of India, covers the development of coal reserves, coke ovens and a coal preparation plant. Massey said the companies also agreed to evaluate certain mining projects in India and develop coke ovens in the country and elsewhere.
However, the partnership is not limited to India or coal, Massey said, noting that the Essar Group's business interests include steel, energy, power, communications and construction.
"The potential for synergies between the two companies is readily apparent," Massey Chairman and Chief Executive Don L. Blankenship said in a statement. "We have been developing a relationship with Essar for some time and are optimistic about the potential to work and grow profitably together."
Terms of the partnership agreement were not disclosed.
Massey said the deal allows it to "significantly expand its global reach and provides an established partner in India, where demand for coal and steel has grown dramatically."
JPMorgan analyst John Bridges applauded the move, although he noted it is not likely to help Massey's earnings in the immediate future. He rates the stock "Underweight."
"We view this as beneficial to Massey in the longer term as it not only gives (Massey) access to one of the fastest growing coal markets in the world but also helps it diversify a little our of the aging (Central Appalachian) region," Bridges said in a research report.
(editor : jane)
