Alpha buys US coal mining rival Massey for $8.5bn

Massey's problems began when it was involved in one of the deadliest mining accidents for decades

Alpha Natural Resources is buying Massey Energy in an $8.5bn (£5.3bn) deal that will create America's second largest coal miner.

The move is further consolidation of an industry that is booming due to demand from energy-thirsty Asian economies.

Alpha will pay cash and shares worth $7.1bn, and take on Massey's debts to create a business with 110 mines and coal reserves of 5 billion tons.

Alpha chief executive Kevin Crutchfield said the deal creates a global player.

Alpha is a key supplier of metallurgical coal used to fuel steel mills in countries such as China and India.

Mr Crutchfield said: "In terms of the next decade, the world is going to remain structurally under-supplied in high-quality metallurgical coal.

"There's just not going to be any massive new supply coming on," he said.

Massey put itself up for sale in November after posting wider losses due to an explosion that killed 29 miners in West Virginia in April - the deadliest US coal mining disaster in 40 years.

Mr Crutchfield said Alpha had done in-depth due diligence on Massey and he was "comfortable with the exposed risk" from any regulatory and legal fall-out.

The coal sector is seeing intense merger and acquisition activity. Walter Energy has bought Canadian rival Western Coal, while UK-based businessman Nat Rothschild is paying $3bn for miners in Indonesia.

Meanwhile, Rio Tinto has offered $3.9bn for Africa-focused Riversdale Mining.