November 12, 2008 / 8:38 PM / 11 years ago

Sour economy to slow coal industry mergers: analyst

PORTSMOUTH, Virginia (Reuters) - The global coal industry is ripe for consolidation but the current economic crisis will slow the pace of mergers, an analyst said on Wednesday.

“Financing conditions are going to be tough,” said Mark Liinamaa, a mining analyst for Morgan Stanley, speaking at an industry coal conference sponsored by the McCloskey Group. “In this market it’s going to be difficult to get anything done.”

Deals that have been announced but not yet completed — such as Cleveland Cliffs’ (CLF.N) bid for Alpha Natural Resources ANR.N — may not be consummated, he said.

More consolidation would help the industry by tightening control over output to keep it in line with demand in a slowing economy, he said.

Fourteen deals worth $15 billion have been done in recent years. There is more public company involvement in coal, but there are still many small, private players, he said.

Public companies control about 68 percent of U.S. coal production, up from 40 percent in 2001.

The top 25 producers still mine about 80 percent of U.S. coal output, which probably represents a near-term peak in consolidation efforts, he said.

Reporting by Bruce Nichols; editing by Jim Marshall

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