Soaring coal prices plus a weak dollar may make United States coal mining companies targets for takeovers, contends Christopher Martin with Bloomberg. Possible acquisition candidates include two independent, publicly traded companies headquartered in Richmond: Massey Energy and James River Coal.

The price of coal has risen to record highs along with the price of petroleum, and mergers & acquisition activity in the coal industry is acclerating as acquirers conclude that it is easier to buy coal reserves and mining capacity than build it from scratch. A sign of the times: Earlier this month, the board of Abingdon, Va.-based Alpha Natural Resources, with its 57 mines and 617 million tons of reserves, approved the sale of the company for $10 billion to Cleveland Cliffs Inc.

“In the next 12 months there will be an unprecedented amount of both domestic and cross-border mergers and acquisitions,'' said Wilbur Ross, chairman of International Coal Group Inc. in Scott Depot, W.Va. “U.S. reserves are undervalued relative to those in the rest of the world.”

The increasing need for power in emerging markets is putting a premium on coal, especially in China, which gets 80 percent of its electricity from the fossil fuel, Bloomberg reports. U.S. coal exports are booming as other coal-exporting nations like Australia and South African experience supply bottlenecks. Coal prices more than doubled this year to nearly $120 per ton on the U.S. East Coast. Meanwhile, the decline in the value of the dollar – and the corresponding strength of other currencies -- makes U.S. coal reserves cheaper in comparison to reserves elsewhere.

"The likelihood of overseas investors is growing stronger because of the weak dollar,'' Steven Leer, the CEO of St. Louis-based Arch Coal Inc.

While these trends make companies like Massey and James River vulnerable to takeovers, their soaring stock prices are creating opportunities not available long ago. “Our stock price will allow us to do some transactions that we haven't been able to do in the past,'' Mike Bauersachs, Massey's vice president of planning, said in June. The company plans to buy mines or reserves near its existing operations in West Virginia and Virginia to spread costs and maintain growth.