Consol Inc. has agreed to sell the Bayside coal export terminal here to settle Federal Trade Commission objections to its proposed $480 million purchase of Island Creek Coal Inc., the FTC announced yesterday.
The FTC found the acquisition would significantly reduce competition at Baltimore's two coal export piers, which are owned by Pittsburgh-based Consol and Island Creek, a subsidiary of Occidental Petroleum Corp. of Lexington, Ky.
Western Maryland coal producers had complained to the FTC that Consol's plan to take over the Bayside terminal through its purchase of Island Creek would give the giant coal company control of the port's two coal export piers, a monopoly they feared could squeeze them out of the market.
Baltimore is the only port for the Maryland coal companies' exports, since they lack rail access to other ports, such as Philadelphia or Norfolk, Va. A third coal pier in Baltimore, owned lTC by CSX Corp., handles only domestic shipments of coal.
The FTC found that the acquisition by Consol could have raised the price of export services to coal producers and led to reduced coal production in the northern Appalachian region served by the Baltimore terminals.
The FTC settlement permits Consol to buy Island Creek but requires it to sell Curtis Bay Co., which owns and operates the Bayside terminal.
"It's gratifying we can still explore the export market with competition," said Joseph A. Schwartz III, a Baltimore attorney who represents the Maryland Coal Association and its 21 operating companies.
"Fifteen years ago there was a crying need to open the port to competitive forces," he said. "It would have been disastrous to end all that with this deal."
Operating with slim profit margins, coal companies in Allegany and Garrett counties insist they need competing export terminals in Baltimore to obtain the best price to ship coal.
Before they can quote prices on a shipment, they must know how much a terminal will charge to unload coal from railroad cars, store it, blend it and load it onto ships, they say.
In addition to owning a coal terminal here, Consol controls a number of mines throughout the country, though none are in Maryland. Consol is a joint venture between the Du Pont Co. of Wilmington, Del., and Germany's RWE Aktiengesellschaft.
Mr. Schwartz said state coal operators also feared that Consol would delay shipments of Maryland coal if it controlled both piers, or would raise prices so they couldn't compete with Consol-produced coal.
Of the 3.5 million tons of coal mined each year in Maryland, about 1 million tons is exported, Mr. Schwartz said.
Because of air quality controls, there is little or no domestic market for poor-quality coal. As a result, coal companies in Maryland and elsewhere rely heavily on the export market to sell their lower-quality coal.