Apollo Global Management LLC, the private-equity firm run by Leon Black, is providing $300 million to a partnership focused on buying coal-mining assets worldwide.
The partnership seeks to develop and operate coal assets that have good export opportunities, Apollo and NRI said in a statement today. Global electricity demand will climb by 70 percent by 2035, according to the Paris-based International Energy Agency, the companies said.
The Stowe Global Coal Index of 36 coal, equipment and mining service companies has dropped 23 percent in the last 12 months as low natural gas prices and mild weather have led U.S. coal companies to cut millions of tons of production, shutting mines and firing workers as demand and prices for the fuel tumbled.
Central Appalachian coal, the U.S. benchmark, fell 11 percent to average $63.07 per ton in the fourth quarter from $71.19 a year earlier. Surging gas production from shale formations sent prices for the fuel to a 10-year low of $1.90 per million British thermal units in April.
Gas, which some electricity generators can use instead of coal to produce power, averaged $2.83 a million British thermal units in 2012, the lowest price since 1999, according to data compiled by Bloomberg.
The previous winter was the fourth-warmest winter on U.S. record, cutting gas use during its peak-demand season. A supply surplus to the five-year average has persisted since Sept. 2011 and ballooned to a six-year high by the end of the first quarter of 2012.
NRI was formed from the management team of INR Energy, a West Virginia producer of steelmaking coal that was bought by Cliffs Natural Resources Inc. in 2010 for $757 million. NRI is based in Richmond, Virginia.