Chris Cline, owner of Foresight Energy LLC, poses in Foresight Energy LLC's Shay coal mine in Carlinville, Illinois. Photographer: Andrew Harrer/Bloomberg
Chris Cline became a billionaire by betting on a dirty fuel the world can't get enough of.
With maps of 675 square miles of his Illinois mines before him, Chris Cline recalls the moment he knew the coal in those mines would be worth billions of dollars.
It was 2002, and he and a competitor were on the phone lamenting how hard it was to find big deposits in central Appalachia, the stretch of rolling hills that extends from West Virginia to eastern Tennessee.
Cline, a miner's grandson, knew where to look instead, Bloomberg Markets magazine reports in its November issue. The next day, he decided to spend $300 million for mining rights, land and equipment in Illinois, betting on coal his rivals were abandoning. Cheap, plentiful and energy-rich, Illinois coal had a major drawback: It contained too much acid-rain-producing sulfur to be burned in most power plants.
Cline foresaw that the dwindling Appalachian supply, coupled with what he expected would be rules to force all power plants to add scrubbers to remove pollutants, would make Illinois coal attractive. If plants had to clean the coal anyway, Cline reasoned, why not use inexpensive Illinois stock?
He was right. Three years later, the U.S. Environmental Protection Agency required power plants to add scrubbers to cut emissions, reviving the stagnant market for high-sulfur coal. The value of Illinois deposits quintupled during the next five years, helping Cline raise $1.2 billion to build the mines that he's now parlaying into a fortune.
"?Going All In'
"I never had a problem going "?all in' in a card game,"? says Cline, 52, who is tieless in a blue shirt and chinos as he recalls his gamble on this June morning at his Pond Creek mine outside Marion, Illinois, 320 miles (515 kilometers) southwest of Chicago.
If you've never heard of Cline, it may be because he's making his fortune far from Wall Street on the Illinois prairies -- by digging up a rock humans have used for fuel since the Bronze Age.
Cline doesn't hang out in Hollywood or Silicon Valley or hobnob with fellow billionaires. He's the principal owner of a private company, Foresight Energy LLC, and until now has never spoken to the media. Cline maintains his roots in West Virginia. He spends two months a year off the beaten track in Beckley, a town of 16,832 near where his grandfather mined coal with a pickax a century ago.
Chances are good that if you live in the eastern third of the U.S. -- or even in parts of Europe -- your home is lit by electricity from his coal. Cline ships 11 million tons a year and may reach 80 million tons by 2018, giving him 7 percent of projected U.S. output.
"?Good Lives'
Cline says he abandoned his policy of avoiding reporters -- and his long-held belief that there's no such thing as good publicity in the coal business -- because he wants to improve coal's public image on all fronts.
"We in the industry probably do the worst job in the world getting out the story of the good lives we're helping people live,"? Cline says. "Changing that is certainly a big interest of mine."?
At Pond Creek, Cline, who is 6 feet (1.83 meters) tall and has the rugged looks of actor Harrison Ford, turns effusive as he dons blue coveralls and a white hard hat. He ushers his visitors into a pickup that heads down a paved slope toward the coal.
This is ideal territory for longwall mining, so called because it uses a machine with a 5.5-foot shearer to cut slices 3.5 feet thick from a coal seam that's 1,400 feet wide -- a long wall of coal. Each day, Cline's longwall machine extracts 35,000 tons, enough to power 2,800 U.S. homes for a year.
Coins Jingling
It's dangerous work that can rile up landowners when it causes property on the surface to drop by 6 feet. But compared with Appalachia, with its 4-foot-thick coal seams and mines filled with water and mud, it's more like coal farming, Cline says.
Five hundred feet underground, the pickup emerges into a labyrinth of corridors alongside a conveyor that hauls coal to the surface. Cline beams as fist-sized chunks rattle past.
"I like that,"? he says. "It's like the sound of coins when they're jingling."?
In an age obsessed with global warming and green energy, coal -- a combustible rock that has generated heat for humanity for 5,000 years and still conjures up images of black lung disease and the sooty England of novelist Charles Dickens -- is staging a defiant comeback.
Climate Change
Condemned by environmentalists who say that digging it mars the land and that cleaning it is impossible, and blasted by the World Health Organization for contributing to premature deaths, coal supplied 29.4 percent of the planet's manmade energy last year -- the highest level since 1970.
Coal is responsible for a third of U.S. emissions of carbon dioxide, the main greenhouse gas producing climate change, the Government Accountability Office found in June.
CO2 in the atmosphere rose in July from a year earlier to 390.09 parts per million from 387.84. The International Energy Agency, which advises 28 governments including the U.S., advocates a limit of 450 parts per million to avoid social disruption.
"Coal is one of the most damaging materials in the environment, but it's not going away,' says John Thompson, an analyst at Boston-based Clean Air Task Force. "By 2015, China will have three times more coal-fired plants than the U.S. They'll produce CO2 that will stay in the atmosphere thousands of years."?
Growth Industry
China opens a coal-fired plant each week; last year, seven workers died every day on average in Chinese mines trying to supply those plants, according to the nation's environmental ministry.
Global coal consumption may soar 58 percent from 2010 through 2035, the U.S. Energy Department says, making it a growth industry for the 21st century. Eighty-five percent of the increase will come in China and India, the DOE says.
Cline says he has read everything he can find on global warming and describes it as a real but exaggerated threat. He says he supports technologies that make the burning of coal cleaner and is doing his part by supplying coal to an American Electric Power Co. power plant in New Haven, West Virginia. New Haven is the world's first coal-fired plant to both capture carbon and then bury it thousands of feet deep in a process called sequestration.
Cline says he's trying to make mining itself safer by using fewer workers and giving them incentives to be productive.
"?Inconvenient Truth'
Politicians who want to penalize coal have their priorities wrong, Cline says. He says humankind will benefit more from cheap and abundant energy than from overreacting to what he calls minimal increases so far in atmospheric CO2 and the level of the world's oceans.
Cline says he was so annoyed when his children's teachers in Palm Beach, Florida, aired Al Gore's film "An Inconvenient Truth"? that he asked them to distribute literature that showed that climate change may be caused by clusters of sunspots or the Earth wobbling on its axis, not just carbon. When they refused, he complained to school fundraisers.
"As far as the social acceptability of coal, I like to think I'm part of supplying the cheapest energy in America,"? he says.
Buffett's Coal Bet
Investors are applauding coal's comeback. After tumbling 84 percent in five months from June to November 2008 as the financial crisis gutted growth, the Stowe Global Coal Index rebounded. The index rose 295 percent from its low on Nov. 20, 2008, through Oct. 11 of this year -- more than five times the rise of the Standard & Poor's 500 Index in that period.
Shares of Peabody Energy Corp., the largest U.S. coal producer, climbed 217 percent to $51.53. Brisbane, Australia- based Macarthur Coal Ltd., the biggest producer of coal used in steelmaking, quadrupled to A$12.90. Joy Global Inc., which makes mining equipment in Milwaukee, rose 381 percent to $73.12.
Even Warren Buffett's $27 billion purchase of the Burlington Northern Santa Fe LLC railroad in February was partly a bet on coal. Buffett, chief executive officer of Berkshire Hathaway Inc., uses his company's newly acquired railroad to ship coal from Wyoming to dozens of U.S. states.
Cline is buying locomotives, building a port on the Ohio River and designing his own oceangoing ships to serve his coal empire. He already exports 40 percent of his haul, mainly to Europe. As China and India gobble up half of world production, he's in talks to ship to them, too.
Mine Games
Cline says mining rights to his 4 billion tons of Illinois coal are worth at least $3 billion. Dennis Kostic, president of Weir International Inc., a Downers Grove, Illinois-based consulting firm, puts the value at $4 billion -- a level of affluence Cline's grandfather couldn't have imagined.
Raised in a West Virginia hamlet with 200 residents, Cline today owns a 164-foot yacht called Mine Games that features five staterooms and a two-person submarine. He docks it in Palm Beach, 9 miles from his 34,400-square-foot (3,200-square-meter) oceanfront mansion in a neighborhood he shares with golfer Jack Nicklaus. He commutes to his mines in a Gulfstream G550 jet and cruises Illinois in an Italian-made AgustaWestland helicopter with his Australian shepherd, Niki.
In Beckley, his 150-acre (60-hectare) estate has a lake, a go-kart track and pastures filled with horses, goats and llamas. Cline, a divorced father of four who says he dates occasionally, calls it a playground for his two sons and two daughters.
""?I just haven't had time to look for a wife,"? he says.
Getting Richer
Cline could become even richer if Foresight goes public. He says an initial public offering would be worth $3 billion if it occurs next year, as it may. The value would rise to twice that by 2013, he says. He declines to specify his stake, saying only that he's the majority owner of the Palm Beach Gardens, Florida- based company.
"Chris knows how to mine coal,"? says Nick Carter, president of Natural Resource Partners LP, a Houston-based owner of coal reserves, who has provided Cline with $315 million in financing since 2005 and has promised $205 million more. "I want him gambling with my money."?
Cline says he aspires to run the safest, most efficient and most environmentally friendly U.S. coal company. If he achieves those goals, he says, profits will follow.
At Pond Creek, with its conveyor brimming with coal, Cline says he's making an operating profit of $28 per ton this year. Peabody averages $5.99 per ton, says Seth Schwartz, president of Arlington, Virginia-based consulting firm Energy Ventures Analysis Inc.
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