How Alliance Resource Partners L.P. Makes Most of Its Money
Alliance Resource Partners L.P.'s (NASDAQ: ARLP) business is pretty easy to get your head around: It mines coal. Even though it is in the same business as other miners that have struggled mightily as of late to compete against lower-priced natural gas and alternative power sources like solar and wind, it has managed to do better than most of its peers. To understand how, and what differentiates Alliance from its rivals, you need to dig a little deeper into how it makes most of its money.
The basic facts of Alliance's business are simple: It digs coal out of the ground and sells it. In addition to mines, it owns a terminal facility, helping to get the coal from the mine to its customers. And its customer list is where the first important distinction for Alliance shows up. It is predominantly a thermal coal producer, meaning it's main customers are power companies. In contrast, most larger players like Peabody Energy (NYSE: BTU) produce both thermal coal and metallurgical coal, which is used in the steel-making process.
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Source: Fool.com
