Alliance Resource Partners, L.P. (ARLP) Stock Analysis

ARLP’s primary competitive advantage is its position as the second-largest coal producer in the eastern United States, with a diversified asset base spanning seven underground mining complexes across Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia. This geographic spread enables ARLP to serve both domestic utilities and export markets efficiently, mitigating regional demand fluctuations and transportation bottlenecks. In 2024, 80% of tons sold were to U.S. utilities, with 17% exported—demonstrating broad market access.

ARLP’s cost structure is a key differentiator. The company consistently operates as a low-cost producer, with 2024 segment adjusted EBITDA expense per ton in the Illinois Basin at $36–$38, below many regional peers such as Peabody Energy and Alpha Metallurgical Resources, which face higher per-ton costs due to less favorable geology or less efficient operations. ARLP’s long-term contracts—covering over 80% of 2024 sales—provide revenue visibility and reduce exposure to spot market volatility.

The company’s diversification into oil and gas royalties and technology services (e.g., mining safety systems) adds resilience as coal demand faces secular decline. ARLP’s disciplined capital allocation, conservative balance sheet (net leverage below 1x EBITDA), and strong customer relationships—evidenced by repeat business from major utilities—further reinforce its competitive position. However, the company remains exposed to regulatory risk and the long-term decline in coal-fired generation, which larger, more diversified peers may be better positioned to withstand.