Arch Coal

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plans to purchase

Rio Tinto's

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Jacobs Ranch mine in the Powder River Basin of Wyoming for $761 million.

The transaction includes 381 million tons of low-cost coal reserves contiguous to Arch Coal's Black Thunder mine, as well as a high-speed rail loadout, and other mining equipment, Arch Coal said in a statement Monday.

Last year, Jacobs Ranch produced 42.1 million tons of high-quality sub-bituminous coal for sale to power generators in the United States.

Arch Coal, one of the world's biggest coal producers, said the integration of the Jacobs Ranch and Black Thunder mines will create one of the world's "largest and most efficient mining companies."

Arch Coal plans to finance the acquisition with cash flow from operations, borrowings under a revolving credit facility and possibly other debt instruments.