Coal Age

APR 2013

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news continued TOP 10 COAL-PRODUCING STATES W O R L D (in Thousand Short Tons) Week Ending (3/30/13) YTD '13 Wyoming 92,764 West Virginia 30,791 Kentucky 23,427 Pennsylvania 13,830 Illinois 11,206 Texas 10,153 Indiana 9,077 Montana 7,490 Ohio 7,039 North Dakota 6,969 YTD '12 104,877 32,755 26,245 14,774 11,374 9,792 9,569 9,329 6,990 7,194 % Change -11.5 -6.0 -10.7 -6.4 -1.5 3.7 -5.1 -19.7 0.7 -3.1 Coal Prices Begin to Firm BHP Billiton and several major Japanese steelmakers agreed on March 21 on a price of $172/mt for Australian coking coal, up 4%, for the April-June period. The increase is the first in three quarters. The price of iron ore will also go up for the first time in three quarters, with a hike of 30%. The steelmakers are looking to raise product prices as rising materials costs constrain profits. The price hikes for materials will likely impact automotive steel sheet price negotiations for the April-September period. U.S. Total 265,024 -9.3 240,283 Energy Information Administration—while key coal emissions have been reduced by 80%. During a time of intense global energy insecurity, affecting things like economic development and food supplies around the world, coal is an essential source of power, the ad noted; moreover, more than 50% of the world's 6 billion people lack reliable access to energy while energy poverty itself is responsible for 1.5 million annual deaths. "Let's put people first Mayor Bloomberg and bring more light to the reality that the world needs all energy forms," the advertisement concluded. "On behalf of the billions of people in the world who benefit from coal-fueled electricity, we invite you to learn more about clean coal solutions that fuel growing global energy demands and the world's fastest-growing economies." Jewell Finishes Senate Confirmation Hearings for Interior Secretary Retail executive and former Mobil Oil chair Sally Jewell has completed Senate confirmation hearings to follow Ken Salazar as secretary of the Interior; some of her answers divided lawmakers, but her nomination appears set to proceed, according to the National Mining Association (NMA). Coal "is certainly very, very important," she said during the three-hour session on Capitol Hill, while pledging to bring her "experience to bear on multiple uses of public lands and [an] allof-the-above energy strategy." Jewell also highlighted her experience working with energy and mining companies in Alaska. She conceded a lack of familiarity with the Office of Surface Mining Reclamation and Enforcement's Stream Protection Rule, but added her past support for a carbon tax with beliefs climate change is a true threat. This view, she added, is irrelevant to her new position as the Obama administration has ruled out pursuing such a tax. Alaska Republican and ranking Energy and Natural Resources Committee Member Lisa Murkowski recognized Jewell's energy background, but noted less experience, and "less familiarity with public lands policy than many past nominees." Wyoming Republican John Barrasso, meanwhile, said Jewell's membership in the National Parks Conservation Association was "unsettling" and "a fundamental conflict of interest" given the numerous lawsuits the association has brought against the department. April 2013 N E W S ¸ ˛ ˝ ¸ Brazil's Vale Lifts Force Majeure in Mozambique Officials at Vale have lifted force majeure on several coal sales contracts in Mozambique following disruption by severe rainfall. Force majeure was first declared in mid-February after heavy rainfall began early that month in Tete, "creating serious challenges" to the Linha do Sena railway, the Brazilian company said in a news release, affecting some 500,000 metric tons of metallurgical coal. Walter Energy to Idle Canadian Coal Mine According to Reuters, Walter Energy Inc., facing an activist investor that wants to replace half its board, said on March 22 it would idle a high cost metallurgical coal mine in western Canada within the next few weeks, sending its shares nearly 4% higher. The coal miner, which also has operations in the U.S. and Britain, said in a regulatory filing that it would also close a thermal coal mine in Alabama nine months earlier than planned, and announced a $350 million debt offering. Raymond James analyst Jim Rollyson said shutting down the Willow Creek mine in British Columbia is the right move. He said the decision may help Walter Energy in its proxy fight with British hedge fund Audley Capital Advisors LLP ahead of its April 25 annual meeting. Mechel Signs Major Coking Coal Agreement with Baosteel Mechel, one of Russia's top mining and metals companies, signed a coking coal supply deal with China's Baosteel Resources. According to the agreement, Mechel Carbon will supply Baosteel with 960,000 metric tons (mt) of coking coal annually over a one-year contract with possibility to renew; the monthly price will be corrected. Until the beginning of March, Mechel Carbon directly supplied 252,000 mt of coking coal to Baosteel's primary production mills in Shanghai, Zhejiang, Guangdong and Jiangsu."Mechel's agreement with one of China's leading steel companies reflects common approach in long-term cooperation, based on principles of joint coordination, close alliance and common development, which will benefit us all," said Mechel Mining Management CEO Boris Nikishichev. Mechel is celebrating its 10th anniversary this year. It was founded in 2003 and started with a few production assets, including the Chelyabinsk metallurgical plant and Southern Kuzbass Coal Co. It now comprises some 30 producers of coal, along with other industrial assets. Indonesia's PT Adaro Posts 30% Drop in 2012 Net Profit PT Adaro Energy Tbk, Indonesia's No. 2 coal miner, has reported a 30% net profit decrease in 2012 to $385.35 million, while revenue Continued on pg 6... www.coalage.com 5

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