Coal Age

JUN 2013

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news continued TOP 10 COAL-PRODUCING STATES W O R L D (in Thousand Short Tons) Week Ending (5/25/13) YTD '13 Wyoming 146,533 West Virginia 49,641 Kentucky 37,742 Pennsylvania 22,392 Illinois 17,955 Texas 16,729 Indiana 14,635 Montana 14,354 Ohio 11,262 North Dakota 11,106 YTD '12 156,873 51,455 40,319 23,893 19,129 16,148 15,233 14,199 11,591 11,163 % Change -6.6 -3.5 -6.4 -6.3 -6.1 3.6 -3.9 1.1 -2.8 -0.5 Canadian Court Clears HD Mining in Chinese Worker Dispute A federal Canadian court has dismissed a complaint filed by two unions against HD Mining International alleging the company hired 201 unqualified short-term Chinese employees for a coal mine in British Columbia in lieu of Canadians. Representatives of International Union of Operating Engineers and the Construction and Specialized Workers Union both claim HD Mining granted work permits for the Chinese after rejecting numerous Canadians with exemplary qualifications. The high court, however, sided with a decision by immigration authorities to allow the workers into the province. U.S. Total 411,319 -5.9 387,058 metallurgical blend coal (and extensive adjacent potential reserves), Samuel Coal has been working diligently to bring this coal mine into production over the past several months. "From the moment we closed on the acquisition of Samuel Coal in late December 2012, we have been aggressively working toward bringing the first mine into production within this complex," said Mark Jensen, chairman and CEO, Quest Energy. "We would like to express great gratitude to all our employees and partners for their incredible hard work and tenacity in creating an impressive mine that will be the basis for a long-term, safe and profitable operation. We look forward to numerous years of coal extraction out of this mine and providing many well-paying jobs in the region." Samuel Coal has two additional mines that it will begin developing within the next three to six months in the Elkhorn No. 3.5 seam, which can be a sold as either a premium low sulfur thermal product or PCI product, according to the company. Quest Energy's business model is built around niche, localized and scalable low cost operations, and is currently focused on business opportunities in the Appalachian region of the United States and the Caribbean. Southern Coal Restructures Southern Coal recently suspended operations at higher-cost assets in Kentucky, Tennessee and Virginia, and said sites will reopen when demand improves. The restructuring will entail moving miners and equipment to other operating mines throughout the region, however, it will not lower 2013 output, according to officials. Southern Coal employs 1,700 people across five states—Virginia, Alabama, Kentucky, Tennessee and West Virginia. The changes will have a slight impact on its overall workforce. "Hopefully, this will be a positive change for the company and its employees," said Jim Justice, owner, Southern Coal. "The majority of employees and equipment from the idled mines will be moved to mines that produce high-quality coal at a more competitive cost structure." Deep mine equipment will remain onsite pending operational resumption. N E W S ¸ ˛ ˝ ¸ Chinese Coal Imports Surge Coal imports in the world's biggest coal using nation surged by 15% in the 30 days leading up to April as cheaper prices abroad drew increased shipments—with Indonesia and the U.S. leading the way. Indonesian imports jumped about 800,000 metric tons (mt) to 6.85 million mt last month. U.S. shipments, meanwhile, nearly doubled in April to 1.05 million mt. South Africa Plans Pipeline to Supply Northern Coal Mines with Water South Africa is set to complete construction of a 44-mile pipeline in 2013 to supply reservoir water in the northern part of the country to local coal mines, Water and Environmental Affairs Minister Edna Molewa announced. The De Hoop Dam in Limpopo Province is nearly finished and water storage has begun. Work on a separate pipeline supplying water elsewhere in the province is under way. Linc Energy Finalizes Exxaro Underground Gasification Project Linc Energy has formalized a deal with Exxaro Resources to jointly develop its first commercial underground coal gasification (UCG) project in sub-Saharan Africa, including the use of synthesis gas for power generation and gas-to-liquids, according to company officials. Under the agreement, Linc says it will receive $19 million in licensing fees, royalties indexed to Australian CPI from Q4 2012, indexes for synthesis gas, $6.7 million pending UCG's initial regulatory approval in 2017, and engineering partnership fees. Linc Energy officials have also agreed on a minimum 15% equity in the initial project, with an option to buy 49% equity in all operational parts developed by Exxaro, which, in turn, will enjoy a non-exclusive license to Linc Energy's UCG, officials said. Sichuan Province to Close 200 Coal Mines in 2013 Sichuan province in Southwest China will shut down 200 coal mines in 2013, up from the original target of 120 set earlier before, the local government announced at a recent conference on the province's restructuring tasks of its coal industry. The government also made it clear that 500 small coal mines will be closed by the end of 2015 and the number of coal companies in Sichuan will be reduced to within 300 and that each has annual production capacity of no less than 300,000 metric tons after restructuring. Illinois Exports More Coal Illinois enjoyed a five-fold increase in coal exports in 2012, with Europe being the primary destination. But the best may be yet to June 2013 Continued on pg 8... www.coalage.com 7

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