Coal Age

FEB 2012

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news continued TOP 10 COAL-PRODUCING STATES (in Thousand Short Tons) Week Ending (1/28/12) YTD '12 35,172 10,343 8,256 4,483 3,158 2,770 2,720 2,550 2,537 2,238 Wyoming West Virginia Kentucky Pennsylvania Texas Indiana Illinois Montana Colorado North Dakota U.S. Total 83,438 YTD '11 33,829 11,061 8,670 4,813 3,199 2,981 2,770 2,531 1,855 2,317 84,722 Signal Peak Lifts Force Majeure After a somewhat rocky year in 2011 that featured brief idlings resulting from roof falls and high carbon monoxide (CO) levels, Montana's Signal Peak longwall mine ushered in 2012 on a more positive note. On January 4, Signal Peak Energy, which operates the former Bull Mountain mine near Roundup in Musselshell County, lifted a month-long force majeure declared after the Mine Safety and Health Administration (MSHA) shut the mine in early December because of higher-than-allowed CO concentra- tions in a mined-out section of the mine. Company spokesman Mike Dawson confirmed the force majeure no longer was in effect and the mine was back in full production. Despite last year's interruptions, Signal Peak made progress in continuing to ramp up production of subbituminous coal. According to MSHA, the mine turned out 5.13 million tons of coal in 2011, up from 4.38 million tons in 2010. Eventually, Signal Peak's annual output is expected to reach 12.5 million tons. Alliance Sustains Its Positive Momentum Alliance Resource Partners rang up an 11th straight year of record earnings in 2011 and Joseph Craft III, the company's longtime president and CEO, sees more of the same for 2012. The Tulsa, Okla.-based master limited partnership posted a pretty good fourth quarter, too. Full-year earnings were $389.4 million, up 21.3% over 2010. Net income totaled $91.7 million in the final three months of last year, beating earnings of $87.3 million in the year-ago quarter. In 2011, Alliance, which operates in three geographic regions—Central Appalachia, Northern Appalachia and the Illinois Basin—produced 30.8 million tons and sold 31.9 million tons. Craft said he expects those numbers to grow this year to 34- 35 million tons and 34.75-35.85 million tons, respectively, in 2012. Alliance sold 8.2 million tons of coal in the fourth quarter, a gain of 5.4% over the year-ago total. The increase was attributed in part to the resumption of full production at the Pattiki under- ground mine near Carmi in White County, Ill., and higher coal sales at the Gibson North deep mine near Princeton in Gibson County, Ind. Pattiki's output in 2010 was hampered by the failure of a conveyor-belt system that took several months to replace. In Northern Appalachia, a longwall move at the Mountain View underground mine in Tucker County, W.Va., during the February 2012 % Change 4.0 -6.5 -4.8 -6.9 -1.3 -7.1 -1.8 0.8 36.8 -3.4 -1.5 W ORLD N E W S ¸ ˛ ˝ ¸ Mechel OAO has finished laying tracks from the Ulak station to the massive Elga coking coal deposit which is being developed by Mechel Mining's Yakutugol subsidiary. The last section of track of the 321-km railway link was laid in December 2011. The 40-billion- ruble ($1.25 billion) construction project has opened traffic along the entire route from Baikal-Amur Mainline's Ulak station to the Elga deposit. A new 321-km railway will access a massive Elga met coal deposit. "The railway's completion is one of the most complicated and important stages in implementing the unique project of developing the Elga coal deposit, which is one of the world's largest coking coalfields. This project's scale is unique for the mining industry. Completion of railway construction together with the launch of mining at the deposit in such a short time, considering the global financial crisis in 2008-2009, once again proves Mechel is one of the few companies with the potential to handle a project of such magnitude," said Igor Zyuzin, chairman, Mechel. Mechel began constructing the Elga railway link in February 2008. The railway was built in difficult climatic and geological conditions. A total of 76 bridges were built in the course of the rail- way's construction. Mining at the Elga open-pit began in August 2011, producing some 200,000 metric tons by the year's end. China added more than 95 million metric tons (mt) in coal output capacities in 2011 with total output in the country's 14 major col- lieries reaching 3.2 billion mt, according to Liu Tienan, deputy director of National Development and Reform Commission and director of National Energy Administration. Speaking to , Liu also noted China added 90 gigawatts (GW) in installed power capacity last year, bringing the country total capacity to 1,050 GW. In 2012, China will add 200 million mt in coal output capacity and 70 GW in installed power capacity. China First Pty Ltd. has launched an $8 billion lawsuit against QR National Ltd. and QR Ltd. for an alleged breach of confidentiality and misleading conduct over a proposed rail link between the Galilee Basin coal region and the Central Queensland coast. The Queensland Government recently granted significant project sta- www.coalage.com 7 Mechel Completes Elga Railway China Continues to Increase Coal Production Capacity Knowledge China Palmer's China First to Sue QR National Continued on pg 8...

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