Coal Age

NOV 2012

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Let's Move On, Try to Stay Positive editor's note www.mining-media.com BY STEVE FISCOR / EDITOR-IN-CHIEF .S. voters elected President Obama for four more years and the coal industry's hope for change in Washington were dashed. Domestic energy security was obviously not the highest priority for the majority. Dwelling on why is not help- ful. Luke Popovich at the National Mining Association (NMA) sums it up well in his column this month (See Dateline Washington, p. 14) The U.S. coal industry needs to try and stay positive. At this point, U.S. coal operators have three strong talking points: an improving safety performance, record coal exports, and better market conditions on the horizon. Most U.S. coal operators are constantly seeking ways to U improve safety performance. Last year, mining fatality and injury rates fell to an all- time low, according to data recently released from the Mine Safety and Health Administration (MSHA). The fatal injury rate for coal mining was 0.0156 per 200,000 hours worked, and the all-injury rate was 3.38 per 200,000 hours worked, down from 0.0384 and 3.43, respectively, in 2010. President Obama didn't take credit for the improved safety among U.S. mining operations, but he could have. The most recent data from the Energy Information Administration (EIA) says that U.S. 2012 coal exports, supported by rising steam coal exports, are expected to break their previous record level of almost 113 million tons, set in 1981. Exports for the first half of 2012 reached almost 67 million tons, surpassing most annual export volumes dating back to 1949. U.S. coal exports averaged 56 million tons per year (tpy) in the decade preceding 2011. If exports continue at the current pace, the U.S. will export 133 million tons this year. A report this month on the seaborne coal trade (See Coaltrans 2012, p. 42) iden- tifies energy demand trends taking place worldwide. The mantra among coal exporters is increasing Chinese and Indian demand. Increasing demand from Europe is also expected to add buoyancy to the Atlantic Basin markets. Australia and Indonesia are coping with two different kinds of nationalism. Emerging export markets, such as those in Mongolia and Mozambique, are struggling with poor transportation infrastructure. While it's plain to see that year-to-date coal production is down -6.1% (See Top 10 U.S. Coal Producers, see p. 5), several of the largest U.S. coal operators believe that the industry has passed through the trough. U.S. coal demand rose sharply in the third quarter with a significant increase in cooling degree days, which helped to draw down stockpiles in the Ohio Valley. Natural gas prices have nearly doubled to more than $3.50 per million Btu (mmBtu). Peabody Energy believes PRB coal can compete with natural gas prices of $2.50 to $2.75/mmBtu, and the Illinois Basin is competitive at $3.25 to $3.50/mmBtu. Assuming the politicians are able to work out an agreement by the end of the year that keeps the U.S. economy from careening off the fiscal cliff, the coal indus- try can expect a slight rebound in coal demand in 2013. The EIA now projects U.S. coal consumption to rise by more than 40 million tons in 2013. That's following a year where coal production could drop by as much as 120 million tons. In the meantime, coal operators must do what they need to do to remain prof- itable until the market approves appreciably. That means new projects will be tabled while the mines and plants focus on optimization and maintenance. There are some positive signs on the horizon. Try to cheer up and move past the election. Mining Media International Editorial Office 11555 Central Parkway, Suite 401 Jacksonville, Florida 32224 U.S.A. Phone: +1.904.721.2925 Fax: +1.904.721.2930 Editor-In-Chief—Steve Fiscor, sfiscor@mining-media.com Western Field Editor—Russ Carter, rcarter@mining-media.com European Editor—Simon Walker, simon.iets@btinternet.com Latin American Editor—Oscar Martinez, omartinez@mining-media.com Associate Editor—Gina Tverdak-Slattery, gtverdak@mining-media.com Associate Editor & Photographer— Lee Buchsbaum, lbuchsbaum@mining-media.com Graphic Designer—Austin St. Clair, astclair@mining-media.com Mining Media International Corporate Office 8751 East Hampden, Suite B1 Denver, Colorado 80231 U.S.A. Phone: +1.303.283.0640 Fax: +1.303.283.0641 President/Publisher—Peter Johnson, pjohnson@mining-media.com Vice President of Sales & Marketing—John Bold, jbold@mining-media.com U.S. & Canada Sales Manager—Victor Matteucci, vmatteucci@mining-media.com Scandinavia, UK and European Sales Manager—Colm Barry, colm.barry@telia.com German Sales Manager—Gerd Strasmann, info@strasmann-media.de Classified Advertising—Norm Rose, nrose@mining-media.com Show Manager—Tanna Holzer, tholzer@mining-media.com Ad Traffic Manager—Erica Freeman, efreeman@mining-media.com Coal Age, Volume 117, Issue 11, (ISSN 1040-7820) is published monthly by Mining Media Inc., 10 Sedgwick Drive, Englewood, Colorado 80113 (mining-media.com). Periodicals postage paid at Englewood, CO, and additional mailing offices. Canada Post Publications Mail Agreement No. 40845540. Canada return address: Station A, PO Box 54, Windsor ON N9A 6J5, Email: circulation@mining-media.com. Current and back issues and additional resources, including subscription request forms and an editorial calendar, are available online at www.coalage.com. SUBSCRIPTION RATES: Free and controlled circulation to qualified subscribers. Non-qualified persons may subscribe at the following rates: USA and Canada, 1 year, $56.00, 2 year, $96.00, 3 year, $162.00, Student, $16.00, Outside the USA and Canada, 1 year, $77.00, 2 year, $137.00, 3 year, $225.00 surface mail (1 year, $145.00, 2 year, $257.00 airmail delivery). For subscriber services or to order single copies, write to Coal Age, 8751 East Hampden, Suite B1, Denver, CO 80231 USA; call +1.303.283.0640 (USA) or visit www.mining-media.com. ARCHIVES AND MICROFORM: This magazine is available for research and retrieval of select- ed archived articles from leading electronic databases and online search services, including Factiva, LexisNexis, and Proquest. For microform availability, contact ProQuest at 800-521- 0600 or +1.734.761.4700, or search the Serials in Microform listings at www.proquest.com. POSTMASTER: Send address changes to Coal Age, P.O. Box 1337, Skokie, IL 60076 USA. Steve Fiscor, Coal Age Editor-In-Chief sfiscor@mining-media.com REPRINTS: Mining Media Inc, 8751 East Hampden, Suite B1, Denver, CO 80231 USA phone: +1.303.283.0640, fax: +1.303.283.0641, www.mining-media.com PHOTOCOPIES: Authorization to photocopy articles for internal corporate, personal, or instructional use may be obtained from the Copyright Clearance Center (CCC) at +1.978.750.8400. Obtain further information at www.copyright.com. 2 www.coalage.com COPYRIGHT 2012: Coal Age, incorporating Coal and Coal Mining & Processing. ALL RIGHTS RESERVED.

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