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Murray Energy, Foresight Energy Legal Battle Continues A legal battle over a six-year-old confidentiality agreement between two of the most dominant Illinois Basin (IB) high-sulfur thermal coal producers, Murray Energy Corp. (MEC) and Foresight Energy LP, resumed in an Ohio state court this fall after the origi- nal complaint was dismissed in October by a federal court in Illinois. Murray, the largest privately owned coal company in the United States, refiled its breach of confidentiality suit against Foresight in the Belmont County Court of Common Pleas in St. Clairsville shortly after Judge Staci Yandle of the U.S. District Court for the Southern District of Illinois granted Foresight's motion to toss out the com- plaint because it lacked "subject matter jurisdiction." Murray also asked the Ohio court for a preliminary injunction to prevent Foresight, which went public in the U.S. earlier this year, "from acquiring any additional mineral, subsidence and/or coal property rights" in the three southern Illinois counties where American Coal Co., a Murray subsidiary, operates the New Future and New Era longwall mines. A ruling on the injunction request is expected in November. New Future and New Era comprise the Galatia underground mine complex and are among the largest mines in Illinois, togeth- er producing about 9 million tons of coal annually. In recent years, Foresight, part of the Cline Group founded by Florida billionaire Christopher Cline, has vaulted to the top rung of coal producers in Illinois. Foresight's five deep mines — four longwall and a contin- uous miner operation — turned out 18.8 million tons in 2013 and are expected to produce about 24 million tons in 2014. According to Murray's refiled suit, however, Foresight is improperly using proprietary information about mining rights it gained from Murray as part of the 2008 confidentiality accord to get a leg up on its IB competitor. In 2008, Murray said, it marketed for sale its coal operations in Saline, Hamilton and Franklin counties in southern Illinois. One of the potential buyers was Foresight's Williamson Energy sub- sidiary, "a direct competitor" of Murray, the suit said. Before allowing Williamson to perform due diligence on the Murray assets, the parties negotiated and entered into the confi- dentiality agreement, Murray said. "In general, MEC disclosed its confidential and proprietary information regarding MEC's busi- ness and mining operations, including MEC's mining plans for the mining operations subject to the proposed transaction," the suit said. Williamson, it added, "agreed not to use the disclosed informa- tion for any purpose other than the proposed transaction, and specifically agreed it would not use the confidential information to acquire any mineral, subsidence, and/or real property rights related to MEC's operations for eight years," that is, until 2016 at the earliest. Ultimately, Murray and Foresight failed to agree on a sale. Recently, Murray said, it discovered that in 2009, Williamson, and/or its affiliates, "began purchasing mineral, subsidence and/or real property rights directly in the path of MEC's longwall mining plan. Williamson used the information disclosed by MEC in connection with the proposed transaction to strategically iden- tify and purchase mining rights." Williamson "has continued to purchase mining rights as recently as September 2014," Murray claimed, "and is continuing its efforts to acquire additional mining rights." n e w s c o n t i n u e d Poland May Split Coal Assets Into Good and Bad Mines Poland sits on top of the second-largest coal deposits in the European Union (EU), but the industry has suffered losses from inefficient mines and low prices. The Financial Times reported that a government task force is expected to recommend the mines be divided into two groups as a way of rescuing the industry. One would manage viable mines that could seek investment while the other would restructure, or close, financially unsustainable pits. The state-owned coal miners, including Kompania Weglowa, Europe's largest hard coal producer, lost PLN 1 billion in the first half of the year, and more than two-thirds of the country's mines lose money on each ton of the coal they sell. "From a business point of view, this would be the most reasonable solution — to close down mines that are not profitable or have no chance of being prof- itable in the future," said Miroslaw Taras CEO of Kompania Weglowa. The company runs 14 mines, of which four are profitable. POSCO Considers Importing Russian Coal Through North Korea South Korean steelmaker POSCO and shipper Hyundai Merchant Marine are exploring the possibility of importing Russian coal via North Korea ahead of the pilot program of the Rajin Khasan logis- tics, according to the Korea Herald . Hyundai Merchant Marine plans to charter a bulk carrier to ship the coal from Rajin in Rason Special City, North Korea, to Pohang. The company imports some 2 million metric tons (mt) of coal from Russia every year. In November, the Unification Ministry gave the green light to POSCO to import 35,000 mt of Russian coal via Rajin. If successful, this would mark the first time for South Korean firms to import Russian raw material through the North Korean port. Whitehaven Production Surges in Australia During the third quarter of 2014, Whitehaven Coal produced 3.3 mil- lion metric tons (mt) of coal, a 40% increase on the previous corre- sponding quarter's 2.3 million mt. Run of mine coal production lifted 30% on the previous corresponding period to 3.5 million mt. For the quarter, the company sold more than 3 million mt, a 20% increase on the 2.5 million mt it produced in the previous quarter. The company said that it received an average price of $89/mt from sales of its met coal during the quarter and it expects the prices to remain about the same in the fourth quarter. Whitehaven said that the Chinese govern- ment's recent imposition of import taxes of 3% for coking coals and 6% for thermal coals will likely impact coal producers that sell large quantities of coal into the Chinese market. Whitehaven noted that it produces high-quality, low ash thermal coal and China is not a sig- nificant market for them, representing only about 7% of sales. OKD to Lay Off 300 in Czech Republic During mid-October, Radio Prague reported that Czech coal mining company OKD will dismiss 300 people at the end of 2014. The work- ers will mostly be office staff of retirement or pre-retirement age, according to OKD's spokesman Marek Šibrt. Employees laid off will receive six months wages as severance pay. OKD is controlled by the company New World Resources and low coal prices for met coal forced it to introduce austerity measures. Continued from p. 8... 10 www.coalage.com November 2014 ˛