Coal Age

OCT 2015

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Page 6 of 51

would add Patriot's Panther, Rocklick, Wells, Kanawha Eagle, Paint Creek and Midland Trail complexes to its portfolio. Blackhawk also acquired James River Coal's (JRC) assets in a bankruptcy sale in 2014. Alpha Moves Forward in Bankruptcy Case As it wades through its first two months of its Chapter 11 bank- ruptcy case, Alpha Natural Resources is now anticipating approval of its debtor-in-possession (DIP) financing package following a September 15 hearing. The company, which filed its initial volun- tary petitions in Virginia on August 3, is now awaiting a final order from the U.S. Bankruptcy Court. The 18-month package provides for up to $692 million so that the company can continue opera- tions. The financing is led by a group composed of the company's first and second lien lenders. "This expected approval follows a number of other final orders received from the court in recent weeks, including the authorization to continue paying employee wages and benefits," officials noted. Alpha Chief Financial and Strategy Officer Phillip Cavatoni said that finalizing the DIP with the support of its lenders is a "signifi- cant milestone" in its process to restructure. "We believe that, in concert with existing liquidity, this package provides the financial flexibility needed to navigate the Chapter 11 process," he said. The case is In re Alpha Natural Resources Inc. 15-33896, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond). Alpha Natural Resources has also confirmed it will cut nearly 100 from its payroll at two mines in Virginia while it prepares to shut down three other operations in the same area. Spokesman Steve Hawkins said the mines to be closed include Deep Mines 44, 37 and 25. All will be idled by the end of November. A d d i t i o n a l l y , 9 6 j o b c u t s w i l l b e m a d e a t D e e p M i n e s 4 1 a n d 2 6 . M i n e r s ' l a s t d a y w i l l b e N o v e m b e r 2 0 , p u r s u a n t t o a recently issued Worker Adjustment and Retraining Notification Act notice, or within two weeks of that date. All of the mines are located in Dickenson County. Deep Mine 44 began production this year. Production at Galatia's New Era Coming to a Halt Murray Energy Corp.'s Galatia underground steam coal mining complex in Saline County, Illinois, currently has about 500 employees, its lowest level in several years, as the privately owned n e w s c o n t i n u e d Rio Tinto Sells Its Interest in Bengalla Rio Tinto reached a binding agreement for the sale of its 40% inter- est in the Bengalla joint venture in Australia to New Hope Corp. Ltd. for $606 million. Bengalla is the smallest of three coal mines in the H unter Valley of New South Wales in which Rio Tinto holds an inter- est, producing 8.6 million metric tons (mt) in 2014. Rio Tinto and Mitsubishi Development have recently agreed to a simplification to the ownership structure of Coal & Allied, which helps enable this transaction. The transaction is subject to certain conditions precedent being met, including the pre-emption rights of the Bengalla joint venture partners. The sale of the interest in the Bengalla joint venture is expected to close in the first quarter of 2016. New Hope currently has two open-cut coal mines in southeast Queensland that produce thermal coal: New Acland, north of Oakey, and Jeebropilly in the near Ipswich. Total clean coal production from these operations is about 7 million mt. More than 90% is directly sold to export markets, predominantly in the Asia-Pacific region. South African Miners End Strike The National Union of Mineworkers (NUM), representing tens of thousands of miners across South Africa, negotiated a new wage deal for coal miners that brought a strike, which lasted more than a week, to an end in mid-October. The workers with the lowest pay structures will receive wage increases of up to R1,000/month ($75/month) over the initial year and another increase of 7.5% the following year. Higher earners will see raises of between 5% and 7.5% over both years, the Reuters report said. Initially, miners were demanding a R3,000 per month wage hike. Affected companies include Anglo Coal, Glencore, Exxaro Coal, Kangra, Delmas Coal and Msobo. These operations are spread across the Highveld region, home to most of South Africa's coalfields. Prolonged strikes are not uncommon in South Africa — up to almost half a year in the case of the platinum industry a couple of years ago. Most of the country's electricity is generated from coal-fired power plants and an extend- ed strike would have eventually disrupted power. Indonesia to Amend More CoWs During October The Indonesian Energy and Mineral Resources Ministry is finalizing the amendment process of a number of contracts of work (CoWs) related to coal mining. Bambang Gatot Ariyono, the ministry's director general for mineral and coal, said his office was working to reach agreements with mining companies to adjust their CoWs. "We are now focusing on the third generation of coal CoWs. There are a total of around 50 firms and we are expecting to com- plete 10 to 20 of them within October," Ariyono said. There are a total of 73 coal CoWs and 34 mineral CoWs that must be renegotiat- ed and amended as mandated by the 2009 Mining Law. Glencore, Tohoku Set Annual Coal Contract Glencore Xstrata Plc and Japan's Tohoku Electric Power Co. have settled an annual Australian thermal coal import contract 12% low- er than a year earlier, according to Hellenic Shipping News Worldwide. The price set for the year beginning on October 1 was around $64.60/metric ton (mt), reflecting a worldwide supply glut Continued on p. 6... October 2015 5 W O R L D N E W S ¸ ˛ ˝ ¸ T O P 1 0 C O A L - P R O D U C I N G S T A T E S (in Thousand Short Tons) Week Ending (10/3/15) YTD '15 YTD '14 % Change Wyoming 280,452 295,156 -5.0 West Virginia 77,211 86,543 -10.8 entucky 50,088 59,858 -16.3 Illinois 46,001 43,125 6.7 Pennsylvania 40,516 47,022 -13.8 Montana 32,909 32,202 2.2 Indiana 27,141 29,654 -8.5 Texas 24,812 32,989 -24.8 North Dakota 20,827 21,921 -5.0 Colorado 16,102 18,552 -13.2 U.S. Total 691,306 754,808 -8.4

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