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n e w s c o n t i n u e d The amendments and payments, which Peabody officials said will improve its expected 2017 cash flows by $70 million, are now subject to bankruptcy court approval. Peabody officials noted that the company already has con- tributed $165 million to VEBA since 2013 under a prior three- party agreement that involved the union and Patriot. "While Peabody has met its obligations under this agree- ment, Patriot breached the agreement, which left unclear Peabody's ongoing funding requirements to the VEBA," it said. It also said that, should VEBA participants begin receiving another form of health care benefits resulting from new legisla- tion, its payments would cease. The operator's payments for retiree health care under the Coal Act will continue without changes. "The market conditions occurring in the coal industry are unprecedented and have created hardship for stakeholders at all levels," Peabody officials said. "The company is pleased to have reached this new agreement to resolve uncertainty for UMWA participants related to Patriot." UMWA President Cecil Roberts said the union is pleased that a deal could be reached. "The second bankruptcy of Patriot Coal in 2015 and the breakup of that company into separate entities put the initial agreement providing funding for the VEBA in jeopardy. With this new agreement, we have been able to provide a measure of security for these retirees, their dependents and widows." He added that, while the agreement will help, it is not a "per- manent fix" to the issue. "We need Congress to live up to the promise made by Harry Truman in the White House nearly 70 years ago to our nation's miners — and repeatedly confirmed by Republican and Democratic presidents and congresses since — that if miners would provide the resource to make America the most powerful nation on earth, they would receive retirement security for the rest of their lives. It is time to secure that promise once and for all." CONSOL Energy Signs Coal Supply Agreements CONSOL Energy has signed several term coal deals totaling 10.8 million tons over a three-year period. These agreements, along with 650,000 tons of additional commitments for 2016, increase CONSOL's Pennsylvania operations 2016, 2017, and 2018 sold positions to 93%, 61%, and 49%, respectively, assuming the midpoint of the guidance range of 26 million tons. "These agreements demonstrate that even as markets continue to be challenged, customers are still incentivized to contract for term commitments to assure that they have a reliable supply of coal," said Nick DeIuliis, president and CEO, CONSOL Energy. "The Pennsylvania operations' coal has a quality advantage due to its high [calorific value] that not only optimizes plant performance, but also travels well to compete in non-traditional markets. "Even as the domestic market for coal is in the midst of a permanent structural shift, we are capturing market share in the upper Midwest, Ohio River Valley and southeastern U.S. regions, which have traditionally been served by our competi- tors in the Central Appalachian and Illinois basins," said DeIuliis. "In 2016, we expect our Pennsylvania operations to generate positive free cash flow even in the face of depressed natural gas prices and their correlated effect on coal pricing. For imports would continue to be contracted by few coastal thermal pow- er plants owing to logistical cost benefits of imported coal vis-à-vis domestically transported coal supplies. The 9% fall in coal imports during April-November 2015 was matched by a equivalent 9% growth in coal production by CIL, over t he corresponding period of 2014, at 312 million mt. However, according to a CIL official, challenges before the miner has shifted from issues of production growth to issues of achieving sales and off-take by bulk consumers. CIL's sales target during April-December 2015 was 2.5% lower at 389 million mt reflecting lower off-take largely by thermal power plants across the country, saddled as were with higher than normal fuel stocks. Several thermal power plants across Indian states, like Maharashtra, Rajasthan, Gujarat, have unofficially asked CIL to ease off supplies, which would force the latter to maintain higher pit-head stocks while maintaining growth in productions. Czech Republic's NWR is Evaluating its Options New World Resources (NWR) published the preliminary analysis of its strategic review process during December. Management has been focused on reducing operational and overhead costs and achieving a balance sheet restructuring in 2014. Despite these efforts, the group is cash flow negative. Given the market conditions, they could remain cash flow negative for several years Moreover, in the short term, NWR expects mine closure and employee restructuring costs in relation to the closure of the Paskov and Lazy mines, which is viewed as inevitable in the current market conditions absent any stakeholder support. These costs are expected to be €85- €100 million. Indonesia's Large Miners Plan to Produce More in 2016 While the country's small- and medium-sized coal miners mostly plan to reduce production, Indonesia's major coal miners plan to further boost production in 2016 despite an oversupply in the world's coal market, according to the Jakarta Post. According to data from the Energy and Mineral Resources Ministry's mineral and coal directorate general, through mid-December, miners were already planning to produce more than 303 million metric tons (mt) in 2016. The 2016 production plan will be far lower compared to the proposed 419 million mt in 2015. President director of Adaro Energy, the owner of Adaro Indonesia, Garibaldi Thohir, said earlier that they would set output at a range of 52 to 54 million mt in 2016, around 7% lower compared to targeted output in 2015 of 54 to 56 million tons. "We sell most of our coal under long- term contracts and only a little we offer on the spot market. We will reduce the amount [of coal offered] on the spot market," he said. The ministry's director for coal, Adhi Wibowo, said small miners with less than 3 million mt in production tended to cut output because they were the most affected by plunging prices. Meanwhile, big firms continue to increase their production. Indonesia's coal reference price (HBA) for December was set at $53.51/mt, around 16% lower compared to a reference price of $63.84/mt set in January. The December price is around 57% lower compared to the all-time high HBA price of $127.05/mt set in February 2011. Continued from p. 7... 8 www.coalage.com January 2016 ˛