Coal Age

AUG 2012

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2000-2012 *Coal Age, September 2005 assets. He put all of the coal assets under a new company, International Coal Group (ICG). In November 2005, they take ICG public. Arch Coal acquires Triton Coal for $364 million during August 2004. Triton owns and operates the North Rochelle and Buckskin mines. Arch Coal will integrate North Rochelle into Black Thunder and sells Buckskin to Kiewit Mining for $72.9 million. North Rochelle has an estimated reserve base of 226 million tons. In its September 2005 edition, Coal Age offers a special report on the resurgence of the Illinois Basin. The report covers new investments taking place in the region and also provides in- depth coverage of Alliance Resource Partners. The company, which was formed as a master limited partnership when Mapco exited the coal business during the mid-1990s, had grown organically to become one of the most successful coal compa- nies in the nation. In October 2007, Peabody Energy approved a spin-off of coal assets and operations in West Virginia and Kentucky. The spin-off was accomplished through a special dividend of all outstanding shares of Patriot Coal Corp. With 2006 sales of 24 million tons and reserves totaling 1.2 billion tons, Patriot becomes a leading steam and met coal producer. Peabody has essentially bundled all of its union mines, mostly in Appalachia, and formed a new coal company. During August 2008, Rio Tinto announced an IPO for its subsidiary Rio Tinto Energy America (formerly known as Kennecott Energy). The new company would be known as Cloud Peak Energy and it would become the first publicly-held, pure-play PRB coal operator. In March 2009, Arch Coal announces plans to purchase Rio Tinto's Jacobs Ranch mine for $761 million. In 2008, it produced 42.1 million tons and the transaction includes 381 million tons of low- cost reserves that are contiguous to Arch's Black Thunder mine. Alpha Natural Resources made a $2 billion all-stock offer for Foundation Coal during May 2009 and merges its operations to create the third largest coal producer in the U.S. The company will now have 60 mines and 14 prep plants operating in all three major coal basins. Alpha becomes the leading eastern U.S. pro- ducer and the largest U.S. producer of met coals. During January 2011, Alpha offers to acquire the beleaguered Massey Energy for $8.5 billion. Massey Energy's image of a leading 174 www.coalage.com Appalachian coal producers has been irreparably dam- aged by an explosion at the Upper Big Branch mine. In addition to a safety record that is in shambles, the com- pany has on several occasions squared off with environmen- tal activists. In many of those cases, it may have won the debate, but ultimately their public image suffers outside of Appalachia. Alpha acquires the company, makes amends with UBB survivors and regu- lators, and embarks on a retraining program to rebuild some great mines. In May 2011, Arch Coal acquires ICG in a transac- tion valued at $3.4 billion. The acquisition of ICG is a significant strategic step for Arch Coal. Most of all, it broadens Arch Coal's port- folio to now include met coals. In total, the company would have combined shipments of 151.7 million tons and the industry's sec- ond largest reserve position with 5.5 billion tons. Met Markets Surge A growing Chinese steel industry is creating a dramatic increase in demand for met coal and iron ore. Predictions are calling for global steel output to rise by 7.4% to a record 840 million metric tons (mt), unchartered water statistically. The seaborne metal- lurgical market is dominated by Australia, which supplied 92 million mt in 1999 out of a total of 174 million mt. By 2005, Australia met exports are expected to reach 118 million mtpy. Chinese coal imports in the first quarter of 2007 exceeded exports for the first time. China becomes a net coal consumer. Fueled by a need to power a robust economy, the world's largest coal producer is expect- ed to import more and more coal to satisfy its needs. An active typhoon season dur- ing early 2008 takes many met coal mines offline in Queensland, Australia. Meanwhile, in the northern hemisphere, China is experiencing power and coal shortages as fierce winter storms hamper train traffic. Prices for met coal surge—$250/mt have become acceptable and the prices sometimes spike to as much as *Coal Age, August 2011 100th Anniversary Special Issue August 2012 Top 10 Coal Producers, 2011 (millions of tons) Peabody Energy Arch Coal 203.9 151.7 Alpha Natural Resources 102.3 Cloud Peak Energy CONSOL Energy Luminant North American Coal 97.2 62.6 32.3 Alliance Resource Partners 30.8 Kiewit Mining Group Patriot Coal 30.0 28.8 27.9 Top 10 Coal Producing States, 2011 (millions of tons) Wyoming West Virginia Kentucjy Pennsylvania Texas Montana Indiana Illinois Colorado North Dakota 436 137 109 60 45 42 37 36 28 27

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