Coal Age

NOV 2012

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news continued TOP 10 COAL-PRODUCING STATES (in Thousand Short Tons) Week Ending (10/27/12) YTD '12 326,932 Wyoming West Virginia 103,381 Kentucky Pennsylvania Illinois Texas Montana Indiana Colorado Ohio U.S. Total 81,370 47,821 36,068 32,651 30,672 30,330 24,661 23,322 841,795 YTD '11 354,908 111,457 90,496 49,303 31,122 38,282 33,778 30,691 22,459 22,959 896,577 % Change -7.9 -7.2 -10.1 -3.0 15.9 -14.7 -9.2 -1.2 9.8 1.6 -6.1 There are no such worries about Tunnel Ridge, Alliance's newest major steam coal producer. The mine will continue to ramp up to 6.2 million tons in 2013 and 6.5 million to 6.8 million tons in 2014. Meanwhile, construction continues at two other new deep mines—Gibson South near Princeton in Gibson County, Ind., and White Oak No. 1 near McLeansboro in Hamilton County, Ill. Alliance acquired a preferred equity investment in privately owned White Oak Resources, the longwall mine's original devel- oper, last year. Gibson South, which could commence production in the fourth quarter of 2014 or early 2015, is expected to allow Alliance to boost its exports of high-sulfur IB steam coal. White Oak 1 is targeted for initial production in 2013, but will not reach its peak of 6 million tons a year until 2014 or 2015. Craft predicted the coal burn will improve in 2013, "assuming continued strength in gas prices and normal weather patterns." The timing of the improvements, he added, "will depend on the strength of economic activity both domestically and abroad. We believe the market will rebound sometime in the second half of 2013." As natural gas prices near $4/mmBtu, "demand should be improving and we should not have the pressures and deferrals we felt in the early part of 2012," he said. "If gas prices can stay in the $4 range, we feel like we should be okay with our set contract position." Alpha Seeks Permit for New Met Mine in Pennsylvania A new metallurgical coal mine in the planning stages in Greene County, Pa., by Freeport Mining LLC and River Processing Corp., Alpha Natural Resources subsidiaries, is expected to produce 3 mil- lion to 4 million tons of coal annually. The project has entered the regulatory phase, with Freeport having submitted permit applica- tions to the Pennsylvania Department of Environmental Protection and the Pittsburgh district of the U.S. Army Corps of Engineers. "There are three applications filed with DEP," a company offi- cial said in October. "Those are on file and in the process of being reviewed." The developmental timetable for the underground mine is contingent both on the speed of the regulatory process and mar- ket conditions. Falling demand for met coal and decreasing prices this year have caused several domestic met coal producers to pare back production at existing mines and delay new projects until they see an improvement, possibly in 2013. November 2012 W ORLD N E W S ¸ ˛ ˝ ¸ Chinese Coal Output to Exceed 3.7 Billion mt in 2012 On October 18, the China National Coal Association announced that the aggregate coal output in China is expected to exceed 3.7 billion metric tons (mt) this year, while in the current year the newly added coal output capacity has exceeded the growth of demand. Overcapacity plus high import levels are expected to continue to impact the Chinese domestic coal market. In the January to September period of this year, China's total coal output amounted to 2.88 billion mt up 3.6% on year-on-year basis. In the first three quarters of 2012, China's overall coal consumption totaled 3.02 billion mt up by 2.8% year-on-year. Palmer: Swan and Gillard Killing Australian Mining Investment Mining executive Clive Palmer has slammed Prime Minister Julia Gillard and Treasurer Wayne Swan for imposing a mining tax that has failed to raise revenue and only managed to kill investment in Australia's resources sector. Palmer said the Minerals Resource Rent Tax (MRRT) has so far in 2012-13 not raised a cent and has highlighted the damage the government has caused to the nation's economy for zero gain. "The MRRT has killed investment in Australian mining and it has also destroyed Australia's role in min- ing exploration for future generations," Palmer said. "Nobody is to blame other than Wayne Swan and Julia Gillard. They have stuck their heads in the sand while the people of this country suffer because of an incompetent tax that at the end of the day raises no money." Boyce Calls for Australian National Commission on Resource Sector Competitiveness Peabody Energy Chairman and CEO Greg H. Boyce called for the establishment of a National Commission on Minerals Sector Export Competitiveness to ensure Australia's resource sector policies serve the long-term national interest. During a presentation at the Melbourne Mining Club, Boyce said Australia's federal and state governments need to take a holistic approach to promoting the resource sector's competitiveness and ensuring Australia is posi- tioned to take full advantage of opportunities presented by the Asia-Pacific region's large-scale urbanization in the decades ahead. "Recent news of cutbacks and project cancellations across Australia's mining sector can't be attributed solely to the global macroeconomic backdrop or current pricing," said Boyce. "The fact is that inflationary pressures, a strengthening Australian dollar, permitting delays and a barrage of additional tax burdens at both a federal and state level have compromised Australia's international competitiveness." Boyce said a National Commission, comprised of representatives from federal and state government as well as the private sector, should work together to formulate a 30-year strategy to promote Australia's resource sector competitiveness. Chinese Workers Fill B.C. Mining Jobs The first of a group of 200 temporary Chinese workers approved by the Canadian federal government will soon arrive in B.C. to work in coal operations, the Vancouver Sunreported. In total, anywhere Continued on pg 6... www.coalage.com 5

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