Peabody Energy Announces New Illinois Basin Mine


Peabody Energy announced it has entered into long-term coal supply agreements for more than 90 million tons of coal, which will allow development of the Bear Run mine in Sullivan County, Indiana Bear Run will be the largest surface coal mine in the Eastern United States, with expected capacity of approximately 8 million tons of coal annually. The mine will initially supply two major Midwestern electricity generators under long-term contracts with terms of up to 17 years, which together are expected to generate nearly $6 billion in revenues.

“Long-term coal demand continues to grow. We are the largest producer and reserve holder in the Illinois Basin, which is one of the fastest-growing coal regions. We are pleased to be partnering with our customers to meet their energy needs and develop a major new coal mine,” said Peabody Chairman and CEO Gregory H. Boyce. “Peabody’s history as a reliable supplier of affordable fuel, combined with our leading production and reserve position and financial strength, provided us the opportunity to secure some of the largest coal supply agreements in Peabody’s history and develop this world-class operation to serve growing customer needs.”

The Bear Run operation will commence in the second half of this year, and is expected to produce 2 to 3 million tons in 2010 and ramp up thereafter. Approximately $350 to $400 million in capital will be invested over several years to bring the mine to its 8 million ton per year capacity. Bear Run will employ approximately 350 skilled workers and would annually contribute approximately $140 million in regional economic benefits.

Peabody Energy signed an agreement with the Indiana Rail Road Co. to construct a 5.2 mile industrial spur to serve the new Bear Run mine. Construction is expected to proceed once the Surface Transportation Board (STB) issues a favorable declaratory order. The railroad made legal filings with the STB last October, and railroad officials expect to have the new line completed by early 2010.

In related news, Peabody Energy announced during mid-March that the Vermilion Grove mine will be closing, according to The Associated Press. Beth Sutton, Peabody Energy spokesperson, said the mine was closed because it had reached the end of its reserves, and geologic conditions made it impossible to continue without risking worker safety. She said the 160 miners affected will be offered work at other Peabody mines in the area.


As featured in Womp 2009 Vol 04 - www.womp-int.com