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Powder River Basin Coal Swap Allows Peabody Energy to Accelerate School Creek

Posted on: Friday, 24 February 2006, 06:00 CST

By Anonymous

Peabody Energy and Arch Coal, the two largest coal producers in the United States, completed an exchange of coal reserves in Wyoming's Powder River Basin. Peabody Energy said the swap will allow each company to optimize operations at their mines located there.

The exchange involved 54 Mt (60 million st) blocks. Peabody Energy said the deal will allow the company to accelerate the development of its proposed School Creek Mine.

In addition to the coal swap, Peabody Energy also bought the rail, loadout and surface facilities of the former North Rochelle Mine in the Powder River Basin, as well as the "box cut" mine development infrastructure and other assets for $84.6 million.

The company said the purchases would allow the North Rochelle Mine to expand its production more quickly into premium quality coal and more quickly lower development costs.

Kemal Williamson is group vice president of Peabody Energy's U.S. Western Operations. He said the deal with Arch Coal "allows us to accelerate the development of the 27 Mt- to 36-Mt/a (30-million to 40million stpy) School Creek Mine."

The School Creek Mine will access nearly 725 Mt (800 million st) of ultra-low sulfur, premium Btu coal, Peabody Energy said. It could begin producing by the fourth quarter of 2008.

Peabody Energy has about 3.2 Gt (3.5 billion st) of coal in the Powder River Basin. The company said its three operations there were the nation's most productive during the first nine months of 2005. Together, they shipped about 114 Mt (125.7 million st) of coal during that period, a 9-percent increase from the same period in 2004.

Copyright Society for Mining, Metallurgy, and Exploration, Inc. Feb 2006

Source: Mining Engineering

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