This Month In Coal - October 2017

Whitehaven Posts Impressive Results

Whitehaven Coal, Australia’s leading independent coal company with five operating mines in northwest New South Wales, has reported a net profit after tax of $405.4 million for the fiscal year ending June 30. While costs had increased modestly to $58 per metric ton (mt), the company reported sales of $1.77 billion, up 52%.

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Paringa Breaks Ground on New Poplar Grove Mine

Paringa Resources Ltd., the newest entrant in the Illinois Basin (ILB) steam coal market, began construction in August on its 2.8-million-ton-per-year (t/y) Poplar Grove underground steam coal mine, the first of two deep mines planned by the Australian company for its extensive Buck Creek reserve in western Kentucky.

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This Month In Coal - September 2017

Cloud Peak Hosts EPA Administrator

Environmental Protection Agency (EPA) Administrator Scott Pruitt visited the Cloud Peak Energy’s headquarters in Broomfield, Colorado, last month to discuss the agency’s priorities and steps taken during the first six months of the administration and also to hear how the end of the former President Barack Obama administration’s “war on coal” has positively impacted coal jobs and the outlook for the industry.

Pruitt’s remarks focused on his efforts to return the rule of law to the EPA, to bring “a degree of humility” to governance, and to demonstrate that strong and effective environmental stewardship can be achieved without restricting economic growth or negating America’s energy advantage.

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Contura Withdraws IPO

Contura Energy has withdrawn the initial public offering (IPO) of its shares of common stock due to capital market conditions. The company’s principal selling stockholders unanimously determined that proceeding with the offering under current market conditions would undervalue the company.

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Glencore Acquires Interest in Hunter Valley Operations

Glencore has signed agreements with Yancoal Australia regarding the acquisition of a 49% interest in the Hunter Valley Operations (HVO) coal mine in New South Wales and forming a joint venture (JV) following Yancoal’s acquisition of Coal & Allied (C&A) from Rio Tinto.

Glencore will pay cash consideration of $1.139 billion plus a 27.9% share of $240 million non-contingent royalties over five years and 49% of price contingent royalties payable by Yancoal to Rio Tinto on production from HVO in respect of the C&A acquisition.

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This Month In Coal - August 2017

Alpha to Transfer Idle Assets, Eliminate Self-bonding in West Virginia

Alpha Natural Resources plans to pay Lexington Coal Co. (LCC) to take its idled assets. Included with these properties, which are located in Kentucky, Illinois, Tennessee and West Virginia, are approximately 280 permits, substantial reclamation equipment, ongoing royalty payments associated with these properties and 100 million tons of reserves. While the specific economic terms were not disclosed, LCC will receive approximately $204 million in cash at the time of closing and $112 million in installment payments to assist in the fulfillment of bonding, reclamation, water treatment and other obligations associated with the conveyed properties and permits.

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CONSOL Files Plans to Spin Off Coal Business

In mind-July, CONSOL Energy filed the necessary paperwork with the U.S. Securities and Exchange Commission (SEC) to split the company into two publicly traded companies, a coal company and a natural gas exploration and production (E&P) company. The spin-off would provide current shareholders ownership in two companies, each positioned to capitalize on distinct opportunities for future growth and profitability, the company said.

“Today’s filing represents a significant step toward completing the company’s separation, with both entities being well-capitalized and free cash flow generating,” said Nicholas J. DeIuliis, president and CEO. “This strategic separation will enable both businesses to focus on their inherent strengths and unlock value for their shareholders.”

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India’s Utility NTPC Bets Big on Coal

Contrary to the government’s avowed policy, coal will continue to remain the mainstay of India’s largest power generation company, NTPC Ltd. The company is forging ahead to become the country’s second largest coal miner after Coal India Ltd. with plans for large investments in new coal-fired thermal power plants.
Having made a mark as a coal producer from its captive coal mines in the current fiscal year, NTPC Ltd. aims to achieve coal production of 107 million metric tons per year (mt/y) over the next few years.

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This Month In Coal - July 2017

Rio Tinto Agrees to Sell C&A to Yancoal

After receiving a competitive bid from Glencore and a counter offer from Yancoal, Rio Tinto has ultimately decided to sell its wholly-owned subsidiary Coal and Allied Industries Ltd. to Yancoal. Rio Tinto said it felt Yancoal Australia Ltd.’s offer of $2.69 million had a higher level of completion certainty. The sale is still contingent on a vote by the company’s shareholders.

The recommendation follows consideration by the board of a revised offer from Glencore plc received on June 23, and a revised offer from Yancoal received on June 25 comprising further improved terms. Yancoal’s most recent offer includes total consideration of $2.69 billion, comprising $2.45 billion in cash payable in full on completion, as well as $240 million via unconditional guaranteed royalty payments of which $200 million will be received before the end of 2018. It also includes an increased break fee amount provided by Yancoal’s parent company, Yankuang, from $100 million to $225 million and the receipt or waiver of all regulatory approvals required to close the transaction.

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Clean Coal Technologies Signs Agreement for Pristine M Plant in Wyoming

Clean Coal Technologies Inc. (CCTI), an emerging cleaner-energy company using technology to convert untreated coal into a cleaner burning and more efficient fuel, announced they have signed a binding agreement with Wyoming New Energy Corp. (WNEC) for the build-out of its first commercial facility in Wyoming.

WNEC has recently entered into an engagement agreement with Piper Jaffray to raise up to $80 million in debt financing to build a 2-million-ton CCTI Pristine M Plant in the Powder River Basin.

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Coal Operator is Fined for Obed Mountain Mine Spill in Canada

Prairie Mines & Royalty ULC (formerly known as Coal Valley Resources Inc.) pleaded guilty in Alberta Provincial Court to two counts of violating the Fisheries Act. Judge C.D. Gardner sentenced the company to pay monetary penalties totaling $3.5 million.

A portion of the fine ($1.15 million) will be placed into a trust to be managed by the University of Alberta to create the Alberta East Slopes Fish Habitat and Native Fish Recovery Research Fund. A total of $2.15 million will be directed to the Environmental Damages Fund.

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NMA Urges Reform of Broken Program for Abandoned Coal Mines

The chief executive of the National Mining Association (NMA) representing the U.S. coal industry recently told a congressional panel that the federal program funded by the coal industry to help clean up old abandoned coal mines has been plagued by an inefficient structure and lax management leading to billions of dollars spent for other purposes.

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MSHA Launches Initiative to Address Injuries

Data recently compiled between October 2015 and March 2017 by the U.S. Department of Labor’s Mine Safety and Health Administration shows that less experienced miners — both at a mine and at a specific occupation — suffer injuries at a higher rate than more experienced miners. Over this 18-month period, miners with one year or less of experience at a mine suffered 903 injuries, compared to 418 for those who had worked at a mine between one and two years. Miners with one year or less job experience suffered 603 injuries, compared to 409 for those with between one and two years job experience.

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Alpha Divests Green Valley

Alpha Natural Resources (ANR) has sold substantially all of the assets of two separate operations, a coal mining complex and a natural gas operation, both located in central West Virginia. The Green Valley mining assets in Nicholas and Greenbrier counties are being sold to Quinwood Coal Co. The divestiture includes the Green Valley No. 1 prep plant and related permits, which have been idle since the second quarter of 2014.

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