Bidder's Statement - Peabody Energy

4 Information on Peabody Energy
4.1 Overview of Peabody Energy
Peabody Energy is the world’s largest private sector coal company,
with majority interests in 28 coal mining operations in the U.S. and
Australia. In 2010, it produced 218.4 million Tons of coal and sold
245.9 million Tons of coal.
Peabody Energy, a public company existing under the laws of the
United States and listed on the New York Stock Exchange, indirectly
owns 60% of PEAMCoal Holdings.
4.2 History, structure and ownership of
Peabody Energy
(a) History
Peabody Energy was incorporated in Delaware, U.S., in 2001 and
its history in the coal mining business dates back to 1883. Over
the past decade, Peabody Energy has continually adjusted its
business to focus on the highest-growth regions in the U.S. and
Asia-Pacific region. As part of this transformation, it has made
strategic acquisitions and divestitures in Australia and the U.S.
After re-entering the Australian market in 2002, Peabody Energy
expanded its presence there with acquisitions in 2004 and 2006.
In 2007, Peabody Energy spun off portions of its former Eastern
U.S. Mining segment through a dividend of all outstanding shares
of Patriot Coal Corporation. It has also continued to expand its
Trading and Brokerage operations and now has a global trading
platform with offices in the U.S., Europe, Australia and Asia.
(b) Structure
Peabody Energy conducts it operations through a number
of Subsidiaries, including Peabody Energy Australia Pty Ltd
(Peabody Energy Australia) and joint ventures. Peabody Energy
Australia is currently the holding company for Peabody Energy’s
Australian operations.
(c) Ownership
As at 2 August 2011, Peabody Energy understands that the
following entities beneficially own more than 5% of Peabody
Energy’s issued share capital:
Beneficial owner
Percentage of issued
share capital*
Blackrock, Inc. 11.1%
T. Rowe Price Associates 9.1%
* Based on information filed with the SEC.
4.3 Principal activities of Peabody Energy
Peabody Energy is actively pursuing growth plans in Australia with
a view to being a long-term participant in the Australian coal industry.
In addition to its mining operations, Peabody Energy markets, brokers
and trades coal through its Trading and Brokerage segment.
Peabody Energy’s other energy related commercial activities
include participating in the development of mine-mouth coal-fueled
generating plants and the development of Btu Conversion and clean
coal technologies. Peabody Energy’s Btu Conversion projects are
designed to expand the uses of coal through various technologies
such as coal-to-liquids and coal gasification.
Peabody Energy conducts business through four principal
segments: Western U.S. Mining, Midwestern U.S. Mining, Australian
Mining and Trading and Brokerage. The principal business of the
Western and Midwestern U.S. Mining segments is the mining,
preparation and sale of thermal coal, sold primarily to electric utilities.
The Western U.S. Mining operations consist of Peabody Energy’s
Powder River Basin, Southwest and Colorado operations. The
Midwestern U.S. Mining operations consist of its Illinois and Indiana
operations. The business of the Australian Mining Segment is the
mining of various qualities of low-sulfur, high calorific value coal
as well as thermal coal primarily sold to an international customer
base with a portion sold to Australian steel producers and power
generators. Metallurgical coal is produced primarily from five of
Peabody Energy’s Australian mines.
The Trading and Brokerage segment’s principal business is the
brokering of coal sales of other producers, both as principal and
agent, and the trading of coal, freight and freight-related contracts.
It also provides transportation-related services in support of Peabody
Energy’s coal trading strategy, as well as hedging activities in support
of its mining operations.
A fifth segment, Corporate and Other, includes mining and
export/transportation joint ventures, energy-related commercial
activities, as well as the management of its coal reserve and real
estate holdings.
Peabody Energy continues to pursue Btu Conversion projects that
expand the uses of coal through coal-to-liquids and coal-to-gas
projects. Peabody Energy’s participation in generation development
projects involves using its surface lands and coal reserves as the
basis for mine-mouth plants. Peabody Energy is also advancing
several initiatives associated with clean coal technologies, including
carbon capture and storage.
The maps below display Peabody Energy and Peabody Energy
Australia’s mine locations as of 31 December 2010. Also noted
are the primary ports utilized in the U.S. and in Australia for its coal
exports and its corporate headquarters.
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