Peabody Pursues Gasification Project in China - Peabody Energy

message from chairman and chief executive officer greg boycePeabody’s People Create a Culture of Excellence through P3Greg BoyceChairman andChief Executive OfficerAt Peabody Energy, weare continuallyseeking ways to maximizewhat I call the “Three Es” –energy security, economicgrowth and environmentalsolutions. Seldom havethese elements been insuch turmoil as today.Still, even in the presentdynamic environment, coal remains the fastest-growingfuel in the world. Clean coal is the ultimate solution forre-energizing the world economy, creating millions of greenjobs and building energy security. And as the global leaderin clean coal solutions, Peabody is advancing all of thesegoals at once.As I review the events of the past year, I’m impressed byour significant progress in realizing this company’s vision.The credit goes to our 7,000 employees worldwide... peoplewho raise the bar at every turn... individuals who embracechange... and team members who collaborate to createbetter, more efficient ways of doing business.People are at the heart of our Peabody Peak Performance– P3 – initiative, dozens of projects that share a single goal:to drive a culture of continuous improvement at every levelof the organization:• Chief among these is safety. We can report the safestyear in Peabody’s history, with a year-to-date safety rate ofjust 1.70 in the United States.“People are at the heart of ourPeabody Peak Performance– P3 – initiative, dozens ofprojects that share a singlegoal: to drive a culture ofcontinuous improvement atevery level of the organization.”Greg BoyceChairman and Chief Executive Officer• In every region, our P3 Operations Centers of Excellence(COEs) are bringing together mine employees and subjectmatter experts from around the company to maximizeproductivity and improve costs. For example, COE initiativescontributed to record monthly production levels at our NorthGoonyella Mine, while our Wambo Mine increased productivityby more than 20 percent. Our Wildcat Hills Mine implementedsignificant annual efficiencies, and the Lee Ranch Mine hitkey targets despite transitioning equipment and personnel toenable the El Segundo Mine to ramp up to full production.• Our Capital COE is helping us invest wisely in ouroperations: Peabody’s Wilpinjong and El Segundo mineshave costs that are significantly below the norm foroperations with similar production levels.• Our Engineering COEs are successfully applying acan-do mindset to complex life-of-mine analysis.• Our Sourcing COE – a part of Supply Chain Management– collaborates closely with multiple areas of thebusiness to enhance day-to-day procurement at each mine,strategically source goods and services through competitivebidding and other activities and apply forecasting, budgetingand reporting processes to ensure Peabody’s third-partyspending is as cost efficient as possible.• At the same time, our Commercial COE is drivingcompetitive pricing in a difficult environment.As we complete another successful year, I want to thankall of you for your hard work in delivering results that sustainour global leadership in all types of markets and economicconditions. As we look forward to 2009, I know the employeesof Peabody will continue to outperform. Thank you again for allthat you do and have a wonderful new year.Employees monitor key performance indicators using aP3 Performance Board.Peabody Energy Wins Global Energy Excellenceand Strategic Investment HonorsFlash bulbs snapped and cameras rolled as Chairmanand Chief Executive Officer Greg Boyce accepted dualhonors at the 10th Annual Global Energy Awards in NewYork City, an event popularly known as the ‘Oscarsof Energy.’ Peabody Energy won the ‘Award of Excellence’for its legacy of industry leadership and the ‘StrategicEnergy Investment of the Year’ Award for the company’stransformation into a global energy powerhouse and a leaderin clean coal technologies.In receiving the Award of Excellence, Peabody wasrecognized as an energy all-star. The company emerged froma crowded field to earn finalist status in each of the 10 years ofthe competition. In fact, the company was a finalist 29 timesin multiple categories since the Global Energy ceremony wasestablished, winning ‘Coal Company of the Year’ three times.Peabody also received the first Strategic Energy Investmentof the Year Award. The honor recognizes the company’ssuccess in expanding beyond its U.S. platform to capitalize onhigh-growth, high-margin markets around the globe. Peabodyincreased its international earnings contribution from just1 percent to 50 percent by achieving rapid growth in Australiato serve Asia-Pacific markets through a major acquisition;expanding international coal trading activities; and pursuingnew business in developing markets such as China.“The Global Energy Awards are one more barometerof our success as a leading international energy company,”Greg reflects.Conveyor is written for employees and stakeholders and is producedby the Investor Relations & Corporate Communications Department.Visit PeabodyEnergy.com and CoalCanDoThat.comThe use of the words “Peabody,” “the company” and “our” relate to Peabody,our subsidiaries and our majority-owned affiliates.Printed on recycled paper.2|Conveyor Fourth Quarter 2008Framed by a glittering backdrop, Chairman and Chief Executive Officer Greg Boyce and President and Chief Commercial OfficerRick Navarre hold Peabody Energy’s dual honors at the 10th Annual Global Energy Awards.“These honors say that we have sustained a legacy ofinnovation, leadership and superior performance. They saywe are advancing clean coal technologies. And they saythat Peabody is helping to meet the challenge of the 21stCentury: fueling an energy-short world. I thank Peabody’s7,000 employees around the world for our success inexpanding globally and setting new financial records.”Peabody Energy701 Market StreetSt. Louis, MO 63101-1826Phone: 314-342-3400Fax: 314-342-7799Conveyor@PeabodyEnergy.comPeabody Energy (NYSE: BTU) isan Equal Opportunity Employer.Copyright © 2008 Peabody EnergySustainability took center stage at this year’s ceremony,which attracted an array of 500 top executives from morethan two dozen nations. Honorees are selected from nearly200 entrants by a global panel of energy leaders, includingformer regulators, heads of major energy companies, leadingacademics and international energy experts.“This recognition by the Global Energy organizationis a tribute to Peabody’s vision for long-term growth,”says President and Chief Commercial Officer Rick Navarre.“We became the global leader by anticipating enormousgrowth in energy demand and positioning our companyto meet the need. Together, we have built a world-classorganization that is advancing the future of energy onan international stage.”Peabody’s Global Energy awards join more than40 safety, environmental and corporate honors thecompany has earned within the past year. Peabodyalso is ranked first in the mining and crude oil sectorin Fortune Magazine’s listing of the “Most AdmiredCompanies” and holds the number-one position inall categories.

Safety... A Way of LifeA Backhoe, a Beauty and a Bright Idea at Kayenta MineQuick quiz: What do a backhoe, a beauty queen anda bright idea at Peabody’s Kayenta Mine in Arizonahave in common?The answer: an inventive safety initiative, a first-placetrophy in the Southwest Region’s annual Safety InnovationsAward Competition and a way to support an institution inNavajo cultural life.Kayenta’s safety success story began when the mine’sbackhoe crew approached managers with an idea foranother exit from the two-and-a-half-story loading machine.In the event of an emergency, the exit would enable themachine’s operator to escape without having to lower aladder from the engine room.“The second shift heavy maintenance crew startedlooking at different exit strategies using ropes and ladders,”says Maintenance Supervisor Jeff Shiflett.“Based on the concept of an extension ladder,they designed, built and installed their own solution:an emergency exit that was easy to access and operate.”Once finished, another task awaited. The maintenanceteam set out to create an ingenious secondary emergencyexit by installing a hinged hatch in the catwalk near theoperator’s cab. The hatch can be lifted and is attached to atwo-section ladder. With the pull of a pin, the ladder swiftlyextends to the ground, providing a rapid, safe departure route.“The operator’s cab is about two stories from the ground,so we needed to find an escape method that would work over adistance,” says Kayenta’s Director of Production Gregg Kitchen.“In an emergency stop situation, the secondary escape laddercan adjust to varying terrain up to 16 feet from the ground.”Submitted by the mine’s safety department, the projectwon the Southwest Safety Innovations Award and $1,000that could be donated to the charity of the team’s choice. Thecompetition was created to encourage a culture of safety andSugar Ridge Achieves ‘Sweet Success’ in StewardshipIt’s a sweet life on Sugar Ridge, nearly 1,100 acresof highly productive reclaimed Indiana farmland atPeabody’s Miller Creek operation. The U.S. Department ofthe Interior recognized Sugar Ridge with the 2008 NationalAward for Excellence in Surface Mine Reclamation andprovided a special commendation for community outreach.Together the honors add up to a sweet victory for employeesand come on the heels of more than 40 awards for stewardshipand safety Peabody has earned in the past two years.U.S. Office of Surface Mining Director Brent Wahlquistpraised Peabody employees for best practices thatachieve both flourishing farmland and a strongrelationship with area neighbors: “The accomplishmentsat Miller Creek Mine – Sugar Ridge, serve as an enduringreminder of successful coal mine reclamation alongwith the importance of early community involvementin planning operations.”Located five miles north of Clay City, Ind., SugarRidge produced 3.7 million tons of coal over a six-yearperiod. Creating 84 percent prime farmland over the samesurface area required intense attention to soil quality.enhance community relationships through a giving program.Enter the beauty queen: Kayenta selected the MissNavajo Nation Program to receive the funds. For more than50 years, the pageant has crowned young Navajo women,who are charged with preserving Navajo traditions andacting as goodwill ambassadors for the nation.Jonathea Tso, Miss Navajo Nation for 2007 and 2008, wasa guest at a luncheon hosted by the mine this summer andaccepted the check for $1,000. The Dartmouth graduatePeabody Achieves 3Q Safety RecordPeabody Energy has achieved the safest fourconsecutive quarters in the company’s 125-year history,reporting an overall U.S. safety rate of 1.70 for the year andoutperforming the industry average by over 60 percent, basedon the latest preliminary industry data. Our Australia minesmarked a 26 percent improvement over the prior year, andFarmersburg, Ind., Peabody Energy Midwest, also achieveda perfect annual safety record.Employees’ record-breaking safety results build on pastprogress. Consider the two Peabody President’s awardwinners from the previous year: the Viking and Franciscounderground mines in Indiana. The Viking surface operationcompleted 2007 with zero reportable incidents. By the firstquarter of 2008, the mine capped more than four consecutiveyears and 1.3 million hours without a single reportable incident.Employees at the Francisco Underground Mine achieved thebest underground safety record in Peabody’s history, literallyhalving their incident rate for three consecutive years. Thanksto past President’s Award winners and the operationsearning that distinction today, Peabody continues to approachthe company’s ultimate goal of zero incidents.That’s why, before mining began, the team considered howto optimize soil handling with available equipment.Soil sampling revealed that, in addition to the one footof rich topsoil, the entire top 10 feet, or two layers, of subsoilwas desirable for planting. So, the team took the extra stepof adding two layers of subsoil to graded overburden.“With a little additional planning on the front end and atminimal extra cost, we were able to produce a benefit wellbeyond what was required by regulation,” explains Ken Rogers,Reclamation Manager. In fact, the Indiana Society of Miningand Reclamation cited Sugar Ridge’s success when honoringKen earlier this year for innovative practices in stewardship.Miller Creek Mine Manager Matt Ubelhor believesthat attention to such details as proper soil replacementand handling techniques resulted in a highly successfulreclamation effort. “We used low ground-pressure dozerswith wider tracks to spread the topsoil and limited use ofvehicles with tires over the area,” he says. “Those types ofadjustments add up to success.”He cites crop yields as evidence of the team’seffective soil handling. Despite a drought in 2007 andnoted that she had many ties to the Kayenta community and thather mother was a former employee of the Black Mesa Mine.“The Safety Innovation program is another way we canencourage out-of-the-box thinking about safety,” says BillBeaver, Southwest Operations Director of Safety and thearchitect of the competition. “It makes the mine site a saferplace to work and our community a better place to live.”The safety teams at Peabody’s Francisco Underground Mine(top) and Viking Mine (bottom) proudly display their President’sAward trophies alongside President and Chief CommercialOfficer Rick Navarre and other executives. They join hundredsof employees who every day bring Peabody closer to ourultimate vision of zero incidents.an extremely wet spring and early summer in 2008, theSugar Ridge reclamation project is on track to meet orover-comply with pre-mining target yields in three outof five years to achieve a timely bond release.The team’s outreach to local residents also yieldedresults. As a member of the Indiana Prime Farmland Team,Miller Creek and other mines in Peabody’s MidwestGroup have hosted field days to inform and educateneighboring local farmers, regulators, university researchersand equipment manufacturers about mining and reclamationand Peabody’s mission “to return the land to a conditionequal to or better than we found it.”Neighboring surface landowners also have participatedin reclamation planning in visible ways, working cooperativelyto devise five water impoundments ranging from eightto 26 acres that will be used for livestock watering, fishingand recreation.“People have built docks and put pontoon boats andsailboats in the water,” says Ken. “Working together, thiscommunity has created a legacy of stewardship that will lastfor generations.”Surface Superintendent Guy Mattingly (left) and EngineeringManager Lonnie Nelson (right) are surrounded by nearly 1,100acres of highly productive reclaimed farmland at Viking – SugarRidge in South Central Indiana. The land has produced corn,soybean, wheat and alfalfa yields that have equaled orsurpassed pre-mining harvests.Conveyor Fourth Quarter 2008|3

12 5 years ofinnvFor 125 years, hundreds of Peabody employees have challenged conventional wisdomand devised better ways to do business. In ways large and small, they’ve reshaped theway coal is mined, and in the process transformed Peabody into one of the most innovativecompanies in the industry. Here are some of their stories:Keeping Machines on the MendLong before mining machinery was equipped withself-diagnosing computers, Peabody’s Illinoisoperations developed a predictive maintenanceprogram in 1983 that prevented breakdowns andextended the life of the company’s machinery. Theinnovative initiative enlisted senior project engineersto carefully monitor machine vibration levels todetect impending breakdowns before they occurred.The process allowed repairs to be scheduled moreefficiently with less disruption to the productioncycle. Modeled after initiatives at the NationalAeronautics and Space Administration and theU.S. Navy, it was the only contemporary programof its kind in the coal industry.Ripping into ReclamationAny farm hand knows loose soil leads to better cropyields. So, when Peabody reclamationists in Illinoisand Kentucky set out to reclaim prime farmland, theylooked for ways to loosen earth that had been heavilycompacted by mining activity. They needed a tillingdevice that was economical to operate, convenientto use and adjustable to depths of almost three feet.Finding nothing that met these criteria, the teamdesigned the Vibrating Deep Ripper. The intimidatingname is apt. As the ripper is pulled behind a farmtractor, two large “teeth,” each containing threesmall hydraulic motors, penetrate the ground andloosen the soil. Patented in 1989, the device hasbeen ripping its way to better farming results acrossthe United States.Going the Extra Air MileAfter a damaged dragline boom temporarily idled itsMoura Mine, Peabody devised an ingenious approachto getting the Australian operation back to work in1971. After crunching some numbers, Peabody’splanners concluded that disassembling a boom inthe United States and shipping it more than halfwayaround the world by air was less costly than allowingthe mine to wait months while a replacement boomwas constructed in Australia. Sure, the boom couldbe recreated for about $375,000, while the airfreightalone for a boom would run about $390,000. Still,every day the machine was out of commissionrepresented thousands of tons of unsold coal.The result was one of the largest and longestairlifts of fabricated steel ever organized. Sevenchartered American Airlines and Pan AmericanAirlines flights were converted to carry 37-foot steelbeams and associated parts from St. Louis, Mo.,to Queensland, Australia, where the boom wassuccessfully reassembled.ApprovedInviting New IdeasMost large businesses can claim some patents,but Peabody has racked up 32 since 1976.Virtually all involve an individual or group ofemployees seeking a better, faster or moreeconomical way of working. Several of the earliestpatents were for processes for producing chemicalcoke, low-temperature coal tars and coal-basedpaving binders and have since been licensed toother companies. Other bright ideas had practicalapplications at mine sites, including a lockingapparatus for a trolley-type electrical connector,a tool for installing cutting blades on graders, adevice used to move electrically powered miningequipment, a conveyor belt cleaner and a noisesuppressing intake for ventilation fans. And everypatent certificate testifies to a culture of innovationthat continues to keep Peabody strong in the21st Century.4|Conveyor Fourth Quarter 2008

ationat peabodyThe sun rises at Peabody’s North Antelope Rochelle Mine inWyoming. Every day is a new opportunity to innovate.Becoming a Power Trading PioneerThere were high-fives all around Peabody headquartersin 1997 after the successful acquisition ofCitizens Power, the nation’s first licensed powermarketer and a pioneer in the complex world ofelectricity trading. Citizens brought strength andexpertise in electricity purchase agreements, riskmanagement and electricity asset restructuring toPeabody. Today, Peabody’s expanded internationaltrading platform offers customers a one-stop sales,trading and transportation network that worksaround the clock, around the world. The companycurrently trades coal on five continents throughoffices in the United States, the United Kingdomand China.PIC-king a Better WayAnyone faced with an impenetrable instructionmanual can sympathize with Maintenance InstructorVern Evans and Maintenance Supervisor GeorgeHeidinger. The pair were perplexed by the controlpanels on new shuttle cars delivered to the Marissa,Ill., underground mine where they worked. Thecombination of buttons and gears were simply toocomplex to troubleshoot. So they designed asimpler system using off-the-shelf parts. Dubbedthe Peabody In-house Controller – or PIC – thestreamlined panels operated like a dream andearned a patent in 1989.Bettering the Roof BoltFinding inventive solutions was something of aspecialty for Guy McDowell, a roof bolt specialistat Peabody’s Camp Complex in Kentucky. Perhapsthat’s why Guy was charged with identifying thebest bolt to hold a shale roof stable. When he couldnot find a bolt manufacturer that fit the bill, heinvented a new bolt and nut, both with left-handedthreads. The bottom of Guy’s bolt was “swedged”or bent to prevent the large nut from shifting.In addition, he devised a solid support system tofix his bolts in place. After each hole was drilled ina mine roof, fast- and slower-setting resin packetswere forced into the hole. As the bolt spun to theend, the packets were broken, releasing resin toharden around the bolt. Known in the industry asthe McDowell bolt, the invention has receivedseveral patents.Riding the Rails to Greater EfficiencyWith a roar, the unit train shudders to life, bearinghundreds of tons of coal across miles of track withgathering speed. Every day, this scene is repeatedat mines around the globe, serving as a clatteringtribute to another visionary concept from Peabody.As the company’s President and Chief ExecutiveOfficer, Merl C. Kelce determined that a train carrying100 cars each with a minimum capacity of 100 tonscould save time and money by moving exclusivelybetween a mine and its customer. The result wasthe first unit train, one of the most transformativeideas in mining during the late 20th Century.Because Merl’s unit trains did not idle in rail yardsto be unloaded like typical trains, they dramaticallyincreased the speed and efficiency of coal deliveries.The solution enabled Peabody to keep pace withsoaring coal demand during and inspired imitatorsthroughout the industry.Conveyor Fourth Quarter 2008|5

Queensland Project Highlights Peabody’s Commitment to Clean Energyhis is a momentous occasion... Projects such as“Tthe one we are celebrating today illustrate that weas a nation have the capacity, in partnership with the privatesector, to actually put in place [coal-based] solutions that aregood for the economy, good for the environment and... goodfor the global community.”Martin Ferguson, Australian Federal Minister forResources and Energy, spoke these powerful words at aceremony in Biloela, Queensland, to celebrate the start ofconstruction on the Callide A Oxyfuel demonstration project,the world’s first pilot of Oxyfuel clean coal technology. As afounding member of the Australian COAL21 Fund, Peabodyis providing critical financial support to the project, whichwill ultimately reduce emissions by up to 90 percent.Oxyfuel technology can be retrofitted to existingequipment, enabling coal-fueled boilers to burn coal in amixture of oxygen and re-circulated flue gases, rather thanair, and creating a concentrated stream of carbon dioxidethat can be more easily captured, transported and eventuallystored in nearby geological formations.The COAL21 Fund made the largest single contributionto the Oxyfuel initiative, donating A$68 million. The Australianand Queensland governments also committed A$50 millionPictured from left to right while touring the Callide A turbine floorare Geoff Wilson, Queensland Minister for Mines and Energy,Yoshifumi Matsumura, Japan’s Vice Minister of Economy,Trade and Industry and Martin Ferguson, Australian Ministerfor Resources and Energy.Oxyfuel-enabled boilers burn coal in a mix of oxygen and re-circulated flue gasses, producing energy while providing a concentrated streamof carbon dioxide that can be more easily captured and stored.and A$35 million, respectively. The Callide A project will begingenerating electricity using Oxyfuel technology in 2011.Julian Thornton, Managing Director of Peabody EnergyAustralia, believes the Oxyfuel project will have far-reachingbenefits: “The Callide A demonstration will prove thesuitability of this technology for both existing and newcoal-fueled power stations around the world. It’s just one ofmany initiatives we are pursuing through the COAL21 Fundto commercialize advanced clean coal technologies andaddress climate change.”During the coming decade, the COAL21 Fund will spendapproximately A$1 billion to support a series of carboncapture and storage pilot projects with the objective ofdeveloping a suite of low emissions technologies forcommercial deployment by 2017. Peabody is the globalleader in clean coal solutions, advancing signature projectsaround the world to develop near-zero emission technologies,“It’s just one of many initiativeswe are pursuing through theCOAL21 Fund to commercializeadvanced clean coal technologiesand address climate change.”Julian ThorntonManaging Director of Peabody Energy Australiafrom GreenGen in China to FutureGen in the United States tonumerous initiatives in Australia.Says Julian: “Peabody shares Australians’ focus on drivingcontinuous environmental improvement and carbon managementon a global scale. Together we can meet the needs of anenergy-short world.”P3: Achieving Peabody Peak PerformanceSourcing COE Uses Big Thinking to Achieve Big Savingsake your time, and think big.”“T That’s the approach Peabody’s StrategicCommodities team takes to tackle cost reduction projects,according to Strategic Commodities Director Jason Ryan.As members of the P3 Sourcing Center of Excellence(COE), the commodities team works with operationscounterparts as part of a comprehensive nationwide processto analyze spending and achieve savings on purchasesthat range from roof bolts to diesel fuel. Among the moreimpressive results of the effort? More than $2 million inlower diesel fuel costs across the company this year alone.“Results are directly correlated to input. The moreresources you have, the more thorough an analysis youcan do,” Jason adds. “The Sourcing COE brings togetherthe people and processes it takes to go deeper into thenumbers. By broadening our bandwidth, we identify moresupply options in less time.”The Sourcing COE collaborates with numerous teamsthroughout Peabody to deliver the lowest total cost and highestvalue from the goods and services Peabody purchases fromthird-party suppliers. The company’s top operating expenseis fuel. When several agreements came up for renewal, thetiming was right for an all-out review of options for sourcingdiesel in all of its U.S. regions.The COE went far beyond anything attempted in recentmemory, performing exhaustive evaluations and developingcomplex supply scenarios that could be offered to prospectivevendors. Employees also met non-traditional diesel producerswith refineries outside Peabody’s normal supply regions.In an unusual move, the team even approached theBurlington Northern Santa Fe and the Union Pacific railroads,exploring the feasibility of railing fuel from Alberta, Canada,to Wyoming and from Louisiana to Indiana.“We learned the ‘what ifs,’” explains Chris Hagedorn,Supply Chain Management Vice President. “Sourcing isabout more than being a tough negotiator. It’s abouthaving the knowledge to negotiate effectively... comingto the table prepared with the technical acumen and thecompetitive scenarios that result in the best deal.”Peabody’s Sourcing COE has saved more than $2 millionin diesel purchases annually. The team is working on multipleinitiatives to deliver more bang for Peabody’s buck.Every penny counts. At today’s prices, 85 percent of thecost of a gallon of diesel is the cost of crude oil. Only a fractionof the remaining 15 percent is negotiable. So, each potentialsupplier was encouraged to evaluate even long shot supplyscenarios. Persistence paid off, deepening Peabody’s wellof potential vendors. In the end, the team implemented anumber of contract structure changes in each region andintroduced a new vendor in the Powder River Basin to servethe North Antelope Rochelle Mine.Engagement between Supply Chain and Operationscontinues to serve an essential role in helping Peabody delivermore bang for the buck. Each COE project features an advisoryteam of mine representatives from every region who are inregular communication by phone and in person with the COEteam. As a result, people from many areas of the organizationweigh the costs and benefits of purchasing proposals. And bydocumenting recommendations, vendor histories and qualityrequirements as a team, the COE is establishing valuablebenchmarks for future negotiations.Admittedly, the COE team says its fuel initiative hasfar to go. Just in the area of diesel, additional analysesand negotiations are planned into 2009. And, as the teamcompletes each deal, another effort begins downstreamto monitor product performance and cost.“We’re pleased with the changes we’ve been able tomake,” adds Matt Bocklage, the P3 Sourcing COE team FuelProject Leader. “We talked to more than the usual suspects.We found savings in fractions of pennies. And we are deliveringsecurity of supply. We are getting the deal done.”6|Conveyor Fourth Quarter 2008

PEABODY’SHOMETOWNHEROESLike Mother,Like DaughterAt Peabody locations around the world, thousands ofemployees give back to their communities, demonstrating thespirit of Peabody’s mission to “power economic prosperityand result in a better quality of life.” In this issue of Conveyor,we recognize a remarkable mother and daughter who gavethe gift of life. As Conveyor celebrates Peabody’s “HometownHeroes,” we encourage you to share your stories. Tips can beemailed to Conveyor@PeabodyEnergy.com.Thanks to the ultimate gift – the gift of life – the 2008holiday season will always have a special meaning forCynthia Trull. After Cynthia’s kidneys failed, she was barelysurviving. That’s when her sister, Twentymile AdministrativeAssistant Jennifer Holmlund, offered to donate a kidney.It wasn’t the first time a Peabody employee had sacrificedto save Cynthia’s life. Sixteen years ago, when she firstexperienced kidney failure during a pregnancy, Cynthia’smother, Twentymile Information Technology Manager PhyllisMoore, became the first generation of the family to give akidney, transforming a white-knuckle medical emergency intoa lesson in love.Because of her experience, Phyllis believes Jennifer’sdecision to donate came naturally: “She’s always beenthe protective big sister. She’s always looked out for theyounger kids.”After qualifying as a suitable donor, months ofpreparation followed. Jennifer underwent extensivemedical testing, and doctors insisted that she shapeup for the transplant by losing weight. So Jenniferput herself on a health regimen that included walking“She’s always been theprotective big sister.She’s always looked out forthe younger kids.”Phyllis MooreTwentymile Information Technology Managertwo to three miles a day and visiting the gymwhen the weather grew cold.“I absolutely hate the gym,” Jenniferconfesses. By persevering, she shed 47extra pounds.Few of Jennifer’s coworkers at Twentymilewere aware of her plans until recently, saysTwentymile Human Resources AssociateBonnie Hampton: “She came in to work everyday and was just as wonderful as ever. Shewas quiet about it right up until the surgery.”Jennifer did confide her intention toher boss, Operations Group Executive WaltScheller. She describes his attitude as“just overly caring.”Walt, in turn, was impressed withJennifer’s “selfless act of kindness.”“It’s simply Peabody’s way to always dowhatever you can to help families,” he adds.As the date for her surgery approachedin late June, Jennifer informed her coworkersabout her plans. The support from theTwentymile team was overwhelming, shesays. “I can’t say enough about how wonderfulthey were.”During the summer, the sisters participated in oneof the more than 14,000 kidney transplants performedevery year. As in most of these cases, their operations –at the same time, in the same hospital – were freeof complications. Several employees pitched into perform Jennifer’s work until her return from thetransplant procedure.“It’s not minor surgery,” concedes Jennifer, whoserecovery was prolonged.She says now that she regrets only the few poundsshe regained during her post-surgery inactivity. As for hermissing kidney, “I can’t tell it’s gone,” she says.Though she has needed some follow-up procedures,Cynthia says the transplant has left her “feeling likebeing reborn.”Cynthia Trull (above) has receivedthe gift of life twice fromTwentymile Mine employeesJennifer Holmlund (right) andPhyllis Moore (not pictured).“It’s simply Peabody’s wayto always do whatever youcan to help families.”Walt SchellerOperations Group ExecutiveEnergy replenished, she’s joined a couple of Bible studygroups, stopped using handicapped parking and returned toschool to become a dental assistant.Cynthia is enjoying her new lease on life. After yearsof being unable to travel long distances from her homein Boise, Idaho, Cynthia made plans to join her mother, sistersand their 94-year-old maternal grandmother in Colorado forChristmas. It must have been a holiday to remember.Peabody Pursues Gasification Project in Chinacontinued from page 1The mine would supply the adjacent coal gasification plant,which could produce up to 1.3 million tons annually of methanolor equivalent fuel, as well as other chemicals. Jitong is preparedto help transport coal and coal-derived chemicals and fuelsfrom the plant through their railways and the Chinese nationalrail system to customers throughout China and beyond.For Mr. Su Nan, Vice Chairman of the Jitong board ofdirectors, each new ribbon of rail represents an investmentin China’s energy future: “Eastern Inner Mongolia hasone-fifth the probable reserves in Inner Mongolia. It is oneof the large-scale bases in the 11th Five-Year Plan of ChinaCoal Industry Development,” says Mr. Su. “We will putall our efforts into our partnership with Peabody... andmake full use of our railway resources while being alignedwith the Chinese government policies.”Inner Mongolia rides along the curving northernboundary of China, neighboring the nation of Mongolia, theRussian border and the other provinces of China. One ofthe largest land masses within China, the region is home to20 million people, a rich mixture of customs and languagesand approximately 230 billion short tons of coal.Developing such domestic coal resources and reducingenergy imports has become a strategic priority for China’sgovernment. The nation is home to the world’s largestand fastest-growing coal market. The Chinese powerapproximately 70 percent of their electricity with coal,and in the past two years alone, China has added theequivalent of half of U.S. coal-fueled generating capacity.At the same time, China is also leading efforts to developclean coal technologies. For example, Peabody is the onlynon-Chinese partner in GreenGen, the nation’s centerpiececlimate initiative to advance near-zero emissions coalfueledgeneration with hydrogen production and carboncapture and storage.“With coal seams ranging from 25 to 175 meters inheight, China’s Eastern Inner Mongolia is an ideal spotfor a large-scale surface mining project,” says Tayeb Tahir,President of Peabody China.“This partnership comes just as China pursues energyinfrastructure projects to benefit more of its people. Workingtogether, we can build commercial clean coal solutions thatwill be available, deployable and affordable in China andthroughout the world.”The Executive Vice Chairman of the People’s Governmentof Inner Mongolia, Mr. Ren Yaping, discusses the manyparallels between Wyoming’s Powder River Basin and hiscoal-rich region of Inner Mongolia with Peabody EnergyChief Executive Officer Greg Boyce.Conveyor Fourth Quarter 2008|7

watts upBurton Mine Turns Pink to FightBreast CancerThe Burton Mine’s mammoth Caterpillar 789C nowshines a lovely shade of pale pink thanks to the mine’sPink Truck Campaign to fight breast cancer, the leadingcause of cancer-related death in Australian women.Located in Queensland’s northern Bowen Basin,Burton uses truck-and-shovel and terrace miningtechniques to annually produce up to 3 million tons ofcoking coal. For a full year, every load the pink truckhauls will help the mine reach its goal of raising about$30,000 for breast cancer research.Peabody EnergyAustralia has joinedforces with Theiss,the mine’s contractoperator, to supportthe mine’scampaign. Theissis paying A$1.00for every cubic meter the pink truck shifts from October2008 to October 2009. And Peabody is supporting a varietyof employee-driven activities to raise additional funds, fromauctions and community site visits to a special family day.Peabody is matching 50 cents for every Australiandollar employees raise throughout the year. The campaignwill end on Pink Ribbon Day in October 2009, when Burtonwill present a donation to the Australian National BreastCancer Foundation.“This campaign demonstrates our commitment to thecare of women and their families,” says Ian McDonnell,Burton’s acting General Manager. “It is our hope that thePink Truck Campaign will help reinforce the important roleof women in mining and, most importantly, help fight adisease that affects so many people in our community.”Peabody’s Former HeadquartersBuilding Becomes U.S. LandmarkPeabody Energy’s former headquarters has been listedon the National Register of Historic Places. Constructedin 1957, the three-story Art Deco building at 301 NorthMemorial Drive in St. Louis, Mo., welcomed generationsof employees before the company relocated to its currentglobal headquarters in 1992. The Register is theUnited States’official list of culturalresources worthyof preservation andincludes some ofthe most significantlocations inAmerican history.Peabody’s 125 Year HistoryHeads HomeA commemorative history has been created and mailedto all employees to mark Peabody’s 125th anniversary.The 144-page hardbound volume celebrates the vision,dedication and drive of generations of employees around theworld. Today, Peabody is the world’s largest coal companyand continues to set recordsin safety, environmentalstewardship and financialperformance thanks to thehard work of a world-classworkforce. Peabody isproud to be 125 yearsstrong... and the companylooks forward to a brightfuture over the next125 years.The Energy Revolution Will BeBlogged…Clean coal technology is key to driving economic growth,environmental solutions and energy security. That’s themessage behind CoalCanDoThat.com, a new website andblog – or web log – dedicated to encouraging an informedconversation about clean coal. Anyone can join a communityof top experts in energy and economics who post thoughtfulcommentary, get up to speed on the latest energy headlinesand even listen to downloadable podcasts, or audiointerviews, about the vital choices ahead. That’s why72 percent of America’s opinion leaders support the useof coal, according to a recent poll from RT Strategies andAmerica Public.us. Visit CoalCanDoThat.com, and makeyour voice heard.Pillars of Leadership Provide the Path for “Next Gen” Leaderseadership starts with each one of us. As an“L employee of Peabody, you are your own Centerof Excellence.You are accountable for our success and foryour own personal growth. You can help sustain and growour competitive advantage.”Chairman and Chief Executive Officer Greg Boyce offeredthis advice to employees representing every region andthe corporate office at Peabody’s first Next GenerationLeaders Conference. The three-day gathering in St. Louiswas organized to reinforce a model for success before anaudience of young leaders in the Operations and ManagementAssociate programs. The event was so well-receivedthat organizers plan an encore in 2009.Throughout the conference, a coterie of topexecutives emphasized Peabody’s four leadership pillars:Operations and Management Associates listen raptly asExecutive Vice President and Chief Operating Officer Eric Fordprovides an overview of the company at the Next GenerationLeaders Conference. Eric joined Peabody Chief Executive OfficerGreg Boyce and other leading executives in providing guidenceto Peabody’s newest leaders.inspiration, innovation, collaboration and execution.Effective leaders must inspire employees to perform attheir highest level; innovate through new processes,technologies and markets; collaborate in teams; and executeto achieve results. Numerous organized activities allowedparticipants to put these ideals into action.“As we strive to build a workforce that can fuel oursuccess into the 21st Century, it is critical that we provideopportunities for this next generation to feel connectedto Peabody’s culture and invested in our mission, visionand values,” says event organizer and Director of TalentManagement Peggy Scott. “This conference is just oneamong many initiatives we are working on to provideopportunities for professional growth for our leadershipin the future.”colorful commentaryReaders share their comments about Conveyor’songoing coverage of safety, performance, stewardshipand growth. Conveyor appreciates your feedback andlooks forward to more of your input.Eugene MerrimanBickwell, Ind.The center spread “125 Years of Thinking Big” was veryinteresting and informative. The pictures from the past tothe present were great.Amarjargal SharkhuuGillette, Wyo.The article on the science of carbon storage in Kentuckywas the most interesting of this [past] issue.Merle HendricksCamp Verde, Ariz.The Conveyor is so well-written and informative we boughtPeabody stock. Good points: It has a good picture to printratio, good graphics and photos, attention to safety, explainsgreen solutions and highlights global growth. The historicalfoldout is beautiful and informative. Having worked at theKayenta Mine [in Arizona], I loved the article on the Navajoand Hopi scholarships. I liked the emphasis on good health.Bill StanleyRosiclare, Ill.Putting faces of employees with your articles is a great wayof letting people know it takes all of us as a team to get coalto customers. Conveyor did a great job on this.Gary HarnackGlenrock, Wyo.I would like to hear about the changes and additions that aregoing to be made. [Rich Carr’s Crew 4] set records in theamount of coal taken out and the amounts of coal hauled outon trains.Jacobey K. DavisRosiclare, Ill.I enjoyed the article “125 Years of Thinking Big.” Themachines have come a long way from back in the day, butthere is more of a demand for coal, so you have no choicebut to make it more cost-efficient.8|Conveyor Fourth Quarter 2008