Peabody Energy adds more coal assets in the US, China

Peabody Energy, the world's largest private-sector coal company today said that it has won control of 220 million tons of low sulfur coal reserves in the Powder River Basin of Wyoming through an auction.

The winning bid for the reserves was $0.95 per mineable ton, made through a sealed bid auction process. The company intends to add the "Belle Ayr North" reserve area to its reserves in the Caballo Mine, which had 2010 sales of 23.5 million tons and reserves of 822 million tons.

The St Louis-based coal miner said that the new reserve block would extend the mine life, increase the average Btu of the mine, allow for increased mine production as demand warrants and enable greater mine optimization.

The new reserve lease also strengthens Peabody's position in the largest and most productive coal region in the US. Peabody controls 2.9 billion tons of Powder River Basin coal reserves, which will help it to meet the increasing demand from the fast-growing Asian markets.

Peabody is the world's largest private-sector coal company with 2010 sales of 246 million tons and nearly $7 billion in revenues, Peabody fuels 10 per cent of US power and 2 per cent of worldwide electricity.

In another related development, Peabody has entered into an agreement with China's Xinjiang government for developing 50 million ton-per-year surface coal mine in Xinjiang.