Peabody to maintain momentum in 2012: Boyce

THE world’s largest private sector coal company Peabody Energy achieved its strongest safety performance and best financial results on record in 2011, chairman and chief executive Gregory Boyce told the company’s annual meeting.
Peabody to maintain momentum in 2012: Boyce Peabody to maintain momentum in 2012: Boyce Peabody to maintain momentum in 2012: Boyce Peabody to maintain momentum in 2012: Boyce Peabody to maintain momentum in 2012: Boyce

Courtesy Peabody Energy

Lou Caruana

Boyce said the company would keep the momentum going in 2012 by maintaining its performance across core areas of safety and operations and integrating the company's recent major acquisition into its Australian platform by driving operational improvements and realizing synergies.

It would also advance organic growth projects to serve growing global demand centers.

Peabody was well positioned against the backdrop of favorable long-term supply and demand fundamentals for the global coal industry, he said.

"Coal's demand trends are significant. So, too, are the barriers that constrain coal supplies, including regulations, geology, infrastructure, labor and cost structures," Boyce said. "Against this backdrop, Peabody is very well positioned."

Coal generation continues to grow, especially in the developing economies of China and India. The International Energy Agency recently forecast a robust 65% increase in global coal use by 2035, projecting that coal will surpass oil and natural gas as the largest energy source in the world within the next quarter century.

“Electricity generation is coal's largest end customer base, and China and India lead the global build-out of coal-fueled generation,” Boyce said.

“Over the next five years, we see generation growing by 385 gigawatts. That requires more than 1.3 billion tonnes of additional coal, equivalent to one new 500 megawatt power plant every three days through 2016."

Metallurgical coal production will be needed in the future as steel production also increases in developing economies, Boyce said.

“Within steel, the mix of population growth and increasing per-capita intensity is significant,” he said.

“This has profound implications for metallurgical coal use. In fact, if India, Brazil and China reached a traditional level of maturity in steel intensity relative to more developed countries, global metallurgical coal use would more than double – adding 1.2 billion tonnes of annual consumption."

Peabody reported a new global safety record of 1.92 incidents per 200,000 hours worked in 2011. This reflects a nearly 30% improvement over the company's 2010 performance and the fourth consecutive year of improvement.

"Best practices in safety and operations drive strong results," said Boyce. "Since 2007, our revenues have increased 80 per cent, EBITDA has more than doubled, and operating cash flows are up 260 per cent.”

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