Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (November 2011)
30 slides from Peabody Energy's investor presentation, Nov 30, 2011
Slide 1: Investor Presentation November 2011
Investor Presentation November 2011
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information Some of the following information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, and is intended to come within the safe-harbor protection
Slide 3: Peabody Energy: Expanding Global Reach to Serve Coal's Supercycle
Peabody Energy: Expanding Global Reach to Serve Coal's Supercycle Unmatched international growth pipeline with major Australian and Asia projects Largest position in fastest growing U.S. regions Significant upside with earnings growth and multiple expansion 3
Slide 4: Peabody Platform Delivers Superior Margins in All Markets
Peabody Platform Delivers Superior Margins in All Markets Peabody Gross Margins 2009 2010 YTD 2011 Well positioned in U.S. with highly-contracted production; increasing global volumes to serve expanding Asia-Pacific economies Leading positions in low-cost U.S. regions of ILB and PRB Australia expans
Slide 5: Peabody's Earnings Now Balanced with Australia
Peabody's Earnings Now Balanced with Australia Peabody continues transformation to global coal company Multiple global initiatives increase earnings leverage to stronger international markets 2003 U.S. > 99% 2007 U.S. 83% Australia 17% YTD 2011 U.S. 51% Australia 49% Percentages represent share of M
Slide 6: Global Coal Markets
—! JOnY anit Global Coal Markets ENERGIZING THE WORLD 2 ONE BTU:
Slide 7: World in Early Stages of Supercycle for Coal
World in Early Stages of Supercycle for Coal Asia Represents 90% of 4.4 Billion Tonne Coal Demand Growth Coal Demand Growth 2009 - 2035 (Tonnes in Millions): +50 +315 +1,080 +100 +2,220 +710 Coal Demand Growth 2009 - 2035 (Tonnes in Millions) U.S. growth presented in short tons. Source: World Energy
Slide 8: Thermal Coal Market: Global Coal-Fueled Generation Growing Dramatically
Thermal Coal Market: Global Coal-Fueled Generation Growing Dramatically New Coal-Fueled Generation 2011 - 2020 (GW) China 450 India 125 Other Asia 57 Others 26 Europe 25 USA 8 ~700 GW of new/ announced generation requires more than 2 billion tonnes of new annual thermal coal supply over the next dec
Slide 9: Metallurgical Coal Market: Use Expected to Rise >500 Million Tonnes by 2020
Metallurgical Coal Market: Use Expected to Rise >500 Million Tonnes by 2020 Approximately 50 Million Tonnes of New Supply Required Each Year Global Met Coal Demand (Tonnes in Millions) 2010 920 2015 1,185 2020 1,440 Growth 2015 ~30% 2020 ~60% CAGR 2015 ~5% 2020 ~5% Australia Expected to Supply Major
Slide 10: India, Brazil and China Upside: ~1.2 Billion Tonnes of Met Coal Growth
India, Brazil and China Upside: ~1.2 Billion Tonnes of Met Coal Growth Major Increases in Steel Intensity to Reach Maturity Brazil and India driving demand through increased urbanization and higher steel consumption Both countries rely on imports for majority of met coal needs India's Ministry of St
Slide 11: U.S. Market: PRB and Illinois Basin Expected to Grow as Appalachia Declines
U.S. Market: PRB and Illinois Basin Expected to Grow as Appalachia Declines U.S. Demand Growth Moderate, Significant Shifts in Key Basins CAPP challenged by permitting, geology, safety and significant increases in cost structure PRB and ILB demand growing from new plants, increasing exports and fuel
Slide 12: Near-Term Global Coal Fundamentals Favor Peabody/Macarthur Portfolio
Near-Term Global Coal Fundamentals Favor Peabody/Macarthur Portfolio Largest YTD Inventory Drawdowns Since 1993 New Air Rules Likely to Lift Value of Ultra-Low Sulfur PRB Coal Europe Raises Coal Use on Lower Nuclear Burn and High Gas Prices India Thermal Coal Imports Up 40% YTD Global Steel Producti
Slide 13: Peabody Targeting Multiple Growth Projects
Peabody Targeting Multiple Growth Projects Energizing the world on BTU at a time
Slide 14: Peabody Progressing Toward "Asia 100" Goal
Peabody Progressing Toward “Asia 100” Goal Australia exports China JVs Tavan Tolgoi Indonesia supplies PRB to Asia 14
Slide 15: Australia Platform Expanding Through Organic Growth and Macarthur Acquisition
Australia Platform Expanding Through Organic Growth and Macarthur Acquisition Expansions are in process at Burton, Wilpinjong, Metropolitan and other operations Expected Australia Volumes 2010 Domestic Thermal 6 Seaborne Thermal 11 Met 10 Total 27 2011 Domestic Thermal 6.5 Seaborne Thermal 12-13 Met
Slide 16: Peabody Delivering on Organic Growth Projects
Peabody Delivering on Organic Growth Projects Planned Expansions (Tons in Millions) Mine Additional MTPY First Coal Burton 1 - 2 HCC Late 2012 North Goonyella 1 - 2 HQHCC 2014 Millennium 1 - 2 SH/PCI Late 2011 Wilpinjong 2 - 3 T Q4 2011 Wambo ~3 T 2012 - 2013 Metropolitan 1 HCC Late 2013 Met Coal Mi
Slide 17: Overview of Acquisition of Macarthur Coal
Overview of Acquisition of Macarthur Coal (ASX: MCC) Transaction Description Purchase of 100% of the shares of Macarthur Coal Transaction Structure Takeover under Australian securities law Equity Purchase Price A$16.25 per share = A$4.9 billion; US$5.1 billion Peabody Share Up to 100% (ArcelorMittal
Slide 18: Acquisition Delivers Value Via Increased Global Access, Earnings Expansion
Acquisition Delivers Value Via Increased Global Access, Earnings Expansion Macarthur acquisition expands Peabody's presence with quality met product in high-growth region Provides growth opportunities, large reserve base and significant potential synergies Continues global buildout and earnings cont
Slide 19: PCI in Growing Demand from Global Steel Producers
PCI in Growing Demand from Global Steel Producers Global PCI Market Growing at 5% CAGR Pulverized Coal Injection (PCI) a replacement for coke made from met coal Steelmakers expanding use of PCI to reduce costs Majority of high quality, low-vol PCI supply from Australia Low-vol PCI typically priced a
Slide 20: Macarthur: Active Production Base With Major Growth Pipeline
Macarthur: Active Production Base With Major Growth Pipeline Queensland Port Abbott Point Dalrymple Bay Gladstone Wiggins Island Peabody Met Coal Mine Burton North Goonyella Eaglefield Millennium Macarthur Mine Coppabella Moorvale Macarthur Development Olive Downs Codrilla Vermont East Middlemount P
Slide 21: Transaction Significantly Strengthens Peabody's Position in Australia
Transaction Significantly Strengthens Peabody's Position in Australia Peabody Australia pro forma 2010 production of 32 million tons with Macarthur Pro forma production of 45 - 50 million tons by 2014-15 given combined growth platforms Australian Production Thermal Met Tons in Millions Xstrata 57 BH
Slide 22: Macarthur Acquisition Fully Financed With Cash and Debt
Macarthur Acquisition Fully Financed With Cash and Debt Financing in place: $1.0 billion in cash $1.0 billion new term loan $3.1 billion new senior notes Aligns with Peabody's financial strategy: Maintains leverage in comfortable range Ensures adequate liquidity to run business Takes advantage of hi
Slide 23: Macarthur Acquisition: Next Steps
Macarthur Acquisition: Next Steps Complete acquisition and implement transition plan Achieve synergies Operational performance Supply chain efficiencies Marketing/blending potential Improve mining plan and equipment efficiency at Coppabella Mine in coming months Advance growth projects to build prod
Slide 24: Asia Initiatives: Pursuing Development of One of China's Largest Mines
Asia Initiatives: Pursuing Development of One of China's Largest Mines Advancing 50 million ton-per-year thermal project in Xinjiang Province Xinjiang likely to be world's fastest growing coal region 100 million tonnes of production in 2010 May reach 1 billion tonnes per year by ~2025 Government sup
Slide 25: Advancing Multiple Projects to Serve Growing Demand Within China
Advancing Multiple Projects to Serve Growing Demand Within China Yankuang Wucaiwan Mine Pursuing development of 20 million ton-per-year surface mine in Xinjiang Would include 2 GW supercritical power plant and SNG facility Lu'an Shaxi Mine Pursuing development of 15 million ton-per-year surface mine
Slide 26: Peabody Leveraging Leading PRB and Illinois Basin Presence
Peabody Leveraging Leading PRB and Illinois Basin Presence Peabody's North Antelope Rochelle Mine produces more than 100 million tons per year of ultra-low sulfur coal with a sulfur content 40% below the benchmark PRB product - a valuable feature in a market with rising SO2 allowance prices Illinois
Slide 27: Advancing Multiple Projects in U.S.
Advancing Multiple Projects in U.S. Bear Run Growing to ~8 MT in 2012 Gateway North Expanding ~40% to 4.5 MT by 2014 Powder River Basin Adding ultra-class trucks; Modest volume growth in 2011 Accessing NARM North reserves and loadout facilities for blending opportunities, margin enhancements and exp
Slide 28: Peabody's Unmatched Growth Pipeline
Peabody's Unmatched Growth Pipeline 2011 2012 2013 2014 2015 Beyond Australia Millennium 1-2 MTPY SHCC/PCI Burton 1 - 2 MTPY HCC Metropolitan 1 MTPY HCC N. Goonyella LTCC 1 - 2 MTPY HQHCC Wilpinjong 2 - 3 MTPY Thermal Wambo ~3 MTPY Thermal/PCI Goonyella Lower 3-4 MTPY HQHCC Macarthur Macarthur Takeo
Slide 29: Peabody Positioned for Significant Growth and Value Creation
Peabody Positioned for Significant Growth and Value Creation Industry Leading Reserves and Production Base Major Cash Flow Generation and Strong Balance Sheet Expanding in Fastest Growing Global Markets Significant Organic Growth Capability Addition of Macarthur Coal Multiple Expansion to Return to
Slide 30: Investor Presentation November 2011
Investor Presentation November 2011
Peabody Energy — Investor Presentation (November 2011) on 6ix