Engineering & Mining Journal

SEP 2017

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NEWS - THIS MONTH IN COAL 28 E&MJ • SEPTEMBER 2017 www.e-mj.com Cloud Peak Hosts EPA Administrator Environmental Protection Agency (EPA) Administrator Scott Pruitt visited the Cloud Peak Energy's headquarters in Broomfield, Colorado, last month to discuss the agen- cy's priorities and steps taken during the first six months of the administration and also to hear how the end of the former President Barack Obama administration's "war on coal" has positively impacted coal jobs and the outlook for the industry. Pruitt's remarks focused on his efforts to return the rule of law to the EPA, to bring "a degree of humility" to gover- nance, and to demonstrate that strong and effective environmental stewardship can be achieved without restricting eco- nomic growth or negating America's ener- gy advantage. "Our country is so rich in resources and so strongly committed to clean air, clean water, and a great environment, that we don't have to make a choice," Pruitt said. "We can have energy-driven growth and strong environmental stewardship." Pruitt also emphasized his commit- ment to restore the EPA's constructive engagement with all stakeholders and to reinstate the cooperative federalism with states that is imbedded in the nation's environmental laws. "Industry and states must be partners in our efforts to ensure strong environmental stewardship and we must enforce the law rather than attempt to influence energy markets," Pruitt said. "This agency will not be picking winners and losers." Cloud Peak Energy CEO Colin Mar- shall shared his thoughts with Pruitt on how the coal industry can help the administrator's vision of domestic energy resources driving responsible economic growth and international influence. "We should burn abundant, low-cost coal in modern High Efficiency Low Emissions (HELE) ultra-super critical coal plants in the U.S. to supply low-cost, reliable elec- tricity to drive domestic economic growth," Marshall said. "The U.S. should simulta- neously develop carbon capture technolo- gy for future deployment to meaningfully reduce CO 2 emissions when that technol- ogy becomes commercially available. In turn, we should use domestic natural gas primarily for heating and to provide indus- trial/chemical feedstock to boost econom- ic growth while exporting surplus natural gas and oil to improve the U.S. balance of trade and drive global energy dominance." Contura Withdraws IPO Contura Energy has withdrawn the ini- tial public offering (IPO) of its shares of common stock due to capital market con- ditions. The company's principal selling stockholders unanimously determined that proceeding with the offering under current market conditions would under- value the company. "Proceeding with an IPO at this time is not the best course for our company or our stockholders," said Kevin Crutchfield, chief executive officer. "We will continue to analyze all strategic options and oppor- tunities to maximize the potential of our young company." As previously disclosed, the company amended its debt agreements to permit an $150 million to be used for the July 13 payment of a $100.7 million extraor- dinary dividend and dividend equivalent and for the potential repurchase of com- pany common stock at any time no later than December 31. The company's board of directors is considering creating a com- mon stock buyback program with the re- maining $49.3 million. Glencore Acquires Interest in Hunter Valley Operations Glencore has signed agreements with Yancoal Australia regarding the acqui- sition of a 49% interest in the Hunter Valley Operations (HVO) coal mine in New South Wales and forming a joint venture (JV) following Yancoal's acquisition of Coal & Allied (C&A) from Rio Tinto. Glencore will pay cash consideration of $1.139 billion plus a 27.9% share of $240 million non-contingent royalties over five years and 49% of price contin- gent royalties payable by Yancoal to Rio Tinto on production from HVO in respect of the C&A acquisition. Glencore will acquire a 16.6% inter- est in HVO directly from Yancoal and the companies will work together to acquire Mitsubishi Development Pty Ltd.'s 32.4% interest in HVO to achieve Glencore's 49% stake. Glencore will be entitled to its share of the profits of HVO from the date that Yancoal completes its acquisition of C&A. Glencore has also agreed to subscribe for $300 million worth of shares in Yan- coal's equity raising. The transaction will be funded from Glencore's existing cash resources and committed facilities, and is subject to Glencore obtaining the necessary regu- latory approvals. Glencore expects the transaction to close within six months. The HVO JV will be jointly controlled by Glencore and Yancoal through a joint-ven- ture management committee comprising three representatives of both JV partici- pants. An independent management team will run the operations on a day-to-day ba- sis and will report to the committee. Glencore will nominate the candidates for HVO general manager while Yancoal will nominate the candidates for HVO financial controller. Glencore will provide operation- al and support services to the HVO JV. Glencore will be the exclusive market- ing agent for HVO coal sales into Japan, South Korea, and all other countries ex- cluding China, Taiwan (with certain exclu- sions), Thailand and Malaysia. HVO is a large-scale, long-life and low- cost coal mine producing premium quality export thermal coal and semi-soft coking coal. HVO lies adjacent to a number of ex- isting Glencore mines in the Hunter Valley. Glencore's combined portfolio of mines in the Hunter Valley, including HVO, will have production capacity of 69 million metric tons per year of high-quality energy coal to meet increasing Asian demand. Scott Pruitt, Environmental Protection Agency administrator.

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