Peabody Energy Coal Mine Development Supports Rocky Mountain Regional Coal-Fired Power Generation Growth

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Peabody Energy Corporation (NYSE:BTU) (Saint Louis, Missouri) is progressing with planning for coal mining and power projects in New Mexico. Peabody has been studying satellite mining operations in the vicinity of the company's subsidiary Lee Ranch coal mine located in Grants, New Mexico, for several years. Originally, the company was looking at two separate mines Star Lake and South Hospah. Star Lake has been put on hold. The company has renamed the South Hospah mine as the El Segundo mine and is currently concentrating project development on that project.

The El Segundo mine is being built as a merchant coal producer and will share customers with the existing Lee Ranch mine. The Lee Ranch mine currently produces around 5.3 million tons of coal per year. New coal production in the area is needed to help area coal-fired power plants achieve future growth plans. Industrialinfo.com has identified over 19,000 megawatts (MW) in planned coal-fired power projects in the Rocky Mountain Region, which includes New Mexico, Arizona, Utah, Colorado, Idaho, Wyoming, and Montana.

Click the image at right to view a table of operational and planned coal-fired power plants by state and megawatts planned for the Rocky Mountain Region.

Peabody has been issued an air permit and is in the process of acquiring a mine operating permit. Approval for the mine operating permit is expected in December of 2003 and the company hopes to break ground in the spring of 2004. The El Segundo mine is permitted as a six million ton per year mine. Existing railroad access will be utilized to ship out product. An overland conveyor system may have to be built with either an overpass or underpass to cross a highway intersection.

Construction is contingent on whether the company can secure coal sales contracts with customers such as Tucson Electric Power Company (NYSE:TEP)(Tucson, Arizona), a subsidiary of UniSource Energy Corporation (NYSE:UNS). Tucson operates two coal-fired power plants in the area, the 556 megawatt (MW) Irvington plant in Tucson, and the 760 MW Springerville power plant. Springerville is scheduled to begin construction this year on two new coal-fired units, which will double plant capacity by 2005. Also Reliant Energy is studying the construction of a 500-1,500 MW coal-fired plant in the area.

Peabody Energy is also studying its own power project in the area. The 300 MW Mustang Energy project would be a mine-mouth project located at the El Segundo mine.