Increasing Coal Exports Drive Patriot Coal's Metallurgical Coal Mine Expansion

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Researched by Industrial Info Resources (Sugar Land, Texas)--As global coal demand continues to increase, Patriot Coal Corporation (NYSE:PCX) (St. Louis, Missouri) is continuing construction and preparations to increase production at the company's mines. At a conference call yesterday discussing the company's second fiscal quarter, Patriot President and CEO Richard Whiting spoke about the company's expansion of its metallurgical coal mines, known as the "Met Build-Out" project.

"In recent months, we started production at two new met mines: Gateway Eagle in the Rocklick complex and Workman Branch in the Wells complex," said Whiting. "We also added a third continuous miner unit at our Black Oak mine, which is also in the Rocklick complex. These mines all produce solid, Grade-A, high-volatile met coal."

In addition to the two mines mentioned, the company plans to begin production at five additional met coal mines by the end of 2012. "In total," said Whiting, "we expect these seven new met mines to increase our met production to a run rate in excess of 11 million tons by the year 2013." In the second quarter, Patriot sold 6.1 million tons of thermal coal and 2 million tons of metallurgical coal.

Whiting noted that global seaborne met coal demand is expected to increase from about 250 million metric tons this year to nearly 400 million metric tons by 2020, while seaborne thermal coal demand is expected to increase more than 30% to almost 1 billion metric tons by that date. "With supply constraints worldwide, we believe U.S. metallurgical coal and thermal coal will increasingly be shipped overseas to satisfy the robust and growing international demand," he said. For additional information, see June 23, 2011, article - U.S. Coal Exports Reach Highest Level Since 1992.

Driving the company's expansion plans is the increased global demand for both metallurgical and thermal coal. "About 75% of our met coal production is currently exported, and we expect our met exports will increase as our production increases," said Whiting. "The world's need for coal continues to expand, and our Met Coal Build-Out will help satisfy this demand."

Patriot is expecting to export about 25% of its total coal production this year. The company expects this figure to rise to about 30%, or 10 million tons, in 2012.

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