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Peabody Energy

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This article is part of the Coal Issues portal on SourceWatch, a project of CoalSwarm and the Center for Media and Democracy.

Peabody Energy, previously Peabody Coal Company, is the largest private-sector coal company in the world. In 2006, Peabody sold over 247 million tons of coal. The company's coal fuels approximately 10% of the electricity generated in the United States and 3% of electricity generated throughout the world. Peabody sells coal to over 350 electricity generating and industrial plants in 15 countries. As of December 31, 2006, the company had 10.2 billion tons of proven and probable coal reserves. It holds majority interests in 40 coal operations located throughout the United States and in Australia and Venezuela. In addition, Peabody owns minority interests in two mines through joint venture arrangements. In the United States, company-owned mines are located in Wyoming, Colorado, Arizona, New Mexico, Illinois, and Indiana. Peabody's largest operation is the North Antelope-Rochelle Mine located in Campbell County, Wyoming, mining more than 87 million tons of coal annually.

A November 2007 presentation to investment analysts by the President of BHP Billiton Coal, Dave Murray, noted that Peabody had a one percent share of the global coal export trade, making it the twelfth largest coal exporter in the world.[1]

Peabody also previously owned coal mines in West Virginia and Kentucky. The company spun-off these assets into the independently-traded Patriot Coal Corporation in October 2007.

Peabody was Nos. 497 and 453 on the Fortune 500 list of companies in 2005 and 2006, respectively.

In the coal mining lobby donated $10,423,347 to members of Congress. Of that, the top three major contributors included Arch Coal, CONSOL Energy and Peabody Energy.[2]

Contents

Peabody CEO makes $11.95 million in 2008

The total compensation for Peabody CEO Gregory Boyce in 2008 was $11.95 million, up from $8.58 million in 2007. Boyce’s salary increased 7.5 percent to $1.05 million, and his yearly bonus was $2.07 million. He was also credited with $7 million in stock and $1.7 million in options, some of which reflects previous years' awards. During 2008, he received stock with a fair value of $2.4 million, as well as stock options valued at $1.8 million. Peabody’s earnings per share increased 162 percent over the previous year.[3]

Peabody announces development of new mine in Indiana

On March 17, 2009, Peabody Energy announced it had entered into long-term coal supply agreements totaling over 90 million tons of coal, allowing the company to develop the Bear Run Mine in Sullivan County, Indiana. Bear Run will be the largest surface coal mine in the eastern United States, with an expected output of about 8 million tons of coal each year. Initially the mine will supply coal to two major Midwestern electricity generators under contracts with terms of up to 17 years. Together these contracts are expected to generate nearly $6 billion in revenues. Peabody will invest an estimated $350 to $400 million over several years to bring the mine to its fullest capacity.[4]

Former Peabody lobbyist appointed to key role for Indiana Department of Environmental Management

In April 2009, David Joest was appointed assistant commissioner for the Office of Legal Counsel of the Indiana Department of Environmental Management (IDEM), which puts him in charge of civil enforcement and criminal investigations of the state's largest polluters. For the last 25 years, Joest has been a registered lobbyist for Peabody. He has fought enviromental agencies and prevented tougher environmental rules in both Indiana and Michigan. In Indiana, he has represented Peabody against the Indiana Department of Natural Resources in legal challenges over permits and defended the company against enforcement from the Indiana DEM. Environmentalists have expressed concern over a conflict of interest, saying that the appointment coincides with Peabody's efforts to open new mines in Indiana.[5]

Peabody closes last mine in Vermilion County, Illinois

In March 2009, Peabody Energy told 160 miners that the Vermilion Grove Coal Mine, which was the last mine active in Vermilion County, IL, was slated to close. The mine was shut down because it had exhausted its coal reserves. Peabody said it would offer the miners work at other company mines in the Midwest.[6]

Lawsuit filed in Boone County, WV

In February 2009, about 250 people filed suit against coal companies they allege poisoned wells in two communities in southern West Virginia. The lawsuit contends that coal companies pumped waste coal slurry empty mines, and that underground cracks allowed the waste to pollute the aquifer. However, the state Department of Environmental Protection says it has been unable to link the wells to the injection site.

The lawsuit targets eight coal companies, including Massey Energy, Peabody Energy and subsidiary Pine Ridge Coal, and West Virginia's Federal Coal Co.[7]

In April 2009, a settlement agreement was reached and was awaiting judge approval. The settlement calls for the coal companies to contribute $45,000 to a fund to provide drinking water to residents in the Seth-Prenter area. The companies stated as part of the agreement that the payment does not constitute any admission of guilt and is inadmissible in court.[8]

Peabody's production in Wyoming

In January 2009, Peabody announced plans to reduce its yearly production of Powder River Basin coal production by 10 million tons because of the economic downturn and weakening demand worldwide. Peabody's three Wyoming coal mines, which include North Antelope Rochelle Complex, Caballo and Rawhide, produced a total of approximately 143.5 million tons in 2008. together produced about 143.5 million tons in 2008, according a Casper Star-Tribune estimate. North Antelope Rochelle accounted for almost two thirds of that total. The company, which employs over 1,700 miners in the state, does not expect a significant loss of jobs in spite of the production slowdown.[9]

Demand for coal to generate electricity to produce steel in China and India has increased in recent years. Peabody Energy announced on October 20, 2009 that demand for coal in these countries will grow 7 to 8 percent annually over the course of the next five years. The company says that coal from Mongolia will supply China while coal from Australia will handle the increased Asian demand. Peabody president Richard Navarre noted that production at Peabody's mines in the Power River Basin will also help supply the growing market in China and India.[10]

In November of 2009 the bank HSBC released a report entitled, "The Green Side of Black" that made estimates about coal's involvement in the future of the U.S. energy economy. In it, the bank reported that coal, even under cap-and-trade, will be a lucrative industry in the future. The author of the report also stated that Wyoming's Powder River Basin will be growing faster than other coal regions in the United States. The HSBC report stated that in Arch Coal and Peabody Energy will be especially prosperous because of their extensive involvement in the Powder River Basin.[11]

Leaked memo on coal marketing strategies

In January 2009, a 2004 leaked memo to then Peabody CEO Irl F. Engelhardt from Steve Miller, who was President of the Center for Energy and Economic Development (now called American Coalition for Clean Coal Electricity), detailed the public relations and lobbying strategies being used to counteract issues including climate change, mercury, plant development, and EPA rulings. Miller details methods used to "sow discord" among regions seeking to limit greenhouse gas emissions.[12][13]

Other strategies revealed in the memo include:[12][13]

  • On climate change: "In the climate change arena, CEED focuses on three areas: opposing government-mandated controls of greenhouse gases (GHG), opposing 'regulation by litigation', and supporting sequestration and technology as the proper vehicles for addressing any reasonable concerns about greenhouse gas concentrations in the atmosphere."
  • More on climate change: "Our belief is that, on climate change like other issues, you must be for something rather than against everything. The combination of carbon sequestration and technology is what we preach and we are looking for more members in the choir."
  • On regional cap and trade programs: "More than a year ago, New York Governor Pataki proposed an eleven-state regional CO2 cap and trade program. CEED has been engaged in this effort from its beginning. Persuading Pennsylvania and Maryland (as major coal-consuming states) to stay on the sidelines, rather than signing onto this initiative, has been one element of our strategy. The other element is to pose voluntary sequestration and technology as the correct policy, rather than mandatory controls."
  • On mercury: "Our strategy in dealing with mercury has been two-fold: prevent states from taking precipitous or unwarranted action to regulate mercury and engage in the federal rulemaking to protect the interests of coal-based electricity."
  • More on mercury: "In 2003, the Quicksilver Caucus with ECOS [Environmental Council of States] tried to pass a resolution calling for the "virtual elimination" of mercury. CEED worked in a coalition with other organizations and companies to convince many states that the Quicksilver strategy was not the right approach and the "virtual elimination" verbiage failed."
  • On proposed CO2 regulation by the EPA: "About a dozen states sued the EPA last year alleging that the agency must regulate CO2 under the Clean Air Act. CEED was the lead organization for outreach to the vast majority of state attorneys general who intervened on the Bush Administration's side in new litigation designed to force CO2 regulation under the Clean Air Act."

Peabody in China

In October 2008, three years after the opening of its Beijing office, Peabody announced an estimated $2.5 billion project to pursue a large-scale coal mine and coal-to-liquids plant in Inner Mongolia. The plant, which would convert coal into methanol, would be developed by a group that includes Peabody, Inner Mongolia Jitong Railway Group Ltd., and the Chinese government. The mine would produce 10 to 20 million tons of coal per year. The project is a first for an American coal company in China. The company is also considering projects in Mozambique.[14]

History

The origins of Peabody Energy starts with the founding of Peabody, Daniels & Company by Francis Peabody and a partner.[15] The company bought coal from established mines and sold it to homes and businesses in the Chicago area. Francis soon bought out his partner, and, in 1890, he incorporated the company as Peabody Coal Company. In 1895, the company began operating its first mine, in Williamson County, Illinois. In 1913, the company won its first long-term contract to supply a large electric utility. Such contracts to electric utilities is how Peabody makes most of its money today. The corporation went public in 1929 with a listing on the Midwest Stock Exchange, and, in 1949, was listed on the New York Stock Exchange.

While Peabody was profitable during its early years, it hit hard times in the early 1950s. To address the situation, it entered into merger talks with Sinclair Coal company. The merger occurred in 1955, resulting in the move of Peabody's headquarters to St. Louis. The merged company, however, retained the Peabody name. Under the leadership of coal-veteran Russell Kelce, the company expanded production and sales, and purchased a mine in Queensland, Australia, its first outside of North America.

In 1968, the company was purchased by the Kennecott Copper Corporation. The U.S. Federal Trade Commission, however, challenged the purchase as an antitrust violation. In 1976, the FTC ordered Kennecott to divest itself of Peabody. The newly-created Peabody Holding Company purchased the Peabody Coal business of Kennecott for $1.1 billion. A consortium of companies controlled Peabody-Holding. In 1990, Hanson PLC, one of the owners of Peabody Holding, bought out the rest of the owners. Peabody was eventually bought by a unit of Lehman Brothers, which brought the company public as Peabody Energy Corporation in 2001. The IPO for Peabody Energy raised proceeds of $456 million.

Recent developments

Prior to 2005, the company was utilizing the transfer agency services of Wachovia Corporation. During the year of 2005, Wachovia gave up its transfer agency services, which were acquired by American Stock Transfer & Trust Company in New York City . Peabody Energy was one of the companies acquired by that transfer agency and is presently still their client.

In October 2006, Peabody completed an acquisition of Excel Coal Limited, an independent coal company in Australia. Peabody paid $1.52 billion for Excel and also assumed $227 million of Excel's debt. At the time, Excel owned three operating mines and three-development stage mines in Australia. Additionally, Excel had an estimated 500 million tons of proven and probable coal reserves.[16] Peabody owns five other mines in Australia, which are all located in Queensland. Most of the Australian production is low-sulfur, metallurgical coal.

On August 30, 2007, Ernie Fletcher, the governor of the U.S. state of Kentucky, signed into state law a bill that will provide approximately $300 million in incentives to Peabody to build a coal gasification plant in that state.[17] The incentives comes in the form of breaks on sales taxes, incentive taxes and coal severance taxes.[17]

On January 25, 2008, Peabody and GreatPoint Energy of Cambridge, MA announced an agreement between the companies where Peabody Energy became a minority investor in GreatPoint Energy, and that Peabody would be the coal supplier for GreatPoint's coal gasification process. [18][19] The two companies will collaborate on building coal gasification plants near Peabody's mines in the Powder River Basin. [18] Peabody's investment will be used to bring GreatPoint Energy's technology to a commercial scale. [18] The agreement also included creating an observer role for Peabody Energy on GreatPoint Energy's Board of Directors. [18]

In May 2008, Peabody disclosed that it had spent almost $1.3 million in the first quarter of the year to lobby Congress on coal-related legislation, including coal-to-liquid fuels, global warming, tax credits, and other issues.[20]

Reference in song

The environmental impact of Peabody Energy's strip mining operations in Muhlenberg County, Kentucky is the subject of John Prine's 1971 song "Paradise." The company was forever immortalized in the song, popular on the bluegrass circuit, whose refrain goes thusly:

And daddy won't you take me back to Muhlenberg County
Down by the Green River where paradise lay?
Well, I'm sorry my son, but you're too late in asking...
Mister Peabody's coal train has hauled it away.

'Clean Coal' Booster

In December 2008, Peabody Energy announced that it would contribute $2 million in funding for the Clean Coal Technology Center in the University of Wyoming's School of Energy Resources. In a media release Peabody stated that the grant "will focus on economic and energy analysis and will support the Technology Center's work in advanced coal utilization research and interdisciplinary undergraduate and graduate programs for energy-related careers. It will also serve as a catalyst for technology transfer to key stakeholders. A multidisciplinary economic and energy analysis of the Powder River Basin's contribution to America's economy will be part of the initial and ongoing research."[21]

At the same time, Peabody also announced that it would contribut $5 million over five years to the Consortium for Clean Coal Utilization at Washington University. This was described in a media release as a project designed to "bring university researchers, industries, foundations and government organizations together to research clean coal technology, making St. Louis the nation's center for clean coal research."[22] The project will be run by the university's International Center for Advanced Renewable Energy and Sustainability(I-CARES).

Campaign contributions by Peabody Energy

Peabody is a major contributor to both Republican and Democratic candidates for Congress, having contributed $272,300 to members of the 110th Congress (2007-2008). Contributions like this from from fossil fuel companies to members of Congress are often seen as a political barrier to pursuing clean energy.

FollowTheCoalMoney lists $138,200 in contributions from Peabody Energy to members of the House of Representatives in the 110th Congress (2007-2008) as being[23]

FollowTheCoalMoney lists $134,100 in contributions from Peabody Energy to members of the House of Representatives in the 110th Congress (2007-2008) as[24]

More information on specific coal companies and representatives can be found at FollowtheCoalMoney.org, a project sponsored by the nonpartisan, nonprofit Oil Change International and Appalachian Voices.

Lobbying

Peabody Energy Lobbying in 2009

According to an official disclosure report filed with the House clerk's office, Peabody Energy spent $820,000 on lobbying expenses in the first quarter of 2009. During the period from January to March, the company lobbied on coal, mine safety, energy tax credits, and global warming issues. Christopher Leahy, a former policy coordinator for the House Energy and Commerce Committee, and Ursula Wojciechowski, a former staff member of several House subcomittees, were among those registered as Peabody lobbyists.[25]

Peabody Energy Lobbyists in 2008

The Center for Public Integrity lists Peabody Energy's 2008 lobbyists, based on public disclosure documents, as being[26]

Coal projects sponsored by Peabody Energy

Mines owned by Peabody

Arizona:

Colorado:

Illinois:

Indiana:

Kentucky:

New Mexico:

Wyoming:

Australia:

Mining Expansion

In late November 2009, Peabody Energy's Arclar Coal Company received two permits, one for water quality certification and one for discharge, allowing mining to expand on 668 acres at the Wildcat Hills Complex in southern Illinois. Two hearings - one for each permit - were held on Sept. 29 and Oct. 14, 2009, and environmental groups such as the Sierra Club, Prairie Rivers Network, and the Environmental Law and Policy Center raised objections to the expansion. However, the Illinois Environmental Protection agency approved the permits.[27]

Contact information

Website: www.peabodyenergy.com

Articles and resources

Related SourceWatch articles

References

  1. ↑ Dave Murray, "BHP Billiton Coal CSG Anlayst Visit: Hunter Valley Energy Coal", BHP Billiton, November 2nd, 2007.
  2. ↑ "Coal Mining: Long-Term Contribution Trends" OpenSecrets.org, accessed January 27, 2010.
  3. ↑ David Nicklaus, "Boyce makes $11.95 million as Peabody CEO," St. Louis Post-Dispatch, March 26, 2009.
  4. ↑ "Peabody Energy Announces Long-Term Coal Supply Agreements Totaling Nearly $6 Billion in Revenues From Major New Mine in Indiana," PR Newswire, March 17, 2009.
  5. ↑ Gitte Laasby, "Former coal lobbyist tapped for key role at IDEM," Post-Tribune, May 10, 2009.
  6. ↑ "Last coal mine in Vermilion County closes," Associated Press, March 15 2009.
  7. ↑ "W.Va. towns with bad well water sue coal companies," Associated Press, February 3, 2009.
  8. ↑ "Settlement would direct coal dollars to water fund," Charleston Daily Mail, April 7, 2009.
  9. ↑ Dustin Bleizeffer, "Coal producer plans reduction," Casper Star-Tribune, January 7, 2009.
  10. ↑ Coal Demand Soars as Asia economies rebound Reuters, October 20, 2009
  11. ↑ Bank predicts bright future for Wyoming coal under cap-and-trade, Erica Peterson, West Virgina Public Broadcasting, November 30, 2009.
  12. ↑ 12.0 12.1 Coal Industry Strategy Letter To CEO of Peabody Energy, desmogblog.com, June 18, 2004.
  13. ↑ 13.0 13.1 Kevin Grandia, "Leaked Clean Coal Strategy Memo to Peabody Energy," desmogblog.com, January 16, 2009.
  14. ↑ "Peabody Pursuing Mine, Coal Plant in China," St. Louis Post-Dispatch, October 2, 2008.
  15. ↑ BTU: Definition and Much More from Answers.com
  16. ↑ Peabody Energy Form 10-Q, United States Securities and Exchange Commission, quarter ending 9/30/06
  17. ↑ 17.0 17.1 Alford, Roger; Malcolm Knox (08-30-2007). "Ky. Governor Signs Coal Tech Bill" (in English), Forbes. Retrieved on 2007-09-16. 
  18. ↑ 18.0 18.1 18.2 18.3 "GreatPoint Energy announces coal supply partnership with Peabody Energy and enters into agreement to build natural gas manufacturing facilities in Powder River Basin", "GreatPoint Energy" press release, January 25, 2008.
  19. ↑ "Peabody Energy acquires equity interest in GreatPoint Energy", "Peabody Energy" press release, January 25, 2008.
  20. ↑ "Peabody Energy shoveled $1.3M into 1Q lobbying", Forbes.com, May 23, 2008.
  21. ↑ Peabody Energy, "Peabody Energy (NYSE: BTU) Advances Clean Coal Research and Advanced Mining Technologies With $10 Million in Grants", Media Release, December 2, 2008.
  22. ↑ Washington University, "Washington University research to advance clean coal technology", Media Release, December 2, 2008.
  23. ↑ "House Members of the 110th (2007-2008) Congress", Follow The Coal Money, accessed March 2009.
  24. ↑ "Senate Members of the 110th (2007-2008) Congress", Follow The Coal Money, accessed March 2009.
  25. ↑ "Peabody Energy unit spent $820K lobbying in 1Q," Associated Press, July 17, 2009.
  26. ↑ "Peabody Energy", Center for Public Integrity, accessed March 2009.
  27. ↑ Eric Fodor,"Arclar receives permits to expand Wildcat Hills mine" Daily Register, November 30, 2009

External resources

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