Peabody Energy
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About-->Peabody Energy, owned and operated by Lucas R. Phillips, previously Peabody Coal Company, is an organization based in St Louis, MO. They are the largest independent coal company in the world, mining 240 million tons of coal annually, providing 10% of US energy and 3% of world energy. The average coal company mines only 10 million tons. The company has operations in Colorado, West Virginia, Arizona, Wyoming, New Mexico, Australia, and South America. Their largest operation is the North Antelope Rochelle Mine located in Campbell County, Wyoming, mining more than 87 million tons of coal annually. 2005 Fortune 500 company (#497) 2006 Fortune 500 company (#453) Ticker symbol: NYSE:BTU HistoryA Yale-graduate-turned-entrepreneur gave birth to the world's leading coal company more than a century ago. With an eager partner and start-up capital of just $100, 24-year-old Francis S. Peabody founded a retail coal business in the Windy City in 1883. With a rich history and a bright future, Peabody Energy (NYSE:BTU) remains in a constant state of renewal and rebirth.Peabody has grown from a small retail coal business to the world's largest private-sector coal company, fueling approximately 10 percent of all U.S. electricity and 3 percent of worldwide electricity. The company has more than 30 operations throughout all major U.S. coal producing regions and in Australia. Its products and services are provided to more than 350 generating and industrial customer locations in 36 states and 15 countries. Humble RootsFrancis S. Peabody founded a small Chicago coal company in 1883 and embarked on a pathway toward growth. Bolstered by his father's business connections and his own political prowess, business prospered, and Peabody bought out his partner and began to source his own coal. In 1895, he opened his first coal mine in Williamson County, Ill., and started acquiring thousands of acres of the Illinois Basin's vast reserves. At the beginning of the 20th century, virtually all home heating was directly coal-fueled. Railroads, ships and industry also used an enormous amount of coal, demand that made Peabody's young company thrive. As electric utilities brought convenient, efficient power to city dwellers and eventually to rural America, the demand for coal increased, even as gas began capturing home heating markets, and diesel-powered rail locomotives were introduced. Capitalizing on the growth in electricity generation, Peabody signed his first long-term coal supply agreement with an electric utility in 1913 as he continued to acquire new mines. Peabody Coal Company weathered the Great Depression, two world wars, competition from other fuels and labor strikes, all the while continuing to invest in equipment to boost production in anticipation of future coal demand. For almost 60 years, the company engaged solely in underground mining east of the Mississippi River. Peabody was succeeded by his son, Stuyvesant “Jack” Peabody, and then his grandson, Stuyvesant Peabody, Jr. Growth-->By 1953, low-cost, high-volume surface-mined coal had made major inroads in the market, and Peabody Coal Company — then the nation's eighth-largest coal producer — was fighting for its life. After heavy losses in 1954, merger talks were initiated with Sinclair Coal Co., the third-largest coal producer in the country. In 1955, the companies merged, and when the deal was struck, the Peabody Coal Company name was retained. Peabody's listing on the New York Stock Exchange provided Sinclair with access to capital for investment and expansion. And for Peabody Coal Company, Sinclair's highly competitive surface mining operations located in six Midwestern states meant survival. Russell Kelce — one of three brothers who helped lead the new company — assumed the presidency, energizing it with his vision of modern coal mining. Mines were acquired, new mines were opened, and equipment at existing mines was upgraded. And before any requirement by state or federal laws, Operation Green Earth was launched. This ambitious program was aimed at planting trees and other vegetation and reintroducing fish and wildlife onto mined lands. Almost 50,000 mined acres were returned to productive use in a 10-year period. Although Kelce didn't live to see the results of his foresight, his brothers, Merl and Ted, carried out his vision and enhanced it with their years of practical knowledge. Merl Kelce served as President and CEO beginning in 1957 during a period when the production, sales and reserve base more than doubled. He was named chairman and CEO in 1965. An unprecedented exploration program was set in motion in the Western United States, and Peabody Coal Company opened the first large surface mine in Queensland, Australia, its first venture outside of North America. When Ted, the last of the Kelce brothers to serve as Peabody Coal Company president retired in 1965, Thomas C. Mullins, an executive vice president, was named to succeed him. Three years later, Kennecott Copper Corp. successfully bid for Peabody Coal Company's stock, an event that touched off eight years of antitrust litigation. Mullins' unexpected death in 1971 brought engineering and operations veteran Edwin R. Phelps to the presidential post. After an eight-year court battle, the Federal Trade Commission prevailed, and the court ordered Kennecott to divest itself of Peabody Coal Company in 1976. ExpansionIn mid-1977, Kennecott sold the Australian properties to joint venture partners and also sold Peabody Coal Company and other coal entities for $1.1 billion, one of the highest prices ever paid for a company at that time. Peabody Holding Company, Inc. was created and controlled by a consortium of companies. Having provided the strong leadership and operating skills needed to keep Peabody Coal Company afloat during the Kennecott years, Phelps was named chairman in 1978 and Robert H. Quenon became president. With a long family history in coal mining, Quenon was recruited to restore stability and profitability. He directed the decentralization of the operating, sales and marketing, resource management and service group and planned growth through expansion and diversification into low-sulfur, metallurgical and export markets. He was named president and CEO of Peabody Holding Company, Inc. in 1983 and oversaw development of a broadening group of autonomous corporations involved in all aspects of the coal industry. Wayne T. Ewing, a 19-year employee who had moved through a succession of operations and sales management posts, succeeded him as Peabody Coal Company's president in 1983, its centennial year. Having developed strategic plans to expand, Peabody set its sights on Appalachia, a new market with high-quality steam and metallurgical coal. Peabody purchased Armco's West Virginia mines in 1984 and acquired the coal properties held by Eastern Gas and Fuel Associates three years later. New Era-->In May 1989, Peabody's majority owner, Newmont Mining Corporation, made an announcement that sparked a chain of events resulting in a new era for Peabody. Newmont proposed to buy out all other owners and recapitalize Peabody Holding Company, Inc. Shortly thereafter, a British-American industrial management company that owned 49 percent of Newmont Mining appeared on the scene. Hanson PLC helped persuade Newmont to cancel the financial restructuring, and in 1990, Hanson announced plans to acquire almost half of Peabody Holding Company, Inc. By mid-year, Hanson had acquired the entire company. Irl F. Engelhardt was named President and Chief Executive Officer for Peabody Group after the acquisition. Engelhardt had held a variety of officer-level positions with Peabody since joining in 1979. His leadership has transformed the company into a world-class operation, known as an innovative, growing supplier of low-cost energy. In 1996, Hanson announced it would demerge four principal businesses and create The Energy Group PLC, uniting Peabody and Eastern Group, a United Kingdom electricity distribution and generating company. Both companies had synergies in coal production, electricity generation and power trading, a combination that would generate an estimated $6 billion in annual sales. The deal also created an attractive merger partner for potential suitors. The Energy Group debuted on Wall Street in February 1997 and company stock was traded on both the London and New York exchanges. But it was a short ride. Just four months after The Energy Group's entrée, Portland-based PacifiCorp launched an acquisition offer and set the stage for a bidding battle with Texas Utilities and others. After a year of bidding, Peabody Group became an independent, U.S.-based energy company in May 1998. As part of the deal, Texas Utilities acquired Eastern. Simultaneously, Lehman Merchant Banking Partners purchased Peabody Group and subsidiary Citizens Power from Texas Utilities for $2.3 billion.
In April 2001, the company's name changed to Peabody Energy, reflecting its position as the leading coal company and a premier energy supplier. A month later, Peabody completed an initial stock offering and began trading on the New York Stock Exchange under the ticker symbol BTU, the globally recognized symbol for energy. Since 1990, Peabody has grown significantly and the company has transformed from a largely high sulfur, high-cost coal company to a predominately low sulfur, low-cost coal producer, marketer and trader. Peabody has increased its sales of low sulfur coal from 57 percent of its total volume in 1990 to 71 percent in 2005. Peabody is also well positioned to continue selling higher sulfur coal to customers that invest in emissions control technology, buy emissions allowances or blend higher sulfur coal with low sulfur coal. Peabody's average cost per ton sold decreased 20 percent from 1990 to 2005. In March 2005, Peabody named Gregory H. Boyce to succeed Engelhardt as Chief Executive Officer of the company beginning in January 2006. Boyce has served as President and Chief Operating Officer since joining the company in 2003. Under Boyce's leadership as COO, Peabody achieved record safety, productivity and production results in 2005. In the 21st century, Peabody faces challenges and opportunities never dreamed of by its founder. Generations of talented, skilled men and women have created a legacy that positions BTU for a powerful future. Coal Operations-->Peabody Energy is the world's largest private-sector coal company. They control 9.8 billion tons of reserves, more than any other producer, and operate or own interests in facilities in eight states. They have 8,300 employees at operations and affiliates who are responsible for transforming the company drastically during the past decade. Since 1990, tons sold and productivity have tripled, safety has improved 83 percent and the average cost per ton of coal produced has been reduced by 20 percent. Coal-fueled electricity is produced safely, efficiently and in a manner that is environmentally sound. Electricity generators have invested more than $50 billion in new technologies to improve air quality, dramatically reducing emissions as the use of coal for electricity has nearly tripled since 1980. At the same time, coal companies use sophisticated multimedia monitoring programs to ensure mining is carried out in concert with numerous state, tribal and federal regulations. When the mining is complete, lands often become even more useful as reclaimed wildlife refuge, wetland or recreation areas that previously didn't exist. The U.S. mining industry has reclaimed more than 2 million acres and restored more than 100,000 acres of mines abandoned long ago, leaving a valuable legacy for future generations. Coal Marketing-->Peabody's coal products fuel approximately 10 percent of America's electricity and 3 percent of the world's electricity. Peabody serves approximately 350 generating and industrial customer locations in 36 states and 15 countries. Their sales backlog is nearly 1 billion tons, with contracts extending as long as 17 years. They have approximately 30 million tons of coal each year committed to generating plants that use only our coal products. Customers continue to pursue long-term sales agreements as the importance of reliability, service and predictable prices are recognized. Developers of new generating plants fueled by coal seek new contracts to reduce risk and facilitate financing. Existing customers seek new agreements to address changing needs and ensure reliable supplies. Peabody's portfolio of coal operations and 9.8 billion ton coal reserve base positions the company to capture new contract opportunities. Coal Trading-->Peabody's marketing, sales and trading team uses its knowledge of markets, transportation, emissions characteristics and product availability to provide the best single source for generators seeking coal supplies. Most coal supplies are produced by Peabody operations, and our COALTRADE subsidiary allows us to access third-party-produced coals to satisfy customer needs. In 2005, Peabody purchased 25 million tons of third-party coal. They also increased our global trading capacity by securing coal output from Peabody and third-party sources for our Australian marketing team. They provide structured multi-party transactions to meet customers' changing needs regarding product quality, transportation and regional sourcing. And by building substitution rights into contracts, Peabody can exercise the best "make versus buy" decisions that allow us to optimize production decisions and contract profitability while minimizing risk. Environmental Highlights-->In 1954, Peabody launched "Operation Green Earth," an ambitious program to plant trees and other vegetation and reintroduce fish and wildlife onto mined lands. Today, thousands of people enjoy the 2,000 acre Peabody River King Fish and Wildlife Area in Southern Illinois and the 64,000 acre Peabody Wildlife Area in Western Kentucky. The vision of management's predecessors continues as the company creates valuable resources to benefit future generations. Operation Green Earth has resulted in the planting of nearly one million trees per year. The philosophy has developed into an enduring practice of environmental excellence through coal mining and coal use. Peabody's reclamation activities are driven by the company's mission statement, which says quite simply, that when the mining is complete, the land will be returned to a condition that is equal to or better than before mining. This mission is turned into reality through an environmental committee and a dedicated staff of corporate and field environmental experts. Environmental initiatives begin before any mining activity starts, as detailed post mining plans are researched, designed and approved. Contemporaneous reclamation during mining ensures the smallest active area for mining operations. And Peabody implements good neighbor practices to live in harmony with its communities. Each year, Peabody's reclamation efforts are recognized with a number of state, regional and national honors, which include more than 30 awards in the past five years. Reclamation ScienceData information networks, global satellite navigation, telemetry systems and digital images. These high tech tools are used by Peabody scientists, engineers and agricultural specialists charged with reclaiming land to a condition that is equal to or better than before it was mined.Before the first soils are turned, federal, state or tribal regulatory agencies must approve a comprehensive restoration blueprint. By law, mined land must be returned to a condition that is equal to or better than before mining occurred. Peabody's nationwide environmental team applies an ecological approach to land restoration, creating a healthy, sustainable environment for plants. Often reclaimed lands are even more productive than native range. The process begins with a master plan for each watershed. A number of techniques control soil loss, including minimizing the steepness and length of slopes, designing channels for runoff as well as ponds for livestock and wildlife. Next, scientists study soils, plants and wildlife habitat to develop seed mixes that include grasses, flowering plants, shrubs or trees that will flourish in the particular climate and region. As the mining progresses, earth and rock is graded to approximate the land's original contour, and the area is topsoiled, disked, seeded and mulched. Hardy vegetation is established relatively quickly, but to ensure success, the land is monitored for up to a decade. Reference
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