Slowdown prompts Peabody to cut output in Wyoming, Australia
Written on January 9, 2009
Faced with a global economic slump and weak energy prices, Peabody Energy Corp. is cutting coal production at its mines in the Powder River Basin and reducing output of Australian coal used by steel makers.
Peabody, the world’s largest private-sector coal company, said it will cut production from its three Powder River Basin mines in northeast Wyoming by about 10 million tons, or 5 percent. The company now expects to produce 190 million to 195 million tons after surpassing 200 million tons last year.
Production cuts in the basin, the nation’s biggest coal-producing region, will target lower-quality, lower-margin coal reserves, and equipment will be redeployed to other mines, Peabody said.
In Australia, Peabody is reducing output of so-called metallurgical coal used in steelmaking by 2 million tons — or about 8 percent — because of a drop in global steel demand.
"We are taking prompt market-driven actions to make adjustments to our production platform and respond to the global economic downturn," Chief Executive Gregory H. Boyce said in a statement.
Peabody said actual 2009 production will depend on the speed of recovery in electricity and steel markets as well as the magnitude and timing of economic stimulus packages in the United States and China, Boyce said cash loans.
Shares of St. Louis-based Peabody fell $2.97 to $25.48 in composite trading on the New York Stock Exchange.
The slumping global economy and lower coal prices have also prompted other mining companies, including Creve Coeur-based Arch Coal Inc., to respond with production cuts. In October, Arch announced it was idling some equipment at its Black Thunder mine in Wyoming.
jtomich@post-dispatch.com | 314-340-8320
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