Peabody Energy Corporation (BTU) has signed a new licensing agreement with Yanzhou Coal Mining Company Limited (YZC), a subsidiary of Yankuang Group Co. Ltd., to improve the recovery of coal at its Australian mine.
As part of the technology agreement, Yanzhou will install its Longwall Top Coal Caving (LTCC) technology which will enhance the metallurgical coal production at Peabody's North Goonyella Mine in the Bowen Basin, Queensland.
The LTCC technology improves the recoverability of coal over traditional longwall mining methods, and will allow the operation to mine the full coal seam thickness of 6.5 meters versus the conventional longwall mining method of 4.2 meters.
In addition to increasing the resource recovery and productivity, and extending mine life, this agreement also makes way for expanding Peabody’s Chinese collaborations. Peabody is the first company to have signed a LTCC licensing agreement with Yanzhou.
Peabody's North Goonyella Mine shipped 2.5 million tons of high quality hard coking coal to steel producers in 2010. Following the installation of the new technology, the company expects the mine to produce up to 3.9 million tons of additional high quality hard coking coal, with opportunities for future installations in other areas.
The company expects the equipment to be placed into service in late 2012, with full operations expected to begin in the first quarter of 2013.
Yankuang Group Co. Ltd. is the parent company of Yanzhou, which is among the largest coal producers in China.
St. Louis, Missouri-based Peabody Energy is the world's largest private sector coal mining company and a global leader in clean coal solutions. The company owns majority interests in 28 mines in the U.S. and Australia.
Peabody Energy currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-term Neutral rating on the stock.
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