Gregory H. Boyce, chairman and CEO of St. Louis, Missouri, US-based Peabody Energy, the world's largest private sector coal company, has said that the company is well positioned to navigate market challenges, capture opportunities and create value for shareholders in both the near term and long term, speaking at Peabody's 2012 Analyst and Investor Forum in New York on Wednesday, June 27.
Mr. Boyce stated that the company's superior gross margins and strong cash flows allow ongoing investments in growth projects, adding that, given macroeconomic concerns, capital expenditures are being reduced and the timing of selected mine projects is being extended. The company has cut 2012 capital expenditure by $200 million from targets set at the beginning of the year to $1.0 billion from $1.2 billion.
With the modified timeframes, Peabody now targets Australian coal production of 45 million mt to 50 million mt by 2015 to 2017, up from 25 million mt in 2011.
Boyce anticipates that China's coal imports "will reach a record 285 million mt in 2012 as the country increasingly looks to the seaborne coal markets", while expecting global metallurgical coal use to increase by 25 percent by 2016, mainly driven by China and India.
Regarding the US coal market impacted by a weak economy and low natural gas prices, Boyce said that the outlook for coal has strengthened following the recent sharp declines in US shipments, the rise in natural gas prices and seasonal decreases in utility stockpiles. Peabody continues to project that US coal demand will decline by 100-120 million metric tons in 2012.