Archer Annual Report 2010

Plain-text annual report

Start Here ARCH COAL, INC. 2010 ANNUAL REPORT Start Here A recognized leader in mine safety and environmental compliance, St. Louis-based Arch Coal, Inc. (NYSE: ACI) is one of the world’s largest and most efﬁcient coal producers, with more than 160 million tons sold in 2010. Through 11 mining complexes in six states, we represent roughly 15 percent of America’s coal supply. Our national scope of operations and 4.4-billion-ton reserve base includes a presence in ﬁve of six major U.S. coal supply basins. Our core business is supplying cleaner-burning, low-sulfur coal to customers on four continents, including U.S. and international power producers, industrial and other end users as well as steel manufacturers. It’s the start of a new decade, and coal’s story is as compelling as ever. Coal is the rock upon which the developed world’s economies were built – and it will continue to play a dominant role in powering the residential, commercial and manufacturing sectors of these economies for decades to come. In emerging markets, coal is the lifeblood supporting economic growth. It’s an essential input for steel making, an energy feedstock for industry and agriculture, and an abundant and affordable power source for electric grids around the world. Coal is playing a pivotal role in alleviating poverty, building the wealth of nations and advancing the quality of life for the world’s citizens. But coal’s story is also deﬁned by its struggle to keep pace with demand. Many of the world’s traditional supply regions are facing reserve depletion, regulatory pressures and inadequate infrastructure investment. Overcoming these challenges – and bringing on new supply – will require long lead times and a massive capital outlay. These forces drive coal prices today … and will continue to inﬂuence coal markets in the decade ahead. 1 ARCH COAL, INC. 2010 ANNUAL REPORT Coal Is the World’s Energy Global coal consumption reached nearly 8 billion tons in 2010, having expanded by a record 3 billion tons in the past decade. China alone boosted its coal consumption from 1.3 billion tons in 2000 to 3.5 billion tons in 2010. Given current rates, global coal use could well increase another 3 billion tons in the next decade. In fact, by 2015, the world currently plans to add at least another 1.4 billion tons to annual coal demand. Projected Coal Demand Growth from New Power Plants by 2015 +45 D N A M E D G N W O R G I COMMONWEALTH OF INDEPENDENT STATES (CIS) 2010 Market Size: 396 Million Tons Projected Growth: 28 Million Tons NORTH AMERICA 2010 Market Size: 1,066 Million Tons Projected Growth: 45 Million Tons EUROPE 2010 Market Size: 953 Million Tons Projected Growth: 114 Million Tons +33 LATIN AMERICA 2010 Market Size: 57 Million Tons Projected Growth: 33 Million Tons Bubble size represents projected growth in coal use at new plants, by region. * Reﬂects demand from previously announced power plants only. Actual growth in Chinese steam coal demand is likely to be double this ﬁgure. 2 ARCH COAL, INC. 2010 ANNUAL REPORT Coal-fueled plants are being built around the globe as the world’s population increases and emerging nations expand and electrify their cities. A total of 425 giga- watts of new coal-based generating capacity is slated to come online by mid-decade, adding the equivalent of current U.S. coal industry production and more to global coal consumption. Beyond coal-based power plant additions, expected growth in per-capita steel consumption in developing economies will drive up demand for metallurgical coal in the coming years. Moreover, the adoption of plug-in electric vehicles in developed countries could accelerate the pull for steam coal in particular. +28 +114 +20 +516 +39 +352 * CHINA 2010 Market Size: 3,450 Million Tons Projected Growth: 352 Million Tons +211 INDIA 2010 Market Size: 690 Million Tons Projected Growth: 516 Million Tons MIDDLE EAST 2010 Market Size: 16 Million Tons Projected Growth: 20 Million Tons AFRICA 2010 Market Size: 214 Million Tons Projected Growth: 39 Million Tons OCEANIA/OTHER ASIA 2010 Market Size: 658 Million Tons Projected Growth: 211 Million Tons 3 ARCH COAL, INC. 2010 ANNUAL REPORT Strategic, Domestic Reserve Base Arch Coal’s reserves stretch nearly coast-to-coast, allowing us to meet future coal demand inside and outside America’s borders. Our coal shipments are regionally balanced across the nation’s four major railroads, while our investments in river terminals in Kentucky and Illinois grant us ﬂexibility to transport coal on the nation’s inland waterways. In addition, our equity investments in marine terminals on the East and West Coast – along with throughput opportunities at ports in Virginia, Louisiana, California and British Columbia, Canada – provide access to the growing seaborne metallurgical and steam coal trade. million tons of reserves 455 16 million tons sold 2 3 4 5 1 WESTERN BITUMINOUS Arch is the largest coal producer in the Western Bituminous Region, comprised of Utah, Colorado and southern Wyoming. 1,353 million tons of reserves 1. West Elk 2. Skyline 3. Dugout Canyon 4. Sufco 5. Arch of Wyoming 4,445 million tons of strategic coal reserves held by Arch Coal 1,905 132 million tons of reserves million tons sold 1 NORTHERN POWDER RIVER BASIN During the past two years, Arch has amassed 1.4 billion tons of coal reserves in this developing basin, and now controls more reserves than any other coal producer there. 1. Otter Creek reserves 2 1 SOUTHERN POWDER RIVER BASIN With the addition of Jacobs Ranch in 2009, Arch now stands as the largest producer of 8800-Btu coal and the second largest producer overall in the region. 1. Black Thunder 2. Coal Creek Each dot represents 50 million tons of reserves at 12/31/2010. Represents sales volumes related to Arch’s equity interest in Knight Hawk. * 4 ARCH COAL, INC. 2010 ANNUAL REPORT U.S. coal production continues to shift westward, and Arch has invested heavily in western coalﬁelds to expand its superior operating position there. Over the past 13 years, the Powder River Basin has become the nation’s largest coal supply region, serving 48% of U.S. steam coal demand. Also, the Western Bituminous Region (representing 6% of U.S. steam coal output) is a key supply source for the Rocky Mountain area, which boasts the nation’s fastest-growing population. Additionally, both regions can further extend their reach into eastern U.S. states and globally. Arch also maintains a presence in key eastern coalﬁelds. Although the nation’s No. 2 coal supply basin, Central Appalachia, is in secular decline – faced with depleting reserves and signiﬁcant regulatory hurdles – it remains a strategic steam coal supply source for domestic and European power generators, and represents an important metallurgical coal supply source for global steel manufacturers. In addition, the Illinois Basin stands poised for resurgence as global steam coal demand rises and growth in world coal supply remains constrained. 2 1 ILLINOIS BASIN With a 49% equity interest in a private coal producer and a large, undeveloped reserve base in this basin, Arch has varied expansion opportunities it can pursue. 1. Knight Hawk (equity interest) 2. Lost Prairie reserves million tons of reserves 364 2* million tons sold million tons of reserves 368 13 million tons sold 1 2 3 4 CENTRAL APPALACHIA Arch maintains a sizeable, focused and low-cost operating position in the region, with ﬂexibility to service both the metallurgical and steam coal markets. 1. Mountain Laurel 2. Coal-Mac 3. Cumberland River 4. Lone Mountain SHIFTINGWESTWARD 5 ARCH COAL, INC. 2010 ANNUAL REPORT Safety and Stewardship Add Shareholder Value An industry leader in safety and environmental performance, Arch Coal continues to set the bar higher each year. In 2010, we set a new record for safety, attaining a lost-time incident rate of 0.46, the best in our history and the best among diversiﬁed U.S. coal industry peers. Last year, we also delivered our best environmental performance on record (as measured by SMCRA* violations). Achieving success in our core values of safety and environmental performance is absolutely critical for the overall success of our company. Of course, our ultimate goal is the “Perfect Zero” – zero injuries and zero environmental violations at each operation each and every year. SAFETY RECORD (LOST-TIME INCIDENT RATES) (per 200,000 employee-hours worked) ARCH’S ENVIRONMENTAL COMPLIANCE RECORD (number of SMCRA* violations) 4 3 2 1 0 20 15 10 5 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 U.S. Coal Industry Five-Year Average 3.03 Arch Coal Five-Year Average 0.85 * Surface Mine Control and Reclamation Act 6 ARCH COAL, INC. 2010 ANNUAL REPORT With the continued application of technology, the U.S. power generation industry succeeded in reducing plant emissions by 67% from 1970 to 2009 – even as coal use climbed 150%. As more funds ﬂow into clean energy programs, technology can and will deliver solutions to reduce greenhouse gas emissions, too. Given the rapidly expanding use of fossil fuels around the world, it’s imperative that investment in such technologies – like carbon capture and storage – increase. Arch supports clean coal technologies as part of our core values. We’re investing in a project that can turn coal into gasoline, with plans to capture the CO2 emissions from the proposed plant for use in enhanced oil recovery at domestic oil ﬁelds. We’re also ﬁnancing and licensing technology aimed at reducing mercury emissions from coal. And, we’re mining and marketing predominantly low-sulfur coal to help limit traditional emissions at power plants. I R E D U C N G E M S S O N S I I ARCH COAL’S CLEAN COAL INVESTMENTS (in millions) >$50 Million Arch is helping advance the next generation of clean coal technologies by investing over $50 million in clean-energy innovators, university programs and public-private partnerships. (cid:92)(cid:92)(cid:92) DKRW Advanced Fuels’ Coal-to-Liquids Project (cid:92)(cid:92)(cid:92) Tenaska Trailblazer Energy Center (cid:92)(cid:92)(cid:92) ADA Environmental Solutions Emissions Reduction Technology (cid:92)(cid:92)(cid:92) Washington University’s Consortium for Clean Coal Utilization (cid:92)(cid:92)(cid:92) University of Wyoming’s School of Energy Resources (cid:92)(cid:92)(cid:92) U.S. Department of Energy’s National Carbon Capture Center 7 ARCH COAL, INC. 2010 ANNUAL REPORT Cash Is King at Arch Coal 2010 was a good year for coal stocks, and particularly for Arch Coal, as our share price rose 58% compared with a gain of 13% for the S&P 500. Our company delivered record free cash ﬂow last year – a winning combination of improved earnings performance and restrained capital spending. Arch also achieved its second highest EBITDA in company history, driven by substantially higher operating margins in each region. More importantly, we expect 2011 to be even better. FREE CASH FLOW* (in millions) 2006 ($315) 2007 ($158) BUILDINGSTRENGTH Deﬁned and reconciled at the end of this report. * 8 ARCH COAL, INC. 2010 ANNUAL REPORT In 2010, Arch shored up its already strong balance sheet, reducing its net debt outstanding to $1.5 billion at year-end. The nearly $200 million spent on debt reduction last year helped the company lower its net-debt-to-capital ratio to 40%. Beyond building our balance sheet strength, we successfully completed a $500 million bond offering that extended a portion of our debt maturities out by seven years, from 2013 to 2020, providing additional ﬁnancial ﬂexibility. Arch is exceptionally well positioned in the U.S. coal industry with its delevered balance sheet and minimal level of legacy liabilities. As always, we’ll pursue organic growth opportunities that enhance our return on capital and evaluate strategic growth investments that create shareholder value – but we will do so prudently, as we’ve demonstrated over the course of our history. Absent those opportunities, we will look for ways to return our free cash ﬂow to shareholders. 2008 $182 2009 $60 $3,186 million in reported revenues in 2010 – marking the best year in company history. 2010 $382 NET-DEBT-TO-CAPITAL RATIO (percent of total capital) ADJUSTED EBITDA* (in millions) 2000 2010 2000 2010 84% 40% $315 $724 9 ARCH COAL, INC. 2010 ANNUAL REPORT Dear Fellow Shareholders: The past decade has certainly been good ﬁnancially for the U.S. coal industry and for coal stocks. Since 2000, an investment in ACI has returned 453% compared with a return of 15% for the S&P 500, highlighting our shareholder focus and ﬁve dividend increases during the past 10 years. Of course, other drivers contributed to this outperformance, including supply constraints, global economic growth and industrial expansion in emerging nations. So what will drive coal markets in the decade ahead? We believe it will be more of the same. Developed countries are ﬁnally rebounding from the Great Recession of 2009, while the developing world continues its rapid pace of economic growth, infrastructure spending and energy use. Coal industry consolidation, supply rationalization and reserve depletion will further shape future coal market dynamics. It’s still early in this global commodity super-cycle. We urge you to Start Here. It will be an exciting journey. 10 ARCH COAL, INC. 2010 ANNUAL REPORT FINANCIAL HIGHLIGHTS Year Ended December 31 (in millions, except per share data) Tons sold Revenues Income from operations Adjusted net income* 2010 162.8 2009 126.1 2008 139.6 $ 3,186.3 $ 2,576.1 $ 2,983.8 $ 324.0 $ 123.7 $ 461.3 $ 185.8 $ 63.4 $ 354.3 Adjusted diluted earnings per share* $ 1.14 $ 0.42 $ 2.45 Adjusted EBITDA* $ 724.2 $ 458.7 $ 753.2 Cash provided by operating activities $ 697.1 $ 383.0 $ 679.1 Capital expenditures $ 314.7 $ 323.2 $ 497.3 Dividends declared per common share $ 0.39 $ 0.36 $ 0.34 *Deﬁned and reconciled at the end of this report. Building Strength last year, earning seven national or state awards, During the past decade, we have been busy including the U.S. Department of Interior’s building our asset base – either through organic National Award and the Interstate Mining Compact growth initiatives or via opportunistic strategic Commission’s National Public Outreach Award. additions. We’ve also pruned our portfolio along the way by monetizing non-core operations and reserves. All of these efforts have transformed Arch Coal into what it is today – a world-class energy company and the operator of some of the safest and most environmentally responsible mines in the world. Third, the most successful companies in commodity businesses tend to be low-cost producers. We never lose sight of that goal, and our mines consistently vie for that honor in each of our primary producing regions. Our reported costs per ton in 2010 reﬂect this success. In particular, costs in the Powder River Basin In particular, we’ve assembled strengths in four took a step down in 2010 as the full integration areas that will propel our success in the next of Jacobs Ranch into Black Thunder – the world’s decade. First and foremost, our safety largest coal mining complex – was realized. performance is unparalleled in the U.S. coal Operating costs in the Western Bituminous industry. The tragic events of the past year in Region also improved in 2010. Central the coal industry serve as a reminder of the Appalachian costs increased only marginally importance of mine safety. In 2010, nearly half last year, due almost exclusively to higher of our mines and facilities worked an entire sales-sensitive costs. Moreover, we continue year without a single reportable injury. With to maintain one of the lowest-cost operating our dedicated safety culture and our adoption structures in that region. of progressive practices such as behavior- based safety, we remain focused on continuous improvement in this critical area of performance. Arch’s operations also attained major milestones in productivity during 2010, helping to enhance our cost performance. Our surface and under- Arch was also honored in 2010 with a national ground mines again achieved productivity levels Sentinels of Safety certiﬁcate from the U.S. that far outranked U.S. coal industry averages, Department of Labor, as well as eight state highlighting our signiﬁcant scale advantage awards for outstanding safety practices. in production. Moreover, all of our longwall In February 2011, the company’s ﬂagship operations placed among the nation’s top operation, Black Thunder, surpassed 8 million 20 most productive underground operations. employee hours – or more than two years – without a lost-time incident. Fourth and ﬁnally, we believe ﬁnancial strength is a key contributor to success in the commodity Second, and in tandem with a commitment to space. In fact, our ﬁnancial performance has safety, our environmental compliance record is improved steadily since the downturn in 2009 vital for measuring success as an organization. … and should accelerate in the coming years. In In 2010, Arch delivered its best year on record 2010, Arch set new records for revenues and cash for environmental compliance, continuing to ﬂow. Improved margins in each of our operating lead other major coal industry peers. Our mines regions helped to expand our proﬁtability, excelled in environmental stewardship practices allowing us to achieve our second highest level 12 ARCH COAL, INC. 2010 ANNUAL REPORT Coal’s Compelling Story An abundant, affordable and vital national resource, coal should be the starting block for America’s energy policy. FOSSIL FUEL PRICES (prompt delivery, $ per million Btu, at February 25, 2011) AVERAGE UTILIZATION AT SELECT U.S. POWER PLANTS IN 2010 (percent of total capacity used) Crude Oil Natural Gas Powder River Basin Coal $16.88 $4.01 $0.81 Average Nuclear Plant (full year) 91% 73% 67% Average Coal Plant (full year) Average Coal Plant (in summer) Coal commands a signiﬁcant cost advantage over other fossil fuels for power generation. Even during peak seasons, coal plants continue to operate at relatively low capacity factors. Improving utilization at these plants can increase coal demand considerably. PROJECTED GROWTH IN U.S. COAL CONSUMPTION (in millions of tons) COAL’S SHARE OF THE U.S. ELECTRICITY MARKET (in 2010, through November) 2010 2030 1,051 1,240 2x Coal’s share is nearly twice that of natural gas. Coal 45% Natural Gas 24% Nuclear 19% Hydro 6% Renewables 5% Oil 1% Domestic coal use is projected to climb 18 percent by 2030. That kind of steady growth – coupled with a promising export story – should create signiﬁcant opportunities for value creation. Coal plays a dominant role in powering America’s electric grid, keeping energy costs low for consumers and making U.S. businesses more competitive. 13 ARCH COAL, INC. 2010 ANNUAL REPORT Arch Coal’s Compelling Story Arch is geared up and ready to deliver even better ﬁnancial results, to generate increasing returns above our cost of capital and to re-deploy our free cash ﬂow in ways that beneﬁt our shareholders. Start Here to join us. ARCH’S RESERVE BASE BY SULFUR CONTENT U.S. STATES SERVED BY ARCH COAL 88% of Arch’s reserve base is considered low in sulfur content. Ultra-low-sulfur 82% Low-sulfur 6% High-sulfur 12% 39 states served by Arch Powered by Arch Not Powered by Arch Roughly 88% of Arch’s reserve base is low in sulfur, helping generators limit emissions and meet government regulations without the need for additional capital outlay. In 2010, Arch served 195 power plants and other end users in 39 of the 48 continential U.S. states, and customers on four continents. ARCH’S MINES: PRODUCTIVE AND PROFITABLE (2010, tons per employee-hour) EARNINGS DIVERSITY – ARCH COAL (2010, segment EBITDA by region) UNDERGROUND MINES 69% 3.04 5.13 8.83 27.54 SURFACE MINES 212% Powder River Basin 46% Central Appalachia 36% Western Bituminous 18% U.S. Coal Industry Average, Excluding ACI Arch Coal Arch’s surface and underground mines achieved productivity levels that far outpaced U.S. coal industry averages in 2010, highlighting our signiﬁcant scale advantage in production. While the company’s production is weighted toward the Powder River Basin, Arch’s ﬁnancial results are well balanced across all operating regions. 14 ARCH COAL, INC. 2010 ANNUAL REPORT of EBITDA in company history. We also exercised to replicate current U.S. coal industry production restraint in capital spending, and used the record and more to meet projected demand. free cash ﬂow generated to reduce our debt levels, further enhancing our liquidity position. Since much of the planned coal development Furthermore, we continued to protect and bolster is projected for the Asia-Paciﬁc region, Arch our balance sheet, which boasts the industry’s acquired a 38% interest in the MBT marine lowest level of legacy liabilities. terminal in Washington state that is seeking to facilitate exports of domestic coal off the West Overcoming Weakness Coast. We have also secured throughput capacity We also overcame several challenges in 2010. out to 2015 at Ridley Terminal in British Columbia, On the market front, coal stockpiles at U.S. power Canada, and are exploring other opportunities producers began the year at record levels, and to increase coal exports off the West Coast. fears of a double-dip U.S. recession lingered These options will help us to meet our strategic throughout the summer. However, favorable objective of expanding coal sales from the weather trends in 2010, along with a nearly Powder River Basin and the Western Bituminous 3% rise in the nation’s GDP, helped to cut those Region into the world’s largest and fastest- stockpiles by 33 millions tons from the record growing coal market. These developments high level reached at the end of November 2009. increase our direct exposure to the seaborne In 2011, we are projecting another reduction of thermal market and should further unlock the 25 million tons – assuming supply and demand value inherent in our western coal assets. remain relatively ﬂat – which would result in stockpiles falling to their lowest levels in nearly Moreover, we will continue to capture export ﬁve years. opportunities for our Central Appalachian coal assets, as well as our growing Illinois Basin In addition, natural gas prices languished for interest. Our equity stake in the DTA marine the second straight year, creating a further drag terminal in Virginia – along with throughput on coal markets. Fortunately, the ability for options at other East Coast facilities and natural gas to displace coal remains relatively investments in inland river terminals – will allow modest. We believe that existing generation and Arch to increase its exposure to the Atlantic transmission constraints limit the amount of coal Basin metallurgical and thermal coal trade. that can be displaced by gas to less than 5% of Our trading function further supports our overall consumption. Moreover, even at today’s strategy of increasing participation in seemingly unsustainable natural gas prices, international coal markets. most U.S. coal basins – and particularly the Powder River Basin – still command a signiﬁcant Turning to domestic markets, growth in coal cost advantage for power generation. Seizing Opportunity demand will be fueled by higher utilization at existing coal plants and usage at new coal plants recently completed or well underway. In total, We foresee considerable market opportunities we project 45 million tons of incremental, annual developing in global and domestic coal markets. coal demand from new coal plants during the In the next ﬁve years alone, the world will need next four years, and another 90 million tons 15 ARCH COAL, INC. 2010 ANNUAL REPORT of new, annual coal consumption from higher – and for a substitute for increasingly expensive, utilization (from 67% to 73%) at existing plants. foreign, petroleum-based fuels – could prompt a renewed push for coal-to-liquids technologies. At the same time, we expect that coal supply in Central Appalachia will continue to decline, Start Here with up to 40 million tons of regional supply We’ve assembled the right pieces to excel in this disappearing by mid-decade. This decline current market cycle. Our short-term goal will be represents another market opportunity for other continued margin enhancement at our existing coal basins, particularly the Powder River Basin, operations. Longer term, we will continue to to step in and ﬁll the domestic coal supply gap. evaluate internal growth options, such as mine Confronting Threats development in the Illinois Basin and Montana. Beyond that, we will pursue strategic growth Of course, ongoing regulatory and permitting opportunities – particularly those that can pressure will likely result in the retirement of contribute to our participation in the Asia-Paciﬁc some older, less efﬁcient coal plants. We expect growth markets. But, as our history shows, we these potential closures to be modest, and will do so prudently. ultimately dependent upon the future power needs and the economic conditions of those Our goal is to be the continued industry leader communities served by the plants in question. in safety and environmental performance, to In addition, new sources of coal demand could deliver even better ﬁnancial results, to generate offset the aggregate coal demand lost from any increasing returns above our cost of capital and proposed coal plant closures. to re-deploy our free cash ﬂow in ways that Furthermore, regulatory challenges will continue to dynamically change the U.S. coal industry. We We believe we’re still at the outset of a major expect more high-cost coal supply rationalization commodities super-cycle. Start Here to join us. beneﬁt our shareholders. and perhaps even further consolidation, resulting in a stronger and healthier industry overall. Such challenges could also help spur incremental investment in clean coal technologies that will make coal use in this country and around the world cleaner, more efﬁcient and more climate- Steven F. Leer Chairman and Chief Executive Ofﬁcer friendly. In addition, the push for cleaner fuels March 1, 2011 16 ARCH COAL, INC. 2010 ANNUAL REPORT Annual Report On Form 10-K For the Year Ended December 31, 2010 Arch Coal, Inc. Shareholder Information Common Stock Our common stock is listed and traded on the New York Stock Exchange under the ticker symbol ACI. On February 28, 2011, our common stock closed at $33.53 and we had approximately 8,455 holders of record of our common stock on that date. Dividends Arch paid dividends on our common stock totaling $0.39 per share in 2010. There is no assurance as to the amount or payment of dividends in future periods because they are dependent on our future earnings, capital requirements and financial condition. Code of Business Conduct We operate under a code of business conduct that applies to all of our salaried employees, including our chief executive officer, chief financial officer and chief accounting officer. The code is published under “Corporate Governance” at http://investor.archcoal.com. Corporate Governance Guidelines Our board of directors has adopted corporate governance guidelines that address various matters pertaining to director selection and duties. The guidelines are published under “Corporate Governance” at http://investor.archcoal.com. Independent Public Accounting Firm Ernst & Young LLP 190 Carondelet Plaza, Suite 1300 St. Louis, Missouri 63105 Financial Information Please direct any inquiries or requests for documents to: Investor Relations Arch Coal, Inc. One CityPlace Drive, Suite 300 St. Louis, Missouri 63141 (314) 994-2897 www.archcoal.com Transfer Agent Questions regarding shareholder records, stock transfers, stock certificates, dividends or other stock inquiries (other than our Dividend Reinvestment and Direct Stock Purchase Plan) should be directed to: American Stock Transfer & Trust Company 6201 15th Avenue Brooklyn, New York 11219 (877) 390-3073 www.amstock.com Requests for information about our dividend reinvestment and direct stock purchase plan should be directed to: American Stock Transfer & Trust Company P.O. Box 922, Wall Street Station New York, New York 10269 (877) 390-3073 www.amstock.com Board of Directors JAMES R. BOYD (a)(b*) Lead Director, Arch Coal, Inc.; Retired Senior Vice President & Group Operating Ofﬁcer, Ashland Inc. JOHN W. EAVES (c)(e) President and Chief Operating Ofﬁcer, Arch Coal, Inc. DAVID D. FREUDENTHAL (a)(e) Former Governor of Wyoming J. THOMAS JONES (a)(c) Chief Executive Ofﬁcer, West Virginia United Health Systems STEVEN F. LEER (c) Chairman and Chief Executive Ofﬁcer, Arch Coal, Inc. THOMAS A. LOCKHART (c)(d) State Representative, Wyoming House; Retired Vice President of PaciﬁCorp THEODORE D. SANDS (c*)(d)(e) President, HAAS Capital, LLC; Retired Managing Director, Investment Banking, for the Global Metals/Mining Group, Merrill Lynch WESLEY M. TAYLOR (d)(e*) Retired President, TXU Generation PETER I. WOLD (c)(e) President, Wold Oil Properties and Secretary/Treasurer, American Talc PATRICIA FRY GODLEY (a)(b)(e*) Partner, Van Ness Feldman, P.C. A. MICHAEL PERRY (a)(b) Retired Chairman of the Board, Bank One, West Virginia, N.A. ROBERT G. POTTER (b)(d*) Retired Chairman and CEO, Solutia Inc. (a) Audit Committee (b) Nominating and Corporate Governance Committee (c) Finance Committee (d) Personnel and Compensation Committee (e) Energy and Environmental Policy Committee * Committee Chair ROBERT G. JONES Senior Vice President – Law, General Counsel and Secretary DAVID B. PEUGH Vice President, Business Development PAUL A. LANG Senior Vice President, Operations DECK S. SLONE Vice President, Government, Investor and Public Affairs DAVID N. WARNECKE Senior Vice President, Marketing and Trading SHEILA B. FELDMAN Vice President, Human Resources DOUGLAS H. HUNT (d)(e) Director of Acquisitions, Petro-Hunt, LLC BRIAN J. JENNINGS (a*)(c) Chief Financial Ofﬁcer, Energy Transfer Partners, L.P. Senior Ofﬁcers STEVEN F. LEER Chairman and Chief Executive Ofﬁcer JOHN W. EAVES President and Chief Operating Ofﬁcer C. HENRY BESTEN Senior Vice President, Strategic Development JOHN T. DREXLER Senior Vice President and Chief Financial Ofﬁcer . m o c n o s i r r a h k a f . l w w w . i r u o s s i M , s i u o L . t S , n o s i r r a H k a F l : n g i s e D archcoal.com One CityPlace Drive, Suite 300 St. Louis, Missouri 63141 314-994-2700

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