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By Leonora Walet
HONG KONG Dec 8 U.S. energy producer Arch Coal
Inc (ACI.N) expects production in 2009 to be flat or slightly
lower while overall output for the U.S. coal industry will slow,
and also sees plenty of opportunity for acquisitions amid the
Separately, Peabody Energy Corp BTU.N, the most valuable
U.S. coal miner, said it is eyeing potential investments in
western China, the country that is expected to drive much of
global growth in demand for coal.
Arch's chief executive said the company had a strong balance
sheet and was well-positioned to make acquisitions.
"We see there's going to be tremendous opportunity to acquire
assets," Steven Leer, chairman and chief executive officer of the
No.3 U.S. coal producer by market value, told Reuters on the
sidelines of an event in Hong Kong.
"Within every crisis there is enormous opportunity," Leer
said, declining to comment on specific targets.
Leer expects overall production for the U.S. coal sector to
end this year slightly higher despite a slowdown in the second
half. He expects industry production to ease in 2009.
U.S. coal prices have slid for weeks after tripling between
mid-2007 and mid-2008 to about $150 a short tonne for premium
"It seems it's stabilising and a great deal would depend on
the bail-out, demand, and what government will do to stimulate
the economy," Leer said.
He sees opportunities to make new acquisitions amid the
global economic slowdown.
"Arch's balance sheet is stronger than it has ever been in
the history of the company and that really prepares us to make
acquisitions if it makes sense for our shareholders," Leer said.
Larger rival Peabody is looking into several investment
opportunities as well, particularly in China.
"We're looking at projects in western China with various
companies," Fred Palmer, senior vice president of government
relations at Peabody told Reuters at the same event.
Leer and Palmer were attending the launch of the Consortium
for Clean Coal Utilisation.
"We are looking at coal development in (Inner) Mongolia for
China and we're in discussion with Chinese companies," said
Peabody signed a deal in October to explore the possibility
of developing a large surface mine and downstream coal
gasification facility in the Inner Mongolia region of China.
The coal giant is now exploring project opportunities in
western China with various other companies, said Palmer, without
"We are here because we see tremendous opportunity. We believe
we can add value to the coal mining development on a sustainable
basis in China," he said.
Peabody Energy partnered with seven other Chinese companies
including China National Coal Group and Shenhua Group to build a
$1 billion power plant that will generate 650 megawatts of
electricity near Tianjin, which is southeast of Beijing.
The first phase of the project, also called GreenGen, is
expected to go online in 2009, initially producing 250 MW.
(Editing by Jacqueline Wong)