U.S. company Peabody Energy feels that its latest Australian acquisition, the Macarthur Coal mines are not up to industry standards. The largest producer of coal in the U.S. by output, has decided to spend time and money on the coal mine to bring it up to par with its expectations.
Chairman and Chief Executive Officer, Gregory H Boyce said that the mines were not being operated to sustainable industry standards and they had chosen to address this issue head on. One of the key issues to be addressed is the 12 million cubic meters of waste material at the Australian mine.
Executives of Peabody Energy said that they had plans to potentially remove 90% of this waste from the mine site in the current year. The St Louis based company also intends to spend tens of millions of dollars to repair large equipment at the mine and upgrade it this year.
The company has forecast selling between 245 million to 265 million short tons this year. Last year the prediction was for 250.6 million tons. On the New York Stock Exchange the news of reduced guidance for the output of coal in 2012 saw the shares of the company decline. In the last three months the company stock value has come down by 7%.
Peabody Energy initially wished to acquire the Macarthur Coal mines with ArcelorMittal as a joint venture partner. However the world’s largest steel making firm decided that it did not want to make such a large investment in a venture where it did not have controlling interests. This left Peabody Energy with a $ 5.05 billion acquisition in the last quarter.