Bear Run Mine at a Glance

• A workforce of more than 350 when ramped up to full capacity

• 2010 production expected to reach 3.5 million tons

• Expected annual capacity of approximately 8 million tons

Peabody Expands Australian Platform to Meet Rising Energy Demand

P eabody Energy Australia is moving ahead with expansion plans that will increase export volumes

up to 40 million tons by 2014 to serve fast-growing Asia-Pacifi c nations, the world’s strongest economies that are powering their progress with coal.

The portfolio of Australian growth projects will target 12 million to 15 million tons per year of metallurgical coal production and 15 million to 17 million tons per year of thermal coal exports.

Projects include expansion at the Metropolitan Mine, which ultimately will increase its production by 1 million tons per year. Last year, the New South Wales mine shipped 1.5 million tons of mostly hard coking coal for export to Asian steel producers. Metropolitan received fi nal permits to proceed with the expansion in the second half of 2009. Its coal ships through Port Kembla, south of Sydney.

“China, India and other Asia-Pacifi c nations are signifi cantly short of coal, which is a vital ingredient for electricity generation and steelmaking,” says Peabody President and Chief Commercial Offi cer Rick Navarre. “Our operations strategically are located to serve enormous growth in Asia. This growth will account for 90 percent of coal demand growth in the next 20 years.”

Peabody also will extend mining activities at the Burton Mine and increase production at the Millennium Mine. Both are metallurgical operations in Queensland. Also moving ahead is permitting for Denham Mine, a planned open-cut operation

expected to achieve a capacity of 3 million tons by 2014 and expanding to 6 million tons per year of high quality, hard coking coal. Thermal capacity will be increased through 5 million to 7 million additional tons of production annually at the Wambo complex and low-cost Wilpinjong Mine in New South Wales.

Expanded access to transportation infrastructure also has been secured. “New contracts with rail providers and construction of the Newcastle Coal Infrastructure Group (NCIG) terminal will help us serve the Wambo and Wilpinjong expansions,” says Peabody Energy Australia Managing Director Julian Thornton. Peabody has the second-largest

interest in the 33 million ton-per-year NCIG terminal, which also plans to further expand long-term capacity. Peabody will access throughput there in April.

Peabody’s Australian volumes in 2009 totaled 22.3 million tons, including 6.9 million tons of metallurgical coal and 9.6 million tons of seaborne thermal shipments.

“Australian shipments continue to increase to satisfy rising Asian demand,” says Julian. “For example, Australian exports to China in 2009 reached 50 million tons compared with only 4.4 million tons the previous year.”

The expansion at Metropolitan Mine in New South Wales is among a number of projects targeted to signifi cantly increase Peabody Energy’s Australian exports by 2014.

From left, Senior Manager of Field Construction Tuss Peluchette and Operations Manager Kent Holcomb survey construction at the Bear Run Mine site in Indiana. Bear Run will be the largest surface mine in the Illinois Basin and the Eastern United States.

The Largest Surface Mine in the Eastern U.S. Advances this Summer

With a 100-plus-year history in Indiana, Peabody Energy begins a new chapter this summer

when the company ramps up production at Bear Run Mine, which will be the largest surface mine in the Eastern United States and the company’s newest investment in the Illinois Basin.

Bear Run is expected to produce approximately 3.5 million tons of coal in 2010. When operating at full pace, the Sullivan County mine will produce 8 million tons annually. “Peabody is putting its resources into the fastest-growing U.S. region,” says Bear Run Operations Manager Kent Holcomb. “The demand for Illinois Basin coal remains strong, and Bear Run will serve long-term customer contracts.”

This summer, Bear Run’s workforce will number 200-plus and will grow to more than 350 by late 2011. Bear Run’s contracts are in place to deliver coal to two major Midwestern electricity generators for terms of up to 17 years. Together, the agreements represent billions in revenues.

Located about 100 miles southwest of Indianapolis, Bear Run will produce coal from the 5, 5A, 6 and 7 seams. In May, the preparation plant comes on line, capable of processing 1,600 tons of coal an hour. Finishing touches also are taking place on the newly constructed Indiana Railroad loop to accommodate shipments from the mine.

Set to be completed on time and on budget, Bear Run’s construction also has included opportunities to contain costs, Kent says.

Portfolio of Projects Will Fuel Growing Need for Quality Coal in Fast-Growing Asia-Pacific Markets

continued on page 6

Bear Run Mine Ramps Up Production in the U.S. Midwest

Second Quarter 2010For Peabody Energy Employees and Stakeholders

3 4-5 8GreenGen Hailed as Global Energy Model

Peabody Pioneers Best-in-Class Restoration

Partnership Honors St. Louis-Area Educators

Delivering BTU’s Formula for Growth Around the World

About the Author:

In March 2009, M. Frances “Fran” Keeth joined Peabody Energy’s Board of Directors. She serves on the audit and compensation committees.

Fran formerly was Executive Vice President of Royal Dutch Shell and Chief Executive Offi cer and President of Shell Chemicals Limited, a services company responsible for Royal Dutch Shell’s global petrochemical businesses. She also served as Executive Vice President of the Customer Fulfi llment and Product Business Units for Shell Chemicals Limited and was President and Chief Executive Offi cer of Shell Chemical LP, a U.S. petrochemical member of the Royal Dutch/Shell Group. Currently, she also serves as a director on the boards of Verizon Communications and Arrow Electronics.

MESSAGE FROM CHAIRMAN AND CHIEF EXECUTIVE OFFICER GREG BOYCE

PERSPECTIVES

2|Conveyor Second Quarter 2010

‘Only Those Who Dare to Fail Greatly Can Ever Achieve Greatly’

My journey to lead a major chemical company – as Executive Vice President of Royal Dutch Shell

and Chief Executive Offi cer and President of Shell Chemicals Limited – began in 1970 when I joined Royal Dutch Shell as a statistical typist.

Soon after, I asked for more advancement opportunities. “If you fail, there may not be a place for you to come back,” my boss replied. Taking the risk allowed me to discover my talent for numbers went beyond typing them. I would never go back, but I would go up.

We don’t need to wait until we achieve a leadership position before striving to lead. That moment and others have taught me four standout lessons:

1. Envision and pursue goals. Results come when you set a goal, commit to and pursue it. At Shell, I would deposit my co-workers’ paychecks and compare my wages with theirs; they all had college degrees. This motivated me to pursue my own. I didn’t stop at my undergraduate business degree. A master’s and law degree followed. This was made possible by Shell’s tuition reimbursement benefi t. And at Peabody, you also are fortunate to have a tuition reimbursement program to help you attain academic goals.

2. We can’t make it alone. American political leader and author Booker T. Washington said, “There are two ways of exerting one’s strength: One is pushing down. The other is pulling up.” Leadership is pulling up. Get to know, mentor and encourage others, while giving them room to grow. Learning how to ask for help also is a strength.

3. Foster diversity and inclusiveness. Every employee must feel heard and respected. Focus on strengths, not on individual differences. Key customers across all business sectors also are increasingly diverse. Diversity makes companies more competitive and credible. Put simply, it makes good business sense.

4. Believe in yourself. When once asked to lead a department, I backed away. I didn’t have enough technical experience. Somebody else with experience but without the desire to learn got the job. I ended up with more responsibility without the authority, and it was miserable. When approached about the role a second time, of course, I said yes. I had to be confi dent, defi ne my own success, and stay true to my values and beliefs.

Peabody frames leadership in the context of four pillars: inspiration, innovation, collaboration and execution. These fall much in line with lessons I’ve learned and are what power best-in-class companies. It’s stretching beyond just clocking in and out each day.

I think back to those early words from my boss on failure. I prefer the words of Robert F. Kennedy: “Only those who dare to fail greatly can ever achieve greatly.”

So don’t wait. Take your next chance to lead.

And achieve greatly.

li i BTU’ F l f G th A d th W ld

Greg Boyce, Chairman and Chief Executive Offi cer

Fran Keeth, Peabody Energy Board of Directors

As we review our 2009 performance and plan for the future, I’m reminded of legendary oilman

John Paul Getty’s formula for success: “Rise early, work hard, strike oil.” Today’s global energy markets are far more complex than in Getty’s time, but BTU’s strategic focus on growth is just as straightforward.

First, we earn the right to grow by executing the basics: pursuing safe, low-cost operations, margin expansion, expert contract strategies and a strong balance sheet. The most important indicator of any well-managed business is safety, and in 2009, we achieved Peabody’s safest year on record; our global incident rate improved 21 percent from the prior year and 40 percent in Australia. And we will not stop until we drive our worldwide safety rate to zero.

Second, we deliver profitable growth through the power of Peabody’s global platform. Peabody’s assets and actions are rightly focused on the world’s fastest-growing markets: Asia internationally and

the Powder River and Illinois basins domestically. Through expansion projects, international trading, joint ventures and acquisitions, we are bringing the world’s most affordable, abundant fuel to people in 23 nations on six continents.

In the face of the worst recession in a generation, your hard work enabled us to deliver the second best earnings in our history. Looking ahead, Peabody is positioned for significant growth and robust long-term performance.

the Wambo complex and the low-cost Wilpinjong Mine to serve our thermal customers. Peabody also is taking steps to increase access to transportation networks throughout Australia, and we continue to grow our Asian presence through offices in China, Mongolia, Singapore and Indonesia, while advancing joint ventures in Mongolia and China.

In the Powder River Basin, we are leveraging the synergies of our Northern operations through a combined management team and further growing operations in our North Antelope Rochelle Mine, the world’s most productive, and we are exploring long-term markets for Powder River Basin coal in Asia. In the Southwest, the new low-cost El Segundo Mine is reaching its stride and is the most productive U.S. mine outside of the Powder River Basin. And in the Midwest, we are completing the Bear Run Mine in Indiana, which will be the largest surface mine in the Eastern United States.

Peabody is the world’s largest private sector coal company at a time when coal is the world’s fastest growing fuel. Coal’s best days are ahead. It forms the foundation of our global economy. It’s abundant, secure and affordable. And it fuels a sustainable future through near-zero emissions technologies. I am proud of the progress we have made securing our energy future and advancing our carbon goals. Coal is at the center of this achievement, and so are you. Thank you for all that you do to make Peabody a world-class company.

Taking the Risk Allowed Me to Discover My Talent for Numbers; I Would Never Go Back, But I Would Go Up

Coal’s best days are ahead. It forms the foundation of our

global economy. It’s abundant, secure and affordable. And it fuels a sustainable future through near-

zero emissions technologies.Our Australian platform is optimally located to serve high-growth Pacific Rim markets, and we are investing in a major capital program to increase our metallurgical and thermal production, annually targeting up to 40 million tons of production by 2014 in Queensland and New South Wales. To increase metallurgical coal output, Peabody is proceeding with permitting for the large Denham Mine, extending our operations at the Burton Mine and increasing output at the Millennium and Metropolitan mines. In addition, we are expanding

Conveyor is written for employees and stakeholders and is produced by the Investor Relations & Corporate Communications Department. Visit PeabodyEnergy.com and CoalCanDoThat.com

Copyright © 2010 Peabody Energy

The use of the words “Peabody,” “the company” and “our” relate to Peabody, our subsidiaries and our majority-owned affi liates.

Peabody Energy 701 Market Street St. Louis, MO 63101-1826Phone: 314-342-3400 Fax: 314-342-7799Conveyor@PeabodyEnergy.com

Peabody Energy (NYSE: BTU) is an Equal Opportunity Employer.

Visit CoalCanDoThat.com as the industry’s best information source for clean coal. Sign up for e-bulletins, and follow Coal Can Do That on Twitter and YouTube!

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Conveyor is written for employees and stakeholr

Conveyor Second Quarter 2010|3

21st Century Coal: GreenGen Hailed as Global Energy Model

Zeroing in: Global Efforts Power 2009 as Peabody’s Safest Year

Hailed by the leaders of the United States and China as a 21st Century world energy model,

GreenGen advances clean energy from coal that will power China’s fast-growing economy.

GreenGen will be among the world’s largest near-zero emissions coal-fueled power plants. Peabody Energy, the only non-Chinese equity partner in the project, convened with project partners in late 2009 to execute their joint venture agreement. Peabody Chairman and Chief Executive Offi cer Greg Boyce and Government Relations Senior Vice President Fred Palmer were joined by U.S. Secretary of Energy Steven Chu, Chinese Vice Premier Li Keqiang and a delegation of Chinese offi cials, as well as others for this prestigious signing ceremony inside Beijing’s Great Hall of the People.

The event captured global acclaim as U.S. President Barack Obama and Chinese President Hu Jintao simultaneously pledged cooperation on cleaner uses of coal and praised GreenGen as a global model for clean energy. The White House Offi ce of the Press Secretary also recognized Peabody’s role in GreenGen.

Taking Shape on the World Stage Southeast of Beijing in the port city of Tianjin, about an hour trip via high-speed rail and on a site just off the Yellow Sea’s Bohai Bay, GreenGen construction moves swiftly. GreenGen is China’s fi rst integrated gasifi cation combined cycle (IGCC) power plant. The site buzzes with activity of more than 130 construction workers putting infrastructure in place.

With construction in multiple phases, the $1 billion project is set to generate electricity as quickly as next year with its fi rst 250 megawatt IGCC unit. GreenGen ultimately will capture and store carbon dioxide to recover oil.

“GreenGen symbolizes the technology path toward achieving near-zero emissions with carbon capture and storage,” says Peabody China President Tayeb Tahir. “Every day, coal lights cities in China, improving lifestyles and generating tremendous economic growth.” Globally, world energy demand is expected to grow 40 percent in the next quarter century, according to the International Energy Agency’s latest World Energy Outlook.

The importance of projects like GreenGen also is demonstrated by the global focus on accelerating development of carbon capture and storage (CCS). President Obama recently assembled an interagency CCS task force to speed up development and cost-effective commercial deployment with a goal of

Incidence Rate Improves 21 Percent

Before every task the Rawhide Mine Preparation Plant team undertakes, safety is the fi rst

conversation. “We examine every step, review equipment we’ll use and discuss potential risks,” says Planner Dale Franzen. “Everyone takes initiative individually toward a goal of zero safety incidents, but we also watch out for one another and don’t hesitate to point out opportunities to be safer.”

This Powder River Basin team closed out 2009 as the 29th consecutive year without an accident causing lost time, a signifi cant company and industry milestone. “While we take pride in the accomplish-ment, safety demands attention every minute of every hour of every day – it is a way of life,” says Dale, who has worked at the plant for 31 years.

bringing 5 to 10 commercial demonstration projects like GreenGen on line in as quickly as six years.

The International Energy Agency calls for 100 large-scale, fully deployed global CCS plants in the next decade. The Australia government is advancing a global coalition to develop 20 industrial-scale CCS projects worldwide in the next 10 years.

Powering China with Near-Zero Emissions“With GreenGen, China shows that the world’s leading coal-consuming nation is a leader in developing clean coal technology,” says Jay Li, who heads up Business Development for Peabody China. China is expected to quickly become the world’s second-largest economy behind the United States, with annual coal use set to grow the equivalent of two times the current U.S. coal use in the next decade. Both countries have pledged together to pursue clean energy projects.

The technologies and science needed for carbon capture are well understood. Carbon dioxide (CO2) can be separated and compressed into a fl uid-like state, making it easier and less costly to transport via pipeline. Injecting carbon into oil fi elds also helps recover oil, followed by injecting carbon for deep storage into geology that has stored methane, coal and oil through the millennia.

China uses coal to fuel 80 percent of its electricity, and is the fastest-growing coal market. “The scale of China’s demand is enormous as we move through electrifi cation, urbanization and the Energy Age all at once,” says Jay.

Peabody also continues to advance development of clean coal on a number of fronts as it expands its presence in Asia and pursues partnerships with major coal, energy and steel companies. These include development of a large surface mine in Western China and a downstream coal conversion facility with the government of Inner Mongolia.

Peabody recently became a founding member of the U.S. and China Energy Cooperation Program, a public-private partnership with leading Fortune 500 companies that seek to develop clean energy projects in China. The program works in consultation with the U.S. Department of Commerce and certain key Chinese government agencies.

Globally, the Peabody workforce made 2009 the safest in the company’s 126-year history. The global safety incident rate reached 2.82, improving 21 percent from 2008. Peabody Energy Australia powered this performance with a record 40 percent improvement. Combine these with the dozens of awards for safety and emergency preparedness, and the result is a year of unprecedented safety success.

“Employees continue to make safety the No. 1 priority,” says Peabody Vice President of Safety Dave Beerbower. “Their commitment continues to drive our incident rate down to our vision of zero. Our operations are proving this is in reach as four mines achieved zero lost-time incidents. I challenge each of us to make 2010 even safer.”

Australia Introduces New ToolsIn each of the past three years, Peabody Energy Australia has raised the bar to introduce safety performance. Continuous improvement is exemplifi ed by a number of 2009 achievements. The Metropolitan Mine mechanical team, a workforce of 50 that

Above, Peabody Chairman and CEO Greg Boyce joins a delegation of U.S. and Chinese offi cials and GreenGen project partners during the signing ceremony inside Beijing’s Great Hall of the People. At right, GreenGen construction takes shape in Tianjin.

continued on page 6

Construction Advances on China’s Near-Zero Emissions Coal-Fueled Plant in Tianjin

Safety 2009: Milestones

• Farmersburg: two years without a reportable incident

• Francisco surface Preparation Plant: 1,500 days without a reportable incident

• Gateway Mine Preparation Plant: 1,000 days without a reportable incident

• Lee Ranch: two years without a lost-time injury

• North Antelope Rochelle: one year without a lost-time incident and 638,000 hours without a safety incident

• Rawhide: one year without a lost-time incident

• Somerville Central Preparation Plant: four years without a reportable incident

• Southwest Region, the Kayenta Mine in Arizona

hours – without a lost-time injury

• Wambo: 500 days without a lost-time incident

• Wildcat Hills surface/Cottage Grove: one year without a reportable incident

• Willow Lake Preparation Plant: 1,000 days without a reportable incident

• Wilpinjong: one year without a lost-time incident

As a commercially operated power plant and carbon research center, GreenGen will sell electricity to the Chinese power grid. Peabody is contributing 6 percent equity in the project. The leading partner is the China Huaneng Group, one of the world’s top 10 power companies; other partners are some of China’s largest utility and coal companies.

“With GreenGen, China shows that the world’s leading coal-

consuming nation is a leader in developing clean coal technology.”

Jay Li

Vice President Business Development

Peabody China

and Lee Ranch and El Segundo mines in New Mexico: 2009 – a combined total of 1.6 million

Allen Eicher

4|Conveyor Second Quarter 2010

Armyworms and cross-country skiing became all part of a day’s work when Environmental

Specialist Allen Eicher and Hydrologist Dennis Jones began their careers with Peabody in the 1980s. For both, living Peabody’s mission – “when the mining is complete, we will leave the land in a condition equal to or better than we found it” – sometimes calls for the unconventional.

Today, with almost six decades of restoration experience combined, Allen and Dennis are among a large group of Peabody environmental specialists recognized as industry leaders by earning acclaim from peers and the industry around the globe. They join Colorado Reclamation Manager Roy Karo in achieving some of the industry’s highest accolades in 2009.

Allen Eicher, IndianaThe year was 1982: Allen Eicher was new on the job at the former Squaw Creek Mine in Southern Indiana. On a drive past two recently seeded fi elds, he noticed something awry.

“As the vegetation began to show, there also were bare areas. A closer look revealed armyworms – caterpillar-like creatures – feeding on the tiny plants, which quickly could destroy the crop. We could lose what we had planted if we didn’t react,” says Allen, who had to convince his mine superintendent to send a helicopter to spray the fi elds. “I pulled two of the worms out of my pocket to show him,” Allen adds. The superintendent eventually gave the green light, Allen says, but not without giving him the nickname of “the worm guy.”

Allen’s keen attention to detail has been evident throughout his career, and is part of his leadership that has garnered him praise from peers. In late 2009, the Indiana Society of Mining and Reclamation honored Allen with the Vance “Pat” Wiram Award for a lifetime of innovative practices in land restoration and environmental achievements.

Allen, who currently works out of the Midwest Operations offi ce, has led the seeding of thousands of farmland and forested acres in Southern Indiana. He is credited with planting nearly 7 million trees. And at Somerville Central, Allen pioneered wetland restoration methods and partnered with Purdue University forestry researchers to enhance tree growth. His efforts also have been recognized by the Indiana Department of Natural Resources with the 2007 Excellence in Mining and Reclamation Award and by the U.S. Deparment of the Interior with the 2008 National Award for Excellence in Surface Mining Reclamation at Sommerville Central Mine.

Ask Allen what he enjoys most about the restoration role, and he’ll mention that it’s part of doing the right thing. “We provide a great source of energy through coal, but we also have to minimize the impact on land and the effects on people, farms, forest and wildlife,” says Allen. “Steps to restore the land begin long before mining occurs. Our landscape designs are measured to include productive farmland, habitat for wildlife, restart of forests and recreation space for people.”

Dennis Jones, ColoradoColorado Operations Hydrologist Dennis Jones might be the fi rst Peabody employee to cross-country ski to the offi ce. Collecting water samples to ensure their quality became one of Dennis’ fi rst charges when he began his career with the company in 1980. He quickly learned how to maneuver through blankets of snow, sometimes three- to four-feet deep, to get to these sites.

He recalled one particularly chilly morning when getting out to the wells was easy. “But the return was another matter,” says Dennis. “One of my skis broke, so making my way back to the truck through the powder was a bit tough.” In that same spirit, Dennis has relentlessly monitored water sources, even when frigid Colorado winters force him to be creative and ski, snowshoe or snowmobile to the source.

Hydrology is a passion for Dennis, who is responsible for sample collection and data interpretation of a monitoring network that is one of the most detailed and complex in the state. It consists of 15 surface

Peabody operations in Wyoming, Indiana and Illinois have been honored for good neighbor practices and environmental excellence by the U.S. Department of the Interior. Each year, an expert panel evaluates land restoration programs and com-munity activities. Three of eight awards went to Peabody for innovation, best practices and stakeholder involvement in 2009.

Peabody Employees Earn Environmental

BEST-IN-CLASS

National Award of Excellence: Caballo Mine, WyomingThe award honors the restoration of streams and wetlands associated with North Tisdale Creek, where the operations and environmental team has effectively established vegetation, wetland conditions and regional landscape features on the prairie. These restored lands are twice as productive for livestock grazing as native range.

National Award of Excellence: Viking Mine, IndianaViking Mine was recognized for restoration of a variety of land uses including prime farmland, high-quality woodlands and wildlife habitat. The Viking Mine operations and environmental teams also perfected soil handling techniques that improve crop yields and reduce erosion.

Bronze Good Neighbor Award: Gateway Mine, IllinoisGateway Mine was honored for its energy education activities and community involvement. The mine routinely conducts tours and supports a variety of community giving initiatives, such as planting trees in area parks and leading education programs in local schools.

In Good Company: U.S. Interior Presents Peabody with National Excellence in Reclamation and Good Neighbor Awards

Preparation Plant Supervisor Robert Greenwood shows Chance Dietrich, grandson of former Peabody employee Ron Dietrich, what it is like to drive one of the Gateway Mine’s vehicles. Gateway routinely conducts community tours and appreciation events.

Dennis Jones

Conveyor Second Quarter 2010|5

Peabody’s North Antelope Rochelle Mine (NARM) received an Industry Reclamation and Wildlife Stewardship Award from the Wyoming Game and Fish Department for best practices to restore essential habitat for big game, mammals, birds and raptors over the past quarter century.

Restored lands in the Powder River Basin create important habitat for deer, antelope, sage grouse and many other species. Multiple studies have been conducted to refi ne land restoration practices for wildlife habitat and advance the understanding of regional wildlife populations. The NARM environmental team conducted a series of studies, which included a multi-year evaluation of the nearby sage grouse population. Scientists used radio transmitters to track bird movements and locations, enabling the team to evaluate vegetation preferences for land restoration plans.

water discharge points, 17 stream sites, 22 springs, 17 continuous stream fl ow recorders and 93 ground-water monitoring wells.

Says Dennis: “Our winter lasts from November through April and includes up to 200 inches of snow. The sites we monitor span a large area; one time a new mine inspector wanted to see all of our sediment ponds, it took 12 hours and 80 miles of travel.” Dennis, an avid outdoorsman, wouldn’t have it any other way.

Dennis’ hydrology contributions also include leading compliance and interpretation of the Surface Mine Reclamation and Control Act of 1977. Dennis has helped regulators draft and clarify regulations for protecting and restoring water in the Colorado mountains.

His dedication prompted his nomination by the Colorado Division of Mining, Reclamation and Safety for the state’s James A. Pendleton Award for outstanding contribution to the fi eld of hydrology

and successful reclamation. Dennis also has been nominated for the award on multiple occasions. His work at the site of the former Seneca Mine also helped Peabody receive the 2009 Excellence in Research and Use of New Practices Reclamation Award from the state.

Roy Karo, ColoradoRecognition for Allen and Dennis came on the heels of national honors for Peabody’s Reclamation Manager for Colorado Roy Karo. Roy was named 2009 Reclamationist of the Year by his peers at the American Society of Mining and Reclamation.

Throughout Roy’s 30-year career, he has helped establish thousands of acres of rangeland and pasture in a semi-arid climate in Northwest Colorado. Under his leadership, lands have been restored to a condition that is typically four times more productive for livestock grazing than native range.

Achieving success for Roy was particularly challenging given Colorado’s high elevation, mountainous terrain and brief growing season. Roy collaborated with engineers, academics and regulators including from the Offi ce of Surface Mining, Colorado State University, the U.S. Forest Service and the Colorado Division of Reclamation, Mining, and Safety.

Their goals were to advance soil handling, fencing and irrigation techniques to reestablish native woody plants and aspen trees in the region. In the process, Roy helped create a model that has been widely replicated.

Innovation and Sustainability Honors “Establishing woody plants presented a challenge, too,” says Roy. “We discovered that big game browsing kept some of the typically hardy and aggressive shrubs from thriving on restored lands.”

Restored Colorado lands today also provide a haven for deer and elk, offering some of the highest densities of big game in the region. Karo also has led numerous initiatives through the Colorado Division of Wildlife’s Ranching for Wildlife Program to successfully establish and document breeding, nesting and brood-rearing habitat for the potentially threatened Columbian sharp-tailed grouse and various mountain bluebird species.

Karo’s initiatives have been recognized with 10 state awards since 1994 and national honors for land restoration from the U.S. Department of the Interior in 2000 and 2006. Interior even singled out the industry veteran with its “Best of the Best Award” for a lifetime of accomplishments in 2006.

RESTORATION

NARM Receives Wyoming Industry Reclamation and Wildlife Stewardship Award

From left, Caballo Mine Senior Hydrologist Phil Murphree and Environmental Engineer Lexie Brundin monitor the success of restored lands near North Antelope Rochelle Mine, whose restoration team received an Industry Reclamation and Wildlife Stewardship Award from the Wyoming Game and Fish Department.

Roy Karo

Dozens of employees represent Peabody on rescue and training teams and have earned local, state and national honors in 2009. These include:

• The North Goonyella Mine Underground Rescue Team (pictured) in Queensland won the George Carbine Memorial Shield Award for excellent emer-gency preparedness at the fi fth annual Queensland Mines Rescue Service Memorial Cup. The seven-member team fi nished fi rst in the competition’s fi rst aid exercise and fi rst in the overall competition.

• The Twentymile Mine Rescue Team in Colorado took fi rst in state at the 2009 U.S. National Mine Rescue contest as well as second place at the

Rescue Teams Continue Global Tradition of Excellence

Ice Breaker emergency preparedness competition. Twentymile rescue trainer Mark Beauchamp also became the Benchman national champion at the biennial U.S. National Mine Rescue Contest for operating a brand new, self-contained breathing apparatus model.

• In the Midwest, the Willow Lake Mine Rescue Team was named best in Illinois at the 2009 U.S. National Mine Rescue contest, and the Air Quality-Francisco Underground Rescue Team was named best in Indiana at the 2009 U.S. National Mine Rescue contest.

• The El Segundo Mine Rescue Team in New Mexico took fi rst place at the 71st Annual Tri-State Firemen’s Association Convention.

• The North Antelope Rochelle Mine and Caballo Mine Rescue Team in the Powder River Basin achieved fi rst place at the 2009 Red Desert Trauma Conference and second place at the 28th Annual International Surface Mine Rescue Competition.

• The Metropolitan Mine rescue team in New South Wales won the B Grade Mines Rescue Competition.

Zeroing in: Global Efforts Power 2009 as Peabody’s Safest Yearcontinued from page 3

supplies the mine with safe and reliable equipment, achieved three years without a lost-injury incident. Another example: the Wilpinjong Mine operated one year, more than 500,000 hours without a lost-time incident. During that time, the mine produced 7.7 million tons of coal.

Also in 2009, Peabody Energy Australia established a Safety Leadership Team, made up of senior and site managers, and a Central Safety and Health Team, comprised of representatives from each Australian mine. This team reviews a site’s safety standards and completes hands-on observations. “These monthly reviews become a forum to share new safety standards and procedures, which we can apply elsewhere,” according to Senior Safety Advisor Garry Saunders.

A major emphasis on safe observations, risk training and completing actions required following incident audits also continue to drive safety. Also new this year is introduction of the Cardinal Rules, eight guidelines based on industry standards in Australia. A pocket-sized tag helps communicate these.

Four U.S. Mines Achieve Zero IncidentsIn the United States, four surface operations proved they could acheive zero incidents in 2009:

Farmersburg Mine in Indiana with almost 700,000 hours worked, Wildcat Hills surface/Cottage Grove in Illinois with 354,000 hours worked, Miller Creek-Knox Pit in Indiana with 335,000 hours and Lee Ranch in New Mexico with 266,000 hours. Francisco and Air Quality, both in Indiana, were the company’s safest underground mines.

Also Farmersburg Mine and Gateway Mine in Illinois achieved the company’s best safety results for surface and underground operations in 2009, and each earned President’s Awards. Gateway achieved an incident rate of 1.05 per 200,000 hours. Overall, the U.S. incidence rate in 2009 at 2.05 fell back from the 2008 rate of 1.7.

The Southwest Region – including Kayenta Mine in Arizona and Lee Ranch and El Segundo mines in New Mexico – completed the entire year without a lost-time injury. Southwest Director of Safety Bill Beaver says staying safe comes down to executing the basics.

“You can think of safety in terms of construction of a house,” says Bill. “Your programs, tools and training make up the fl oors, but the foundation of a commitment to safety has to be fi rmly solid. Our employees make the difference.”

6|Conveyor Second Quarter 2010

‘Coal in the Commonwealth’ Shows Future of Coal in AustraliaUniversity of Queensland and Peabody Highlight Coal’s Essential Role

Coal has shaped Australia’s history and powers its prosperity, creating 20 percent of the nation’s

mineral wealth, 81 percent of its electricity and the largest coal export platform in the world. These are among the fi ndings of the University of Queensland’s “Coal in the Commonwealth” study, sponsored by Peabody Energy.

“This study comes at a very important time as the world weighs the opportunities and challenges associated with different forms of energy; a time where industry and government are discussing the issue along with the community,” said Professor Graham Schaffer, Executive Dean of the University of Queensland (UQ) Engineering, Architecture and Information Technology Faculty.

The far-reaching report, co-edited by UQ Professors Peter Knights and Michael Hood, helps enhance public understanding of the role of coal in Australia and

analyzes its historical, social and economic contribution as well as the importance of its industry leadership in advancing carbon technologies.

“By providing information on coal from the history of Captain Cook’s Endeavour to the progress toward carbon capture and storage, the study promotes informed and balanced discussion at a critical time of public debate,” says Peter.

Says Julian Thornton, Managing Director of Peabody Energy Australia: “’Coal and the Common-wealth’ clearly describes the technologies that are being developed and deployed for a low-carbon economy. As a world authority in mining and engineering research, the university helps outline potential solutions and ongoing innovation in the industry.”

To date, the study has engaged leading industry repre-sentatives including board members of the Australian Coal Association and Queensland Resources Council, the New South Wales Minerals Council, Peabody and UQ staff as well as Australian mining media.

Find the full “Coal and the Commonwealth” study, and an executive summary at PeabodyEnergy.com.

These come from several sources including saving more than $2.5 million from strategic bidding and procurement, $15.5 million in value engineering and revising project plans and $9.5 million in smart sourcing and negotiations for purchasing equipment.

Bear Run is establishing a strong safety platform, says Kent. Employees at Bear Run undergo a fi ve-day comprehensive training session, including a robust safety emphasis. “When I talk with employees about Bear Run, I want to thank them for joining what will become the Midwest’s biggest operation,” says Kent. “We are excited about the opportunities that come with developing this new, sophisticated operation, one that fuels power as well as enormous economic benefi ts in our communities and region.”

Alongside Bear Run’s development, Peabody helps to drive economies within communities surrounding the mine. Bear Run will contribute approximately $140 million in regional annual economic benefi ts.

Indiana’s Sullivan County has a history of coal mining. Called “the Home of Outdoor Recreation,” the county today is home to lakes, as well as hunting and camping sites, several of which reside on restored lands. Coal fuels nearly 95 percent of Indiana electricity, and the state enjoys electricity prices that are among the lowest in the United States. Indiana also is one of the nation’s top 10 coal producing states.

Demonstrating a commitment to good neighbor practices, the company also recently donated a parcel of 44 acres near the town of Dugger. The county and town will develop the land as affordable housing for area residents. A forgivable loan from the Indiana Housing Authority will allow fi ve new homes to be built on the site each year. Organizers are applying for a $250,000 grant that will cut the cost of each home in half, as half of each loan will be forgiven. A 10-unit apartment complex also is planned for the site.

Says Peabody Real Estate Director Mancil Robinson, “Enabling home ownership to be attainable for more families makes a difference in the lives of many, and the donation represents a tangible investment in our Bear Run community.”

Bear Run Mine Ramps Up Production in the U.S. Midwestcontinued from page 1

Environment and Systems team member Amanda MacAlpine joins Trainee Operators Brett Maker and Christopher Hawes at the Wilpinjong Mine. Peabody partnered with the University of Queensland on a study that details coal’s role in shaping the history of Australia and powering the nation’s prosperity.

“We are excited about the opportunities that come with developing this new,

sophisticated operation, one that fuels power as well as enormous economic

benefi ts in our communities and region.”Kent Holcomb

Bear Run Operations Manager

U.S. National Coal Council Study Highlights

• Construction of about 360 gigawatts of coal-based generation with CCS at a $1.2 trillion investment will yield a $2.7 trillion GDP benefi t.

• Generation with CCS over decades can provide up to 3,000 terawatt hours of electricity per year at affordable rates using 1.7 billion tons of coal.

• Next generation technologies for enhanced oil recovery would create demand for captured CO2 that is equivalent to the emissions from about 70 gigawatts of coal-based power for more than 30 years.

• Coal’s carbon content creates a competitive advantage for America as CO2 can be used for value-added opportunities beyond enhanced oil recovery. These range from cement to iron oxide production.

Conveyor Second Quarter 2010|7

Study Sets Path for Greater Use of CCS TechnologiesA Q&A with Peabody’s Senior Vice President Fred Palmer

A newly released National Coal Council study calls for the extensive use of carbon dioxide capture and storage (CCS) technology to reduce carbon emissions by 80 percent within 40 years. Conveyor interviewed study chair and Peabody Senior Vice President of Government Relations Fred Palmer to learn more about the study and what it means for Peabody and the industry.

Q: Why is this study signifi cant?

A: Energy, the economy and the environment are among the most crucial issues we face. The study sets a path for achieving a low-carbon economy with greater use of coal and a path that achieves an 80 percent emissions reduction by 2050. It also estimates CCS technology could produce millions of construction jobs, 800,000 permanent jobs and $2.7 trillion in gross domestic product (GDP) growth by 2050.

Q: What is the role of the National Coal Council?

A: The National Coal Council conducted the study at the request of U.S. Secretary of Energy Steven Chu. As a Federal Advisory Committee to the Secretary of Energy, the council is a private, nonprofi t advisory body whose members are appointed and refl ect diverse interests from business, industry, academia

A Test of True ‘Mettle:’ Transformer Makes its Way to Prairie State Energy CampusMoving a 422-ton generator transformer presents no easy task. That’s especially true when the trip primarily takes place on two-lane state highways and rural country roads from the Kaskaskia River to the Prairie State Energy Campus in Southern Illinois.

This move took three days – with some periods of rest – to cover 14 miles, at a speed of about one mile per hour, but not without attracting a bit of attention and causing a few local traffi c jams. Another equally large transformer was transported to the center in much the same fashion a few weeks prior.

Both are key to construction of the 1,600-megawatt, coal-fueled power plant that will be powered by two 800-megawatt generating units. The fi rst unit is expected to be in operation by late 2011 and the second, a year later.

The ultra clean power plant will generate electricity to serve approximately 2.5 million families in nine states. Peabody maintains part ownership in the project. More than 2,600 workers have spent approximately 5.9 million hours building the plant. Construction wages on the project are approaching $1 billion, and Prairie State has used the products and services of over 150 local suppliers and vendors, making it one of the largest contributors to their regional tax base.

and other groups. With its study, the Council’s approach supports the President’s goal to bring up to 10 large-scale CCS demonstration projects on line in the United States by 2016.

Q: Why should we pursue carbon capture and storage? A: The study confi rms widespread usage of CCS is the low-cost, low-carbon energy solution. The U.S. population will increase from 307 million to nearly 440 million by 2050. That puts the magnitude of the clean energy task into perspective. Investing in the potential of CCS can help meet increasing electricity demand. It also can strengthen national security by using captured carbon dioxide to recover more domestic oil.

Q: Where will the technology investment come from?

A: To bring this into being requires large-scale joint efforts between industry and government. We are also talking about massive private-public partnerships. Capital for investments is available; however, projects must fi rst prove the ability to provide a return on capital.

Q: What does this mean for Peabody?

A: Peabody is energy, and energy is life. We believe that every day we use more coal, we should do so more cleanly. The technologies to generate power with CCS are available now, subject to establish-ment of the proper fi nancial, regulatory and liability framework. CCS also can be used for other projects such as coal-to-gas. Peabody remains a global leader in clean coal solutions. In addition to GreenGen in China, two such examples are our founding memberships in the FutureGen Alliance in the United States and Australia’s COAL21 Fund.

North Antelope Rochelle Mine Reliability Team Earns Uptime Magazine HonorWhen predicting what will happen with large equipment, the reliability team at Peabody Energy’s North Antelope Rochelle Mine is among the best in the world. That’s the conclusion by Uptime Magazine, which awarded the team the Predictive Maintenance Program of the Year award for Specialized Vibration Analysis.

The award recognizes the North Antelope Rochelle Mine’s process to diagnose and detect maintenance issues before components fail. Allowing repairs to be completed in a planned manner saves money and time, and avoids unplanned downtime.

The awards acknowledge world-class predictive maintenance achievements across multiple industries. Recipients for 2009 also included Pfi zer Inc., Alcoa and NASA’s Kennedy Space Center.

Peabody Establishes Southeast Asia Trading Hub in Singapore Peabody Energy’s new Singapore trading hub for COALTRADE activities in Southeast Asia further expands the company’s access to high-growth seaborne coal markets. The trading offi ce is headed

by Managing Director Phillip Smith, who oversees trading activities in Singapore and China. He has more than 30 years of experience in sales, marketing and trading, and previously served as Peabody China Director of Trading.

The company also established a representative offi ce in Jakarta, Indonesia, in 2009. Leading operations there is Reynard Hanoppo, who joined Peabody after more than a decade of managing sales for Indonesia’s third-largest coal producer.

North Goonyella Marks Record-Breaking Mine Drift Concrete Pour A pour of concrete to resurface the man and materials drift – the road that takes all the vehicular and component traffi c in and out of the mine – at North Goonyella Mine in Queensland, Australia, earned its place in the record books.

At 1,042 meters, the line is the longest to be poured in Australian history and also almost doubled the previous record for pumping lineal meters of steel fi ber concrete. Resurfacing of the drift, which is 5.2-meters wide and on a 1:7 gradient, took 30 workers and nine days of around-the-clock work.

A 422-ton generator transformer makes its way down a Southern Illinois highway to the Prairie State Energy Campus.

Reggie Rainey operates a dragline at the North Antelope Rochelle Mine, the most productive in the world. When predicting what will happen with large equipment, Uptime Magazine singled out the mine’s reliability team as one of the best in the world.

WATTS UP

Find the study, “Low-Carbon Coal: Meeting U.S. Energy, Employment and Carbon Dioxide Emission Goals with 21st Century Technologies,” at NationalCoalCouncil.org.

FiCaUanEmCeN

Fred PalmerSenior Vice President of Government Relations

8|Conveyor Second Quarter 2010

Peabody and Logos School Recognize Unsung Heroes in Education

Peabody Energy Australia Provides Big Lift to Rescue Helicopter Service

‘Coal Can Do That’ Campaign Lands Academy Award of Energy Industry

First-of-a-Kind Partnership Honors Teacher from Gateway Mine Community

Some of the best lessons take place when students use their minds, hearts and, above all, their elbow

grease, says Gateway Mine Continuous Improvement Manager Ray Hood. In the Southern Illinois community of Coulterville, Tim Schnoeker is one construction and trades teacher with just that kind of life-changing effect on students. Ray would know, as Tim taught each of Ray’s three daughters.

It was fi tting that Ray helped Peabody present Tim with the inaugural Peabody/Logos “Leaders in Education” award. Tim was honored for a 20-year Coulterville High School career teaching trades and technology skills that also instill lessons in giving back.

The Leaders in Education initiative is a fi rst-of-a-kind partnership to honor excellent educators and mentors across the greater St. Louis area. Weekly winners are selected by a committee of academic, business and civic leaders.

In past years, Tim’s students have rebuilt housing in hurricane-ravaged Mississippi. They have constructed and donated a playhouse to the Court Appointed Special Advocates for Children, which protects the rights of children in foster care, and they have built handicap-accessible facilities for individuals with developmental disabilities.

“My daughters still talk about the days they would have to be up at 5:30 in the morning for Tim’s projects,” says Ray. “Whether they were cooking breakfast to support the community toy drive or helping construct picnic tables for local civic groups, those moments didn’t just build their skills; they’ve built great character.”

A shark attack victim has the Central

Queensland (CQ) Helicopter Rescue Service to thank for saving her life, and the rescue service has Peabody Energy Australia to thank. The company sponsors CQ RESCUE, as the rescue service is known, with AUD $30,000 each year.

It’s a typical baseball game night at Busch Stadium in St. Louis. The crowd roars as the home team

pitcher strikes out another batter and closes the inning. Suddenly, the scoreboard and lights go dark and the music stops. In the startled silence, a message slowly appears on the scoreboard: Without clean coal, it’s game over.

This innovative “Coal Can Do That” advertisement became an instant hit at sports venues and on YouTube this past year. The surprising appeal also helped Peabody Energy earn the 2009 “Marketing Campaign of the Year” honor at the 11th Platts Global Energy Awards.

With “Coal Can Do That,” Peabody created a virtual think tank to share independent and expert views on coal and energy topics. The campaign regularly sends e-mail messages on clean coal industry trends and the latest studies to more than 2.5 million infl uential community leaders, legislators, media members, energy executives and academics.

“At a time when energy and environmental issues consume our airwaves, Peabody is proud to be talking about solutions,” says Vic Svec, Senior Vice President

Peabody has pledged $450,000 over three years to support the initiative and benefi t the mission of Logos School, an independent, alternative, therapeutic school that assists at-risk adolescents whose educational needs can’t be met in a traditional classroom. The Leaders in Education program is the only program open to St. Louis-area applicants, regardless of subject, grade or school. It also is a model Peabody hopes to replicate elsewhere, says Peabody Vice President and Assistant General Counsel Mary Frontczak, who volunteers on the Leaders in Education selection committee.

“We are proud to partner with Logos to honor the educators and mentors who do so much to develop our young people,” she says. “The Leaders in Education program honors individuals who inspire our students.” Award winners receive a $1,000 grant in recognition of their efforts, and they can funnel that money back into their educational efforts.

Dr. David Thomas, Chief Executive Offi cer of Logos School, helped design the program to celebrate the many ways adults can mentor children. “We believe anyone can positively infl uence a child, and every student can succeed,” he says. “Educators like Tim Schnoeker instill critical life lessons in students, many of which grow up in our backyard.”

For Tim, the support for education through the Leaders in Education program proves invaluable. “I view educa-tion as something that takes a team effort, more than just with teachers, parents and school administration,” says Tim. “It is a team approach with the community and area businesses, such as Gateway Mine and Peabody.”

Any employee at a St. Louis-area public, charter or private school serving students in kindergarten through grade 12 can qualify for the program. Find out more at LogosSchool.org/Leaders.

CQ RESCUE undertakes more than 400 rescues within a 300-kilometer radius of the city of Mackay each year, and provides rapid medical assistance and transportation of patients to emergency care and trauma centers.

“The action of CQ RESCUE has helped lessen the prolonged effect of trauma for hundreds of members of the Central Queensland community,” says Burton Mine General Manager Ernest Johnson. “Peabody’s Burton, North Goonyella, Eaglefi eld and Millennium operations all fall into the catchment area of the CQ RESCUE project.”

Established in 1994, CQ RESCUE provides its critical service 24 hours a day, seven days a week, with a crew of four. Its heroic achievements include airlifting 37 people from a stricken vessel in the Whitsundays waterways and transferring a 1-month-old baby with breathing diffi culties from the local Prosperine Hospital to the Mackay Base Hospital for treatment. Landings frequently occur on roads, in open fi elds and in challenging weather conditions.

“Peabody understands how vital CQ RESCUE is,” says Ernest. “We commend the CQ RESCUE team for their dedication and expertise, and are proud to support this important service for central Queensland.”

of Investor Relations and Corporate Communications. “Often called the Academy Award of the energy industry, the Global Energy Awards bring unmatched power and prestige in the energy industry.”

Visitors to CoalCanDoThat.com fi nd a one-stop source for insight into coal’s essential role in driving energy security, economic growth and environmental solutions. The site features blogs, podcasts, educational facts and editorials. Branded Twitter and YouTube channels capitalize on the power of social media to spread the word.

“Few things are more important than brand identity. Even as early as a decade ago, utilities and energy companies hardly had to think about marketing,” says Robin Mason of Platts Insight and Global Energy Awards on the awards selection process. “Today, competition for the hearts and minds of customers and voters is fi erce. The judges looked for a specifi c campaign that was original, made effective use of a variety of media, conveyed a clear message and produced results. Peabody Energy delivered.”

A global panel of top energy executives, former regulators and internationally recognized academics, recognized Peabody’s “Coal Can Do That” information campaign as the year’s best from a crowded fi eld of entries sponsored by major multi-national companies. Peabody is the only energy company to win Global Energy Awards for fi ve years, including Coal Company of the Year three times since the awards were established.

Visit CoalCanDoThat.com or YouTube.com/CoalCanDoThat, and follow our tweets at Twitter.com/CoalCanDoThat.

From left, teacher Tim Schnoeker receives the inaugural Peabody/Logos Leaders in Education award from Logos School President and CEO Dr. David Thomas and Gateway Mine Operations Manager Cliff Walker.

Peabody Australia sponsor-ship helps the CQ RESCUE helicopter service perform lifesaving work.

This “Lights Out” advertisement airs at St. Louis sports venues as part of the award-winning “Coal Can Do That” campaign.Thi “Li ht O t” d ti t i t St L i t