Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Another Gateway to Growth for Peabody

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

When you're a king, the resources at your disposal permit you to look in multiple directions to expand your empire.

Likewise, the king of coal -- Peabody Energy (NYSE: BTU  ) -- sits upon a throne of possibilities that permits the miner to pursue growth on multiple fronts where conditions allow.

Looking back, that same flexibility permitted a timely disposal of Appalachian assets through the spinoff of Patriot Coal (NYSE: PCX  ) in 2007. Since falling demand and cheap natural gas ravaged the domestic coal industry in 2009, the Appalachian region has been the slowest to recover.

With a diverse portfolio of assets that commonly conceal untapped productive potential, however, Peabody Energy is in a position to expand in the right places at the right time.

Peabody continues to place considerable emphasis upon production growth initiatives under way in Australia to address this persistently epic Pan-Asian demand environment. Undaunted by the failure to acquire Macarthur Coal earlier this year, Peabody continues to chase a rapid expansion of Australian production to 40 million tons annually by 2014.

Meanwhile, Peabody is battling to expand production on another front that some Fools may find surprising. After all, tangible or sustainable growth has been a noteworthy rarity throughout the industrial subsectors of the domestic U.S. economy. Peabody considers the Illinois basin "one of the fastest-growing markets in the United States," and this week announced plans to expand production at its Gateway mine in Illinois by more than 40% over the next several years. The plan also calls for a 16-year expansion of the mine's productive lifespan. The Gateway mine presently delivers coal to utilities including Progress Energy (NYSE: PGN  ) .

At 3.4 tons of production, Gateway accounted for 10% of the miner's 2009 output from the Illinois Basin overall. Even with a 40% expansion to 4.5 million tons, the Gateway mine's proportion of Peabody's regional output is destined to decline as the massive Bear Run mine in Indiana ramps up toward its goal of 8 million tons annually. Taken together, however, these two projects underlie a growing footprint of dominance in the Illinois Basin that consolidates Peabody's reign as the king of coal.

As I predicted, coal mining stocks delivered solid shareholder returns in 2009. Thus far in 2010, the flat trajectory of the Market Vectors Coal ETF (NYSE: KOL  ) lies in contrast to a normalizing steam coal market and continued demand growth for metallurgical coal. These conditions have me anticipating a strong close to the year from leading coal producers like Peabody Energy, Alpha Natural Resources (NYSE: ANR  ) and even from heavily impaired Appalachian producers like Massey Energy (NYSE: MEE  ) .

Fool contributor Christopher Barker is the Nat King of Coal and the wild boar of iron ore. He can be found blogging actively and acting Foolishly in the Motley Fool CAPS community under the user name TMFSinchiruna. He tweets. He owns shares of Market Vectors Coal ETF, Massey Energy, and Peabody Energy. Try any of our Foolish newsletters today, free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool scrubs its disclosure policy before releasing it into the atmosphere.

Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1313702, ~/Articles/ArticleHandler.aspx, 10/22/2016 12:39:21 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 15 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
ANRZQ $0.00 Down +0.00 +0.00%
Alpha Natural Reso… CAPS Rating: **
BTUUQ $10.59 Up +4.32 +68.90%
Peabody Energy Cor… CAPS Rating: **
KOL $13.00 Down -0.14 -1.07%
Market Vectors Coa… CAPS Rating: ****
MEE.DL $0.00 Down +0.00 +0.00%
Massey Energy Comp… CAPS Rating: ***
PCXCQ.DL $0.00 Down +0.00 +0.00%
Patriot Coal Corp. CAPS Rating: **
PGNPQ $0.75 Up +0.02 +2.74%
Paragon Offshore P… CAPS Rating: *