11
Arizona Operations Overview
February 4, 2011
22
Peabody Uses Sustainable Mining Practices
● 40-year business partnership with the Navajo Nation and Hopi Tribe
● Tribes own the land and coal resources and provide an able workforce
● Peabody has the mining expertise and capital to operate safely and productively
● Peabody is a premier employer, creating hundreds of skilled jobs
● Lands are reclaimed for traditional practice of livestock grazing and cultural plant collection
● Mining has created more than $3 billion in direct economic benefits since operations began for a $12 billion direct and indirect benefit
● Peabody’s model recognized among world’s best at the Energy Globe Awards in Brussels in 2007
Black Mesa Recognized as World Model Black Mesa Recognized as World Model
33
Mining Has Injected More Than $3.1 Billion into Tribal Economies
44
Additional Local Benefits
● Area resident land use payments average $487,000 per year
● Grazing management program and education ongoing
● Road maintenance and improvements continuing
● Water supply assistance to residents and their livestock
● Public coal free to area residents for home heating
● Annual health fare free to area residents
● Emergency assistance with roads, coal and water
● Summer student jobs program for local area chapters
55
● Kayenta Mine serves Navajo Station through 35-year coal supply contract
● Nearly 8 million tons of coal shipped annually
● More than 94 percent of the workforce is Native American
● Workers earn wages that are 10 times higher than tribal per capita income
● Every mining job is estimated to create three additional local jobs
Peabody is a Premier EmployerCreating Sought-After Jobs
66
Reserves Located on Hopi & Navajo Lands
Navajo Lease Boundary
100% Navajo Nation mineral ownership and 12.5% royalty• 200 million tons originally leased• 90 million additional tons leased in 1987 • 196 million tons mined as of January 1, 2011• 94 million tons remain to be mined as of January 1, 2011
Joint Use Area Leases Navajo & Hopi• 50% Navajo Nation and 50% Hopi Tribe mineral ownership • 200 million tons originally leased• 180 million additional tons leased in 1987 • 226 million tons mined as of January 1, 2011
• 154 million tons remain to be mined
77
Black Mesa Complex Lease Area
NO
COAL
J-21
J-19
N-12 N-99N
N-10
N-9
N-6
J-7
J-23
J-16
SLURRY LINE
J-28 FACILITIES
N-14EASTN-14
N-11 FACILITIES
N-2
N-1
N7-8
J-2
J-4J-3
J-27
BLACK MESA PIPELINE
BLACK MESA MINE
J-10
J-9
NAVAJO-HOPI PARTITION
J-1
J-28
N-11
J-8
N-99S
J21 PIT(MINED)
J-06
J-14
J-15
PEABODY LEASE BOUNDARY
14-20-0603-8580 Navajo
BLACK MESA COMPLEXCOAL RESERVE MAP
14-20-0450-5743 Hopi14-20-0603-9910 Navajo
and LEASE BOUNDARIES
PEABODY LEASE BOUNDARY
88
Reclamation Preserves Traditional Cultural Practices
Lands Restored for Cultural Plant Use, Grazing & Lands Restored for Cultural Plant Use, Grazing & WildlifeWildlife
99
Restored Lands are Important to Residents
● Collaboration with area residents promotes good range management
● Residents have access to productive reclaimed range under Peabody control
● Program provides framework for long-term sustainability of range
● Lands are typically 20 times more productive for grazing than native areas
1010
One-of-a-Kind Cultural Plant Program
● Program encompasses unique and specific best
practices developed by PWCC
– Consulted Navajo and Hopi medicine men,
herbalists, practitioners and literature – 120 species
identified
– Native cultural plant seed collections from Black
Mesa
– Specific propagation, greenhouse, and nursery
programs
– Restore critical soil microbial/plant relationships
– Planting sites developed similar to native site
characteristics
● Nearly 70 cultural plant sites established to date using
40 cultural plant species
● The program is unique in U.S. surface coal mining
1111
Navajo Aquifer Spans anArea the Size of Delaware
1212
Navajo Aquifer Holds 400 Million Acre-Feet of Water
● Navajo Aquifer spans 7,500 square-mile area across northern Arizona; comprised of porous sandstone saturated with water from last Ice Age
● Navajo Aquifer holds more than 400 million acre-feet of water, 17 times the size of Lake Powell
● Mine uses about 1200 acre-feet of water annually for mining and potable uses; 30% of the water used when both mines operated
● Lease conditions give Peabody the right to purchase Navajo Aquifer water as long as mining continues
● Water purchased at a rate that is 10 times the industrial water rate for the Central Arizona Project
1313
Navajo Aquifer is an Important Tribal Water Resource
● Navajo Aquifer supplies about 3,000 acre-feet of water for communities & 1,200 acre-feet of water for mining & potable water
● Aquifer is replenished through the hydrologic cycle
● Annual Navajo Aquifer recharge estimated at 13,000 to 16,000 acre-feet by U.S. Office of Surface Mining
Major Navajo Aquifer Recharge Area Tsegi Canyon, Arizona
1414
N aquifer Water Level Recovery - Kayenta Mine Wellfield
Navajo Well Water Level (feet below ground surface)
Time Period Navajo Well 3OBS Navajo Well 6OBS
2005 Mean Static Level 1155.0 1344.0
End of 2006 1059.2 1262.6
End of 2007 1017.3 1206.1
End of 2008 992.1 1184.6
End of 2009 981.4 1191.3
End of 2010 964.6 1180.0
Total Recovery 190.4 171.0
1515
● Operations require more than 20 permits and licenses mandated by 32 federal statutes
● State-of-the-art monitoring & reporting system used
● Performance measured through monitoring, independent study of environmental data & weekly inspections
● Excellent compliance maintained
Excellent Environmental Compliance Record Maintained
1616
Multiple Initiatives Improve Quality of Life on Black Mesa
● Assist Navajo Nation in establishing improved water and power distribution system in lease area
● Provide free potable water and free coal for home heating to local residents
● Maintain roads and infrastructure for local families
1717
Mining Supports Excellence in Education at Tribal Schools
● Peabody contributes $365,000 annually in Navajo and Hopi scholarships
● Peabody helped develop infrastructure to “wire” town of Forest Lake; award-winning program recognized nationally
● Virtual classroom contains work stations with video conferencing & Internet access to high school
1818
19-Year Black Mesa Archaeology Project meets Federal and Tribal Requirements
● Led by Southern Illinois University’s Center for Archaeological Investigations (SIU-CAI)
● 700 scholars and scientists surveyed 101 sq. miles and identified 2,710 sites
● 215 sites excavated; 887 sites tested and mapped; more than 300 publications
● Over 1 million artifacts remain the property of the Navajo and Hopi
● SIU-CAI is curating the artifacts using best practices
1919
Good Compliance is Achieved with Respect for Traditional and Cultural Values
● Cultural studies, TCP and NAGPRA investigations, and site mitigation are ongoing
● Field work is conducted by professionals under the supervision of the Office of Surface Mining and tribal authorities
2020
● 2009 State Mine Inspector Reclamation Award● 2007 Energy Globe Awards International Honors ● 2005 OSM National & Silver Good Neighbor
Awards● 2003 OSM Inaugural Good
Neighbor Award● 2002 OSM Director’s
Award ● 1998 OSM National Award
for Reclamation
Consistently Recognized for Excellence in Land Restoration
2121
Arizona Operations Overview
February 4, 2011