A Global

Commodity
Global Supply, Global Demand

Coal: The Essential Resource

This primer was complied as part of research conducted for an equity research report on
Hallador Energy, and Illinois Basin Coal Company.
Coal is one of the worlds essential resources, despite its current status as a reviled
resource, one that has long been the target of aggressive government regulation in the
United States, and more recently a target of governments the world over, it remains an
essential source of energy.
Approximately 41% of the worlds electricity is generated by coal-fired power plants,
more then any other fuel source, and 68% of the worlds steel is produced using coal.

ke Away: Coal Remains one of the Worlds Essential Res

Global Energy Consumption

The Worlds Top Five Energy Consumers in 2013 were: China, US, Russia,
India and Japan.

Over the last ten years the energy consumption has been driven by the
developing world, and in particular by China and India.

Global Coal Consumption

Global coal is consumed primarily for
electricity generation and steel making.
(% split)
The world consumption of coal has grown
at a rate of ____ since 1990 and at a rate
of ____ since 2000. In the US the rate of
growth since 2000 has been ___.
As a percentage of total world energy
consumption coal has
____________________

c Chart of Coal Usage

obal Consumption of Coal and % of Global Energy Consumption Chart

Illinois Basin
The New Heart of US Coal Production

The Illinois Basin

The Illinois Basin has experienced a 25% increase in volume mined
since 2009, while the traditional heart of American Coal, the
Appalachian Region, has declined by 14%.
Illinois Basin market share has risen from 8% of total US production in
2000, to 12.5% in 2012. Growth in market share has been driven by
the spread of scrubbing technology at coal fired power plants,
enabling them to make use of the higher sulfur content, and relatively
higher BTU ILB coal.
ILB coal was first exported from the US in 2007, since then the
volume of export has grown by 10%, in 2012 industry data suggests
that 29% of US thermal coal exports were from the ILB. This trend is
likely to continue as a result of new export terminal construction.
The Illinois Basic is estimate to have over 50 billion tons of
recoverable coal reserves, making it the second largest basin in the
country behind only Powered River Basin with its estimated 115
Keytons.
Take Away: The Illinois Basin is one of the
billion

premier US Coal Basins with significant growth

potential

The Illinois Basin: Reserves

As of 2013 ILB consisted of approximately 80 mines, approximately 75%
of which were focused on underground mining, and 25% of which
engaged in surface mining.
The most prolific coal seam in the ILB is the Herrin Coal Thickness, which
is 4 to 9 feet thick and ideal for cost effective long wall and continues
mining.
The ILB has 50.6 billion
tons of estimated
recoverable reserves at
the end of 2011: 37.9
billion in Illinois, 4.0 in
Indiana and 8.6 in West
Kentucky.
The ILB represents 20%
of the countrys
recoverable reserves,
second only to the
powder river basin.
Assuming 140 million
tons of production the
ILB would have a
reserve a level of 360

The Illinois Basin: Pricing

Approximately 75% of ILB mines are focused on underground extraction,
and 25% of are engaged in surface mining.
The most prolific coal seam in the ILB is the Herrin Coal Thickness, which
is 4 to 9 feet thick and ideal for cost effective underground long wall and
continues mining.
In addition to more efficient mining techniques ILB labor structure helps
keep costs down, with only 6% of coal miners in the region belonging to
a union, compared to 275 in the Appalachian basin.
Although the heat content is similar CAPP remains significantly more
expensive then ILB.

The Illinois Basin: Domestic Market

Because of the lower cost ILB coal continues to steal market share from
other coal basins.
Example: In the Southeast coal usage volumes fell 21% from 2008
to 2012, during that time coal deliveries form the ILB were up 24%
and volumes from the Appalachian were down 50%.
Example:
Florida consumption
of ILB coal was up 65% between 2009
Illinois
Basin Coal-Fired
Plant Deliveries
and 2012. (2012)
The three states that
comprise the ILB consume
approximately 52% of the
regions coal production.

Indiana: 75% of coal produced

is consumed locally.
Western Kentucky: WK is the
largest absolute consumer of
ILB Coal.
Illinois: Consumes 25% of coal
produced, the majority of local
electricity (90%) is produced
with Powder River Basin Coal

Outside of the basin Florida,

Ohio, Tennessee and
Alabama are the largest

The Illinois Basin: International

Market
As of 2013 ILB consisted of approximately 80 mines, approximately 75%
of which were focused on underground mining, and 25% of which
engaged in surface mining.
The most prolific coal seam in the ILB is the Herrin Coal Thickness, which
is 4 to 9 feet thick and ideal for cost effective long wall and continues
mining.

The Illinois Basin: Major Producers

As of 2013 ILB consisted of approximately 80 mines, approximately 75%
of which were focused on underground mining, and 25% of which
engaged in surface mining.
The most prolific coal seam in the ILB is the Herrin Coal Thickness, which
is 4 to 9 feet thick and ideal for cost effective long wall and continues
mining.

The Illinois Basin: Major Producer

Margins
As of 2013 ILB consisted of approximately 80 mines, approximately 75%
of which were focused on underground mining, and 25% of which
engaged in surface mining.
The most prolific coal seam in the ILB is the Herrin Coal Thickness, which
is 4 to 9 feet thick and ideal for cost effective long wall and continues
mining.