November 1, 2011 Exhibit 99.1 Met Coke World Summit 2011 |
1 Some of the following information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, and is intended to come within the safe-harbor protection provided by those sections. Forward-Looking Statements Certain statements in this presentation are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These statements involve certain risks and uncertainties that may be beyond our control and may cause our actual future results to differ materially from expectations. We do not undertake to update our forward-looking statements. Factors that could affect our results include, but are not limited to: price volatility and demand, particularly in higher margin products; geologic, equipment and operational risks associated with mining; changes in general economic conditions, including coal, power and steel market conditions; coal mining laws and regulations; the availability and costs of competing energy resources; legislative and regulatory developments; risks associated with environmental laws and compliance, including selenium-related matters; developments in greenhouse gas emission regulation and treatment; negotiation of labor contracts, labor availability and relations; the outcome of pending or future litigation; changes in the costs to provide healthcare to eligible active employees and certain retirees under postretirement benefit obligations; increases to contribution requirements to multi-employer retiree healthcare and pension funds; reductions of purchases or deferral of shipments by major customers; availability and costs of credit; customer performance and credit risks; inflationary trends; worldwide economic and political conditions; downturns in consumer and company spending; supplier and contract miner performance and the availability and cost of key equipment and commodities; availability and costs of transportation; the Company’s ability to replace coal reserves; the outcome of commercial negotiations involving sales contracts or other transactions; our ability to respond to changing customer preferences; failure to comply with debt covenants; the effects of mergers, acquisitions and divestitures; and weather patterns affecting energy demand or disrupting coal supply. The Company undertakes no obligation (and expressly disclaims any such obligation) to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. For additional information concerning factors that could cause actual results to materially differ from those projected herein, please refer to the Company’s Form 10-K and Form 10-Q reports. Statement on Forward-Looking Information |
Metallurgical Market Overview Stabilized global and U.S. steel mill utilization Strong seaborne market China is expected to be a net importer of 30+ million tonnes of met coal in 2011 Limited new global supply in the intermediate term Adequate U.S. port capacity Met market expected to remain strong 2 |
Industry Trends & Opportunities 3 |
Domestic & Global Steel Mill Utilization Both domestic & global steel mill utilization rates are at 70-80% 0 10 20 30 40 50 60 70 80 90 100 U.S. Global Updated: 10/22/11 4 |
Strong Seaborne Met Coal Demand Sustainable seaborne demand, led by Asia Source: McCloskey 5 78% forecast increase in seaborne met demand Asian seaborne met demand expected to almost double between 2010 and 2020 Led by the urbanization of Asian populations |
Chinese Met Coal Trade Net imports of met coal by China remain strong 6 (20) (10) 0 10 20 30 40 50 60 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD Aug 2010 YTD Aug 2011 Imports Exports Net Imports Source: IHS McCloskey |
U.S. Metallurgical Coal Production 7 High Mid Low Total Estimate Notes Alpha 14.6 3.6 1.8 19.9 23.6 1 Arch 6.6 - 1.4 8.0 9.7 2 Walter - - 7.2 7.2 6.3 3 Consol 2.4 - 4.6 7.0 10.3 4 Patriot 6.9 - - 6.9 7.6 5 Cleveland-Cliffs 0.6 - 2.2 2.8 3.2 6 Alliance 1.0 - - 1.0 1.0 7 Rhino 0.7 - - 0.7 0.8 8 Others 12.5 4.4 4.4 21.4 22.0 9 Total Estimate 45.2 8.0 21.6 74.8 84.5 Notes: 1. Includes full year of Alpha and Massey; based on shipment guidance of 9/21/11 2. Includes full year of Arch and ICG; based on revised earnings guidance of 9/30/11 3. Based on revised operating plans of 9/21/11 4. Based on operations update of 10/13/11 5. Based on Q3 2011 earnings release 6. Based on Q2 2011 earnings release 7. Based on Q2 2011 earnings release 8. Based on Q2 2011 earnings release 9. Patriot estimate 2010 2011 |
U.S. Exports of Met Coal U.S. met exports are at historical highs 8 0 1 2 3 4 5 6 7 8 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5-Year Range 2009 2010 2011 |
9 U.S. Met Coal Export Destinations U.S. met exports are growing to three key regions 0 5 10 15 20 25 30 35 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD August 2010 YTD August 2011 Asia Canada Europe/Africa South America |
10 Increasing U.S. Met Coal Exports YTD August met exports are more than any full year, except 2010 0 10 20 30 40 50 60 70 80 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD August 2010 YTD August 2011 Thermal Met Updated: 10/25/11 Source: EVA |
0 10 20 30 40 50 60 70 80 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD August 2010 YTD August 2011 Thermal Met Updated: 10/25/11 Source: EVA 11 Increasing U.S. Total Coal Exports U.S. coal exports to approximate 100 million tons in 2011 International buyers looking for geographic diversity of supply |
Adequate U.S. Port Capacity Infrastructure adequate to handle expected exports 12 Total Export Capacity 131 MT 2010 Tons Shipped 81 MT |
Challenges 13 |
14 Why Global Coal Supply is Constrained Global supply constraints are tightening markets China Constrained rail & truck infrastructure makes shipping within China difficult Indigenous met coal is lower quality Several years running as significant net importer Indonesia, South Africa, Russia, Vietnam Domestic demand increases are absorbing coal production that was historically exported Declining exports U.S. Depleting eastern reserves Difficult permitting Stricter interpretation of safety rules Supply increases will be difficult Australia Regional infrastructure constraints limit supply increase Australian production recovering from record rainfall in early 2011 Infrastructure needed to supply global demand India Plentiful indigenous coal reserves, but lower quality Inadequate transportation infrastructure Colombia Inadequate infrastructure limiting further exports Mongolia Will eventually supply China Much work & time to build infrastructure Ownership/structural challenges China Constrained rail & truck infrastructure makes shipping within China difficult Indigenous met coal is lower quality Several years running as significant net importer Indonesia, South Africa, Russia, Vietnam Domestic demand increases are absorbing coal production that was historically exported Declining exports U.S. Depleting eastern reserves Difficult permitting Stricter interpretation of safety rules Supply increases will be difficult Australia Regional infrastructure constraints limit supply increase Australian production recovering from record rainfall in early 2011 Infrastructure needed to supply global demand Australia Regional infrastructure constraints limit supply increase Australian production recovering from record rainfall in early 2011 Infrastructure needed to supply global demand India Plentiful indigenous coal reserves, but lower quality Inadequate transportation infrastructure Colombia Inadequate infrastructure limiting further exports Colombia Inadequate infrastructure limiting further exports Mongolia Will eventually supply China Much work & time to build infrastructure Ownership/structural challenges |
Higher Industry Cost per Ton in Appalachia More difficult geology Heightened regulatory scrutiny – MSHA and state inspections – MSHA & Army Corps of Engineers permitting delays – Clean Water Act impediments Availability of labor Higher cost inputs – Labor – Diesel fuel – Steel-based equipment & supplies 15 Industry Average Cost per Ton |
Steel Prices versus Raw Material Costs Steel prices remain historically high 16 0 200 400 600 800 1,000 1,200 China Export Hot-Rolled Coil Steel, FOB main China Port China Coke Export Price Australian Hard Coking Coal, FOBT Chinese Iron Ore Import Price 10/26/11 Updated: Source: Metal Bulletin, Steel Business Briefing Commodities Research, McCloskey |
-10 -5 0 5 10 15 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 India China Brazil Australia USA Germany UK Japan Source: Economist Intelligence Unit (The Economist) Concerns about Global Economies 17 Chinese & Indian economies expected to remain strong All global economies growing |
Opportunities for Patriot 18 |
How Patriot Will Participate Strategy – Focus on growth markets – Expand metallurgical coal production – Increase exports – Both met and thermal Leverage to the market – Met Build-Out to 11 million tons annually – Legacy thermal contract roll-off Culture – Strong safety program & environmental stewardship – Disciplined approach, focused on planning and execution Future growth – Organic – Strong reserve base – M&A – Bolt-on and transformational Product & transportation flexibility 19 |
20 Product Diversification Diverse locations, products & mining methods Significant met & thermal coal exports Mining Method YTD Sept ’11 Tons Sold 23.5 Million Tons Reserves 1.9 Billion Tons YTD Sept ’11 Shipments |
21 Multiple Basins & Coal Qualities Northern Appalachia Thermal Federal Central Appalachia Metallurgical Kanawha Eagle Paint Creek/Winchester Panther Rocklick Wells Central Appalachia Thermal Big Mountain Blue Creek Campbell’s Creek Corridor G Logan County Illinois Basin Thermal Bluegrass Dodge Hill Highland Multiple quality & transportation options Transportation Optionality Rail Barge East Coast & Gulf exports |
Patriot Met Coal Complexes 22 Patriot produces premium high-volatile met coal Rocklick Wells Winchester Kanawha Eagle Panther Thermal High-Vol Mid-Vol Low-Vol CSX NS |
23 Opening new met mines to meet rising worldwide demand Patriot Met Build-Out Program |
Increasing Exports at Patriot Expect double-digit exports in 2012 +260% increase 24 |
Contact: Janine Orf Vice President – Investor Relations 314.275.3680 jorf@patriotcoal.com FINANCIAL COMMUNITY PRESENTATION November 1, 2011 Met Coke World Summit 2011 |