10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)                                        

( X )	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2011

or

( )	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ____________ to ____________

Commission File Number: 1-16463

PEABODY ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	13-4004153
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

701 Market Street, St. Louis, Missouri	63101-1826
(Address of principal executive offices)	(Zip Code)

(314) 342-3400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ( X )    No ( )

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ( X )   No ( )

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ( X )	Accelerated filer ( )	Non-accelerated filer ( )	Smaller reporting company ( )
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ( )  No ( X )

There were 270,874,294 shares of common stock with a par value of $0.01 per share outstanding at October 28, 2011.

INDEX

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2011 and 2010	1
Condensed Consolidated Balance Sheets as of September 30, 2011 (Unaudited) and December 31, 2010	2
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010	3
Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2011	4
Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3. Quantitative and Qualitative Disclosures About Market Risk	54
Item 4. Controls and Procedures	55
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	55
Item 1A. Risk Factors	55
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 5. Other Information	58
Item 6. Exhibits	65
SIGNATURE	66
EXHIBIT INDEX	67
EX-10.2
EX-10.4
EX-10.6
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PEABODY ENERGY CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions, except per share data)
Revenues
Sales	$	1,737.3		$	1,663.4		$	5,151.8		$	4,618.3
Other revenues	298.6			201.3			637.0			423.4
Total revenues	2,035.9			1,864.7			5,788.8			5,041.7
Costs and expenses
Operating costs and expenses	1,458.8			1,243.3			4,119.7			3,526.7
Depreciation, depletion and amortization	113.7			116.7			327.8			327.3
Asset retirement obligation expense	15.0			9.9			43.9			30.3
Selling and administrative expenses	71.2			54.1			191.4			163.6
Other operating (income) loss:
Net gain on disposal or exchange of assets	(1.7		)	(6.7		)	(31.4		)	(15.4		)
Loss (income) from equity affiliates	3.2			2.7			9.0			(2.1		)
Operating profit	375.7			444.7			1,128.4			1,011.3
Interest expense	59.2			62.2			159.3			170.1
Interest income	(4.1		)	(2.8		)	(11.7		)	(5.4		)
Income from continuing operations before income taxes	320.6			385.3			980.8			846.6
Income tax provision	37.1			147.7			224.7			257.2
Income from continuing operations, net of income taxes	283.5			237.6			756.1			589.4
Loss from discontinued operations, net of income taxes	(2.0		)	(1.3		)	(3.7		)	(2.2		)
Net income	281.5			236.3			752.4			587.2
Less: Net income attributable to noncontrolling interests	7.4			12.2			17.0			23.2
Net income attributable to common stockholders	$	274.1		$	224.1		$	735.4		$	564.0
Income From Continuing Operations
Basic earnings per share	$	1.02		$	0.84		$	2.73		$	2.11
Diluted earnings per share	$	1.01		$	0.83		$	2.72		$	2.09
Net Income Attributable to Common Stockholders
Basic earnings per share	$	1.01		$	0.84		$	2.72		$	2.10
Diluted earnings per share	$	1.00		$	0.83		$	2.71		$	2.08
Dividends declared per share	$	0.085		$	0.070		$	0.255		$	0.210

See accompanying notes to unaudited condensed consolidated financial statements.

1

PEABODY ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited) September 30, 2011			December 31, 2010
	(Amounts in millions, except share and per share data)
ASSETS
Current assets
Cash and cash equivalents	$	1,401.6		$	1,295.2
Accounts receivable, net of allowance for doubtful accounts of $23.3 at September 30,    2011 and $30.3 at December 31, 2010	591.4			558.2
Inventories	351.9			332.9
Assets from coal trading activities, net	66.0			192.5
Deferred income taxes	90.9			120.4
Other current assets	503.2			459.0
Total current assets	3,005.0			2,958.2
Property, plant, equipment and mine development
Land and coal interests	7,841.3			7,657.0
Buildings and improvements	1,087.7			1,079.8
Machinery and equipment	2,175.8			1,699.3
Less: accumulated depreciation, depletion and amortization	(3,296.7		)	(3,010.0		)
Property, plant, equipment and mine development, net	7,808.1			7,426.1
Investments and other assets	878.5			978.8
Total assets	$	11,691.6		$	11,363.1
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	43.8		$	43.2
Liabilities from coal trading activities, net	62.6			181.7
Accounts payable and accrued expenses	1,334.9			1,288.8
Total current liabilities	1,441.3			1,513.7
Long-term debt, less current maturities	2,458.6			2,706.8
Deferred income taxes	499.6			539.8
Asset retirement obligations	537.3			501.3
Accrued postretirement benefit costs	965.6			963.9
Other noncurrent liabilities	466.7			448.3
Total liabilities	6,369.1			6,673.8
Stockholders’ equity
Preferred Stock — $0.01 per share par value; 10,000,000 shares authorized, no shares    issued or outstanding as of September 30, 2011 or December 31, 2010	—			—
Series A Junior Participating Preferred Stock — $0.01 per share par value; 1,500,000    shares authorized, no shares issued or outstanding as of September 30, 2011 or    December 31, 2010	—			—
Perpetual Preferred Stock — 800,000 shares authorized, no shares issued or outstanding    as of September 30, 2011 or December 31, 2010	—			—
Series Common Stock — $0.01 per share par value; 40,000,000 shares authorized, no    shares issued or outstanding as of September 30, 2011 or December 31, 2010	—			—
Common Stock — $0.01 per share par value; 800,000,000 shares authorized,    279,986,117 shares issued and 270,818,478 shares outstanding as of September 30,    2011 and 279,149,028 shares issued and 270,236,256 shares outstanding as of    December 31, 2010	2.8			2.8
Additional paid-in capital	2,231.3			2,182.0
Retained earnings	3,544.7			2,878.4
Accumulated other comprehensive loss	(139.1		)	(67.9		)
Treasury shares, at cost: 9,167,639 shares as of September 30, 2011 and 8,912,772    shares as of December 31, 2010	(350.7		)	(334.6		)
Peabody Energy Corporation’s stockholders’ equity	5,289.0			4,660.7
Noncontrolling interests	33.5			28.6
Total stockholders’ equity	5,322.5			4,689.3
Total liabilities and stockholders’ equity	$	11,691.6		$	11,363.1

See accompanying notes to unaudited condensed consolidated financial statements.

2

PEABODY ENERGY CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
	2011			2010
	(Dollars in millions)
Cash Flows From Operating Activities
Net income	$	752.4		$	587.2
Loss from discontinued operations, net of income taxes	3.7			2.2
Income from continuing operations, net of income taxes	756.1			589.4
Adjustments to reconcile income from continuing operations, net of income taxes to net    cash provided by operating activities:
Depreciation, depletion and amortization	327.8			327.3
Deferred income taxes	49.1			178.6
Share-based compensation	32.4			30.1
Net gain on disposal or exchange of assets	(31.4		)	(15.4		)
Loss (income) from equity affiliates	9.0			(2.1		)
Changes in current assets and liabilities:
Accounts receivable	(12.5		)	(124.3		)
Accounts receivable securitization program	—			(154.6		)
Inventories	(17.5		)	(71.2		)
Net assets from coal trading activities	71.7			(0.8		)
Other current assets	(41.6		)	19.9
Accounts payable and accrued expenses	(8.6		)	116.5
Asset retirement obligations	27.8			20.3
Workers’ compensation obligations	0.3			5.6
Pension costs	25.5			17.5
Accrued postretirement benefit costs	26.6			18.4
Contributions to pension plans	(1.3		)	(23.9		)
Other, net	(19.3		)	(27.8		)
Net cash provided by continuing operations	1,194.1			903.5
Net cash used in discontinued operations	(3.6		)	(11.3		)
Net cash provided by operating activities	1,190.5			892.2
Cash Flows From Investing Activities
Additions to property, plant, equipment and mine development	(616.2		)	(291.3		)
Federal coal lease expenditures	(42.4		)	—
Investment in Prairie State Energy Campus	(29.8		)	(52.5		)
Proceeds from disposal of assets	12.1			9.7
Investments in equity affiliates and joint ventures	(39.8		)	(18.8		)
Proceeds from sales of debt and equity securities	53.3			10.6
Purchases of debt and equity securities	(44.1		)	(73.6		)
Purchases of short-term investments	(100.0		)	—
Maturity of short-term investments	100.0			—
Investment in shares of Macarthur Coal Limited	(45.5		)	—
Other, net	(4.4		)	(7.4		)
Net cash used in investing activities	(756.8		)	(423.3		)
Cash Flows From Financing Activities
Proceeds from long-term debt	1.4			1,150.0
Payments of long-term debt	(248.4		)	(1,148.5		)
Dividends paid	(69.1		)	(56.5		)
Repurchase of employee common stock relinquished for tax withholding	(16.1		)	(8.4		)
Payment of debt issuance costs	(4.0		)	(32.2		)
Excess tax benefits related to share-based compensation	6.1			—
Proceeds from stock options exercised	4.5			5.9
Other, net	(1.7		)	(0.5		)
Net cash used in financing activities	(327.3		)	(90.2		)
Net change in cash and cash equivalents	106.4			378.7
Cash and cash equivalents at beginning of period	1,295.2			988.8
Cash and cash equivalents at end of period	$	1,401.6		$	1,367.5

See accompanying notes to unaudited condensed consolidated financial statements.

3

PEABODY ENERGY CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Peabody Energy Corporation’s Stockholders’ Equity
	Common Stock		Additional Paid-in Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total Stockholders’ Equity
	(Dollars in millions)
December 31, 2010	$	2.8	$	2,182.0	$	(334.6	)	$	2,878.4		$	(67.9	)	$	28.6		$	4,689.3
Comprehensive income:
Net income	—		—		—			735.4			—			17.0			752.4
Net unrealized losses on      available-for-sale      securities (net of      $2.3 tax benefit)	—		—		—			—			(4.3		)	—			(4.3		)
Decrease in fair value      of cash flow hedges      (net of $66.7 tax      benefit)	—		—		—			—			(100.6		)	—			(100.6		)
Postretirement plans      and workers’      compensation      obligations (net of      $12.8 tax provision)	—		—		—			—			33.7			—			33.7
Comprehensive income								735.4			(71.2		)	17.0			681.2
Dividends paid	—		—		—			(69.1		)	—			—			(69.1		)
Share-based compensation	—		32.4		—			—			—			—			32.4
Excess tax benefits related      to share-based      compensation	—		6.1		—			—			—			—			6.1
Stock options exercised	—		4.5		—			—			—			—			4.5
Employee stock purchases	—		6.3		—			—			—			—			6.3
Repurchase of employee      common stock      relinquished for tax      withholding	—		—		(16.1		)	—			—			—			(16.1		)
Distributions to      noncontrolling interests	—		—		—			—			—			(13.5		)	(13.5		)
Contributions from      noncontrolling interests	—		—		—			—			—			1.4			1.4
September 30, 2011	$	2.8	$	2,231.3	$	(350.7	)	$	3,544.7		$	(139.1	)	$	33.5		$	5,322.5

See accompanying notes to unaudited condensed consolidated financial statements.

4

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

The condensed consolidated financial statements include the accounts of Peabody Energy Corporation (the Company) and its affiliates. All intercompany transactions, profits and balances have been eliminated in consolidation.

The accompanying condensed consolidated financial statements as of September 30, 2011 and for the three and nine months ended September 30, 2011 and 2010, and the notes thereto, are unaudited. However, in the opinion of management, these financial statements reflect all normal, recurring adjustments necessary for a fair presentation of the results of the periods presented. The balance sheet information as of December 31, 2010 has been derived from the Company’s audited consolidated balance sheet. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2011.

The Company classifies items within discontinued operations in the unaudited condensed consolidated statements of operations when the operations and cash flows of a particular component (defined as operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity) of the Company have been (or will be) eliminated from the ongoing operations of the Company as a result of a disposal transaction, and the Company will no longer have any significant continuing involvement in the operations of that component.

Certain amounts in prior periods have been reclassified to conform with the current year presentations with no effect on previously reported net income or stockholders’ equity.

(2) Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented

In June 2011, the Financial Accounting Standards Board (FASB) issued an accounting update that eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, an entity will be required to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The guidance will become effective for interim and annual periods beginning after December 15, 2011, or on January 1, 2012 for the Company. Because the update only impacts financial statement presentation, the guidance will not impact the Company’s results of operations, financial condition or cash flows.

In January 2010, the FASB issued accounting guidance that required new fair value disclosures, including disclosures about significant transfers into and out of Level 1 and Level 2 fair-value measurements and a description of the reasons for the transfers. In addition, the guidance required new disclosures regarding activity in Level 3 fair value measurements, including a gross basis reconciliation. The Company began complying with the new fair value disclosure requirements beginning January 1, 2010, except for the disclosure of activity within Level 3 fair value measurements, which became effective January 1, 2011. While the adoption of this guidance had an impact on the Company's disclosures, it did not affect the Company's results of operations, financial condition or cash flows. In May 2011, the FASB issued additional fair value measurement disclosure requirements that were intended to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between United States (U.S.) generally accepted accounting principles (GAAP) and International Financial Reporting Standards. That update required the categorization by level for financial instruments not measured at fair value but for which disclosure of fair value is required, disclosure of all transfers between Level 1 and Level 2, and additional disclosures for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. The guidance will become effective for interim and annual periods beginning after December 15, 2011, or on January 1, 2012 for the Company. The guidance issued in May 2011 will impact the Company's disclosures, but it will not impact the Company's results of operations, financial condition or cash flows.

5

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In December 2010, the FASB issued an update to guidance on accounting for business combinations that clarified a public entity’s disclosure requirements for pro forma presentation of revenue and earnings related to a business combination. The new guidance, which became effective on January 1, 2011, requires that, if comparative statements are presented, the public entity should disclose revenue and earnings of the combined entity as though the business combination had occurred as of the beginning of the comparable prior annual reporting period only. The guidance also requires the supplemental pro forma disclosures to include a description of the nature and amount of material nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The guidance will impact the Company’s pro forma disclosures related to any business combination transactions, but it will not impact the Company’s results of operations, financial condition or cash flows.

(3) Investments

The Company’s short-term investments are defined as those investments with original maturities of greater than three months and up to one year, and long-term investments are defined as those investments with original maturities greater than one year.

The Company classifies its investments as either held-to-maturity or available-for-sale at the time of purchase and reevaluates such designation periodically. Investments are classified as held-to-maturity when the Company has the intent and ability to hold the securities to maturity.

Investments in securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of income taxes, reported in “Accumulated other comprehensive income (loss)” in the condensed consolidated balance sheets. Realized gains and losses, determined on a specific identification method, are included in “Interest income” in the unaudited condensed consolidated statements of operations.

The Company did not have any held-to-maturity securities as of September 30, 2011 or December 31, 2010.

Investments in available-for-sale securities at September 30, 2011 were as follows:

Available-for-sale securities	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Dollars in millions)
Current:
Federal government securities	$	5.2	$	—	$	—	$	5.2
U.S. corporate bonds	4.6		—		—		4.6
Noncurrent:
Marketable equity securities	55.5		—		6.9		48.6
Federal government securities	11.4		0.2		—		11.6
U.S. corporate bonds	9.4		0.1		—		9.5
Total	$	86.1	$	0.3	$	6.9	$	79.5

6

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Investments in available-for-sale securities at December 31, 2010 were as follows:

Available-for-sale securities	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			(Dollars in millions)
Current:
Federal government securities	$	0.5	$	—	$	—	$	0.5
U.S. corporate bonds	1.9		—		—		1.9
Noncurrent:
Federal government securities	9.2		—		—		9.2
U.S. corporate bonds	6.3		—		—		6.3
Total	$	17.9	$	—	$	—	$	17.9

Contractual maturities for available-for-sale investments in debt securities at September 30, 2011 were as shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Contractual maturities for available-for-sale securities	Cost		Fair Value
	(Dollars in millions)
Due in one year or less	$	9.8	$	9.8
Due in one to five years	20.8		21.1
Total	$	30.6	$	30.9

The Company’s investments in marketable equity securities consists of an investment in Winsway Coking Coal Holdings Limited and shares purchased of Macarthur Coal Limited (Macarthur). For additional information on the Macarthur shares purchased, see Note 17.

Proceeds from sales of securities amounted to $1.5 million and realized gains on the sales amounted to $0.1 million for the three and nine months ended September 30, 2011.

In addition to the securities described above, the Company held investments in debt and equity securities related to the Company's pro-rata share of funding in the Newcastle Coal Infrastructure Group (NCIG).  During the nine months ended September 30, 2011, the Company sold all of its interests in these debt and equity securities. New debt securities were purchased for the funding of the next phase of NCIG's port expansion during the three months ended September 30, 2011. These debt securities are recorded at cost, which approximates fair value, and are denominated in U.S. dollars. The fair value of these securities was $29.4 million at September 30, 2011.

At each reporting date, the Company performs separate evaluations of debt and equity securities to determine if any unrealized losses are other-than-temporary. None of the securities that were in an unrealized loss position at September 30, 2011 has been so for greater than 12 months. The Company did not recognize any other-than-temporary losses on any of its investments during the nine months ended September 30, 2011.

7

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(4) Inventories

Inventories consisted of the following:

	September 30, 2011		December 31, 2010
	(Dollars in millions)
Materials and supplies	$	109.8	$	97.1
Raw coal	54.4		55.4
Saleable coal	187.7		180.4
Total	$	351.9	$	332.9

(5) Derivatives and Fair Value Measurements

Risk Management — Non-Coal Trading Activities

The Company is exposed to various types of risk in the normal course of business, including price risk on commodities utilized in the Company's operations, interest rate risk on long-term debt, and foreign currency exchange rate risk for non-U.S. dollar expenditures. In most cases, commodity price risk (excluding coal trading activities) related to the sale of coal is mitigated through the use of long-term, fixed-price contracts rather than through the use of financial instruments. For the price risk exposure on other commodities, as well as for the interest rate risk and foreign currency exchange rate risk, the Company utilizes financial derivative instruments to manage the risks related to these fluctuations. All of these risks are actively monitored in an effort to ensure compliance with the risk management policies of the Company.

Interest Rate Swaps. The Company is exposed to interest rate risk on its fixed rate and variable rate long-term debt. From time to time, the Company manages the interest rate risk associated with the fair value of its fixed rate borrowings using fixed-to-floating interest rate swaps to effectively convert a portion of the underlying cash flows on the debt into variable rate cash flows. The Company designates these swaps as fair value hedges, with the objective of hedging against changes in the fair value of the fixed rate debt that results from market interest rate changes. From time to time, the interest rate risk associated with the Company’s variable rate borrowings is managed using floating-to-fixed interest rate swaps. The Company designates these swaps as cash flow hedges, with the objective of reducing the variability of cash flows associated with market interest rate changes. As of September 30, 2011, the Company had no interest rate swaps in place.

Foreign Currency Hedges. The Company is exposed to foreign currency exchange rate risk, primarily on Australian dollar expenditures made in its Australian Mining segment. This risk is managed by entering into forward contracts and options that the Company designates as cash flow hedges, with the objective of reducing the variability of cash flows associated with forecasted foreign currency expenditures.

Diesel Fuel and Explosives Hedges. The Company is exposed to commodity price risk associated with diesel fuel and explosives in the U.S. and Australia. This risk is managed through the use of cost pass-through contracts and derivatives, primarily swaps. The Company generally designates the swap contracts as cash flow hedges, with the objective of reducing the variability of cash flows associated with forecasted diesel fuel and explosives purchases. In Australia, the explosives costs and a portion of the diesel fuel costs are not hedged as they are usually included in the fees paid to the Company’s contract miners.

8

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Notional Amounts and Fair Value. The following summarizes the Company’s foreign currency and commodity positions at September 30, 2011:

	Notional Amount by Year of Maturity
	Total		2011		2012		2013		2014		2015		2016 and thereafter
Foreign Currency
A$:US$ hedge contracts (A$ millions)	$	3,977.9	$	391.3	$	1,605.5	$	1,210.6	$	770.5	$	—	$	—
GBP£:US$ hedge contracts (GBP millions)	£	6.5	£	—	£	6.5	£	—	£	—	£	—	£	—
Commodity Contracts
Diesel fuel hedge contracts (million gallons)	188.9		21.4		83.9		57.9		25.7		—		—
U.S. explosives hedge contracts (million MMBtu)	8.8		1.1		3.9		2.6		1.2		—		—

	Account Classification by
	Cash Flow Hedge		Fair Value Hedge		Economic Hedge		Fair Value Asset (Liability)
							(Dollars in millions)
Foreign Currency
A$:US$ hedge contracts (A$ millions)	$	3,977.9	$	—	$	—	$	412.5
GBP£:US$ hedge contracts (GBP millions)	£	6.5	£	—	£	—	$	(0.6	)
Commodity Contracts
Diesel fuel hedge contracts (million gallons)	188.9		—		—		$	38.0
U.S. explosives hedge contracts (million MMBtu)	8.8		—		—		$	(4.9	)

Hedge Ineffectiveness. The Company assesses, both at inception and at least quarterly thereafter, whether the derivatives used in hedging activities are highly effective at offsetting the changes in the anticipated cash flows of the hedged item. The effective portion of the change in the fair value is recorded in “Accumulated other comprehensive loss” until the hedged transaction impacts reported earnings, at which time any gain or loss is reclassified to the consolidated statements of operations. To the extent that the periodic changes in the fair value of the derivatives exceed the changes in the hedged item, the ineffective portion of the periodic non-cash changes are recorded in the consolidated statements of operations in the period of the change. If the hedge ceases to qualify for hedge accounting, the Company prospectively recognizes the mark-to-market movements in the consolidated statements of operations in the period of the change.

A measure of ineffectiveness is inherent in hedging future diesel fuel purchases with derivative positions based on crude oil and refined petroleum products as a result of location and product differences.

The Company’s derivative positions for the hedging of future explosives purchases are based on natural gas, which is the primary price component of explosives. However, a small measure of ineffectiveness exists as the contractual purchase price includes manufacturing fees that are subject to periodic adjustments. In addition, other fees, such as transportation surcharges, can result in ineffectiveness, but have historically changed infrequently and comprise a small portion of the total explosives cost.

The Company’s derivative positions for the hedging of forecasted foreign currency expenditures contain a small measure of ineffectiveness due to timing differences between the hedge settlement and the purchase transaction, which could differ by less than a day and up to a maximum of 30 days.

9

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tables below show the classification and amounts of pre-tax gains and losses related to the Company’s non-trading hedges during the three and nine months ended September 30, 2011 and 2010:

		Three Months Ended September 30, 2011
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives		Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)		Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Diesel fuel cash flow hedge contracts	Operating costs and expenses	$	—	$	(47.9	)	$	8.4	$	(1.0	)
Explosives cash flow hedge contracts	Operating costs and expenses	—		(3.3		)	0.1		(0.2		)
Foreign currency cash flow hedge contracts:
— Operating costs	Operating costs and expenses	—		(269.1		)	92.2		—
— Capital expenditures	Depreciation, depletion and amortization	—		(0.5		)	—		—
Total		$	—	$	(320.8	)	$	100.7	$	(1.2	)

		Three Months Ended September 30, 2010
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives		Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)			Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Diesel fuel cash flow hedge contracts	Operating costs and expenses	$	—	$	22.3		$	(10.9	)	$	0.7
Explosives cash flow hedge contracts	Operating costs and expenses	—		(1.1		)	(2.5		)	—
Foreign currency cash flow hedge contracts	Operating costs and expenses	—		434.7			38.5			—
Total		$	—	$	455.9		$	25.1		$	0.7

10

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

		Nine Months Ended September 30, 2011
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives		Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)		Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Diesel fuel cash flow hedge contracts	Operating costs and expenses	$	—	$	25.0		$	28.4	$	1.1
Explosives cash flow hedge contracts	Operating costs and expenses	—		(4.1		)	—		(0.7		)
Foreign currency cash flow hedge contracts:
— Operating costs	Operating costs and expenses	—		33.8			261.1		—
— Capital expenditures	Depreciation, depletion and amortization	—		(0.7		)	—		—
Total		$	—	$	54.0		$	289.5	$	0.4

		Nine Months Ended September 30, 2010
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives(1)			Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)			Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Interest rate swaps cash flow hedge contracts	Interest expense	$	(8.5	)	$	0.8		$	(0.5	)	$	—
Diesel fuel cash flow hedge contracts	Operating costs and expenses	—			(7.5		)	(27.3		)	—
Explosives cash flow hedge contracts	Operating costs and expenses	—			(4.7		)	(7.4		)	—
Foreign currency cash flow hedge contracts	Operating costs and expenses	—			355.3			104.4			—
Total		$	(8.5	)	$	343.9		$	69.2		$	—

⁽¹⁾  Amounts relate to swaps that were de-designated and terminated in conjunction with the refinancing of the Company’s previous credit facility.

Based on the net fair value of the Company’s non-coal trading positions held in “Accumulated other comprehensive loss” at September 30, 2011, unrealized gains to be reclassified from comprehensive income to earnings over the next 12 months associated with the Company’s foreign currency and diesel fuel hedge programs are expected to be approximately $230 million and $36 million, respectively. The unrealized losses to be realized under the explosives hedge program are expected to be approximately $3 million. As these unrealized gains are associated with derivative instruments that represent hedges of forecasted transactions, the amounts reclassified to earnings will partially offset the realized transactions, while the unrealized losses will add incremental expense to the condensed consolidated statements of operations.

11

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The classification and amount of derivatives presented on a gross basis as of September 30, 2011 and December 31, 2010 are as follows:

	Fair Value as of September 30, 2011
Financial Instrument	Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
	(Dollars in millions)
Diesel fuel cash flow hedge contracts	$	37.1	$	14.3	$	1.1	$	12.3
Explosives cash flow hedge contracts	—		—		3.1		1.8
Foreign currency cash flow hedge contracts	243.2		203.2		13.0		21.5
Total	$	280.3	$	217.5	$	17.2	$	35.6

	Fair Value as of December 31, 2010
Financial Instrument	Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
	(Dollars in millions)
Diesel fuel cash flow hedge contracts	$	25.3	$	26.9	$	11.9	$	—
Explosives cash flow hedge contracts	0.5		0.1		0.1		0.6
Foreign currency cash flow hedge contracts	273.5		366.6		—		—
Total	$	299.3	$	393.6	$	12.0	$	0.6

After netting by counterparty where permitted, the fair values of the respective derivatives are reflected in “Other current assets,” “Investments and other assets,” “Accounts payable and accrued expenses” and “Other noncurrent liabilities” in the condensed consolidated balance sheets.

See Note 6 for information related to the Company’s coal trading activities.

Fair Value Measurements

The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. These levels include: Level 1, inputs are quoted prices in active markets for the identical assets or liabilities; Level 2, inputs other than quoted prices included in Level 1 that are directly or indirectly observable through market-corroborated inputs; and Level 3, inputs are unobservable, or observable but cannot be market-corroborated, requiring the Company to make assumptions about pricing by market participants.

Financial Instruments Measured on a Recurring Basis. The following tables set forth the hierarchy of the Company’s net financial asset (liability) positions for which fair value is measured on a recurring basis:

	September 30, 2011
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Investment in debt and equity securities	$	79.5	$	—		$	—	$	79.5
Commodity swaps and options — diesel fuel	—		38.0			—		38.0
Commodity swaps and options — explosives	—		(4.9		)	—		(4.9		)
Foreign currency hedge contracts	—		411.9			—		411.9
Total net financial assets	$	79.5	$	445.0		$	—	$	524.5

12

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	December 31, 2010
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Investment in debt securities	$	17.9	$	—		$	—	$	17.9
Commodity swaps and options — diesel fuel	—		40.3			—		40.3
Commodity swaps and options — explosives	—		(0.1		)	—		(0.1		)
Foreign currency hedge contracts	—		640.1			—		640.1
Total net financial assets	$	17.9	$	680.3		$	—	$	698.2

For Level 1 and 2 financial assets and liabilities, the Company utilizes both direct and indirect observable price quotes, including interest rate yield curves, exchange indices, broker quotes, published indices and other market quotes. Below is a summary of the Company’s valuation techniques for Level 1 and 2 financial assets and liabilities:

• Investment in debt and equity securities: valued based on quoted prices in active markets (Level 1).

• Commodity swaps and options — diesel fuel and explosives: generally based on a valuation that is corroborated by the use of market-based pricing (Level 2).

• Foreign currency hedge contracts: valued utilizing inputs obtained in quoted public markets (Level 2).

The Company did not have any transfers between levels during the three or nine months ended September 30, 2011 or 2010 for its non-coal trading positions. The Company’s policy is to value all transfers between levels using the beginning of period valuation.

Other Financial Instruments. The following methods and assumptions were used by the Company in estimating fair values for other financial instruments as of September 30, 2011 and December 31, 2010:

• Cash and cash equivalents, accounts receivable, including those within the Company’s accounts receivable securitization program, and accounts payable and accrued expenses have carrying values which approximate fair value due to the short maturity or the liquid nature of these instruments.

• The Company’s investments in debt and equity securities related to the Company’s pro-rata share of funding in NCIG are included in “Investments and other assets” in the condensed consolidated balance sheets. The debt securities are recorded at cost, which approximates fair value.

• Long-term debt fair value estimates are based on observed prices for securities with an active trading market when available, and otherwise on estimated borrowing rates to discount the cash flows to their present value. The carrying amounts of the 7.875% Senior Notes due 2026 and the Convertible Junior Subordinated Debentures due 2066 (the Debentures) are net of the respective unamortized note discounts.

The carrying amounts and estimated fair values of the Company’s debt are summarized as follows:

	September 30, 2011				December 31, 2010
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(Dollars in millions)
Long-term debt	$	2,502.4	$	2,645.3	$	2,750.0	$	2,960.0

13

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Nonperformance and Credit Risk

The fair value of the Company’s non-coal trading derivative assets and liabilities reflects adjustments for nonperformance and credit risk. The Company manages its counterparty risk through established credit standards, diversification of counterparties, utilizing investment grade commercial banks and continuous monitoring of counterparty creditworthiness. To reduce its credit exposure for these hedging activities, the Company seeks to enter into netting agreements with counterparties that permit the Company to offset asset and liability positions with such counterparties.

(6) Coal Trading

Risk Management

The Company engages in direct and brokered trading of coal, ocean freight and fuel-related commodities in over-the-counter markets (coal trading), some of which is subsequently exchange-cleared and some of which is bilaterally-settled. Except those for which the Company has elected to apply a normal purchases and normal sales exception, all derivative coal trading contracts are accounted for on a fair value basis.

The Company’s policy is to include instruments associated with coal trading transactions as a part of its trading book. Trading revenues are recorded in “Other revenues” in the unaudited condensed consolidated statements of operations and include realized and unrealized gains and losses on derivative instruments, including coal deliveries related to contracts accounted for under the normal purchases and normal sales exception. Therefore, the Company has elected the trading exemption to reflect the disclosures for its coal trading activities.

	Three Months Ended September 30,					Nine Months Ended September 30,
Trading Revenues by Type of Instrument	2011			2010		2011			2010
	(Dollars in millions)
Commodity swaps and options	$	(0.6	)	$	38.9	$	(26.6	)	$	29.5
Physical commodity purchase/sale contracts	29.6			23.2		60.9			141.5
Total trading revenues	$	29.0		$	62.1	$	34.3		$	171.0

Hedge Ineffectiveness. The Company assesses, both at inception and at least quarterly thereafter, whether the derivatives used in hedging activities are highly effective at offsetting the changes in the anticipated cash flows of the hedged item. The effective portion of the change in the fair value is recorded in “Accumulated other comprehensive loss” until the hedged transaction impacts reported earnings, at which time gains and losses are reclassified to the unaudited consolidated statements of operations at the time of the recognition of the underlying hedged item. To the extent that the periodic changes in the fair value of the derivatives exceed the changes in the hedged item, the ineffective portion of the periodic non-cash changes are recorded in the unaudited consolidated statements of operations in the period of the change. If the hedge ceases to qualify for hedge accounting, the Company prospectively recognizes the mark-to-market movements in the unaudited consolidated statements of operations in the period of the change.

In some instances, the Company has designated an existing coal trading derivative as a hedge and, thus, the derivative has a non-zero fair value at hedge inception. The “off-market” nature of these derivatives, which is best described as an embedded financing element within the derivative, is a source of ineffectiveness. In other instances, the Company uses a coal trading derivative that settles at a different time, has different quality specifications, or has a different location basis than the occurrence of the cash flow being hedged. These collectively yield ineffectiveness to the extent that the derivative hedge contract does not exactly offset changes in the fair value or expected cash flows of the hedged item.

Forecasted Transactions No Longer Probable. During the nine months ended September 30, 2011, the Company reclassified losses of $9.1 million out of “Accumulated other comprehensive loss” to earnings as the underlying forecasted transactions were deemed no longer probable of occurring.

14

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements

The fair value of assets and liabilities from coal trading activities is set forth below:

	September 30, 2011						December 31, 2010
	Gross Basis			Net Basis			Gross Basis			Net Basis
	(Dollars in millions)
Assets from coal trading activities	$	590.5		$	66.0		$	1,706.2		$	192.5
Liabilities from coal trading activities	(660.5		)	(62.6		)	(1,843.5		)	(181.7		)
Subtotal	(70.0		)	3.4			(137.3		)	10.8
Net margin posted (1)	73.4			—			148.1			—
Net value of coal trading positions	$	3.4		$	3.4		$	10.8		$	10.8

⁽¹⁾  Represents margin posted with counterparties and exchanges of $73.4 million at September 30, 2011; and margin posted with counterparties and exchanges of $148.2 million, net of margin held of $0.1 million, at December 31, 2010. In addition, at December 31, 2010, the Company held letters of credit of $5.0 million from counterparties in lieu of margin posted. Of the margin posted at September 30, 2011, approximately 94% related to cash flow hedges.

The Company’s trading assets and liabilities are generally made up of forward contracts, financial swaps and margin. The fair value of coal trading positions, before the application of margin, designated as cash flow hedges of anticipated future sales was a liability of $109.5 million and $174.2 million as of September 30, 2011 and December 31, 2010, respectively.

The following tables set forth the hierarchy of the Company’s net financial asset (liability) coal trading positions for which fair value is measured on a recurring basis:

	September 30, 2011
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Commodity swaps and options	$	15.1	$	3.9		$	—	$	19.0
Physical commodity purchase/sale contracts	—		(23.8		)	8.2		(15.6		)
Total net financial assets (liabilities)	$	15.1	$	(19.9	)	$	8.2	$	3.4

	December 31, 2010
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Commodity swaps and options	$	10.7	$	(76.2	)	$	—	$	(65.5	)
Physical commodity purchase/sale contracts	—		57.7			18.6		76.3
Total net financial assets (liabilities)	$	10.7	$	(18.5	)	$	18.6	$	10.8

For Level 1 and 2 financial assets and liabilities, the Company utilizes both direct and indirect observable price quotes, including U.S. interest rate curves, LIBOR yield curves, Chicago Mercantile Exchange (CME), New York Mercantile Exchange (NYMEX), Intercontinental Exchange indices (ICE), NOS Clearing ASA, LCH.Clearnet (formerly known as the London Clearing House), Singapore Exchange (SGX), broker quotes, published indices and other market quotes. Below is a summary of the Company’s valuation techniques for Level 1 and 2 financial assets and liabilities:

• Commodity swaps and options — generally valued based on unadjusted quoted prices in active markets (Level 1) or a valuation that is corroborated by the use of market-based pricing (Level 2).

• Physical commodity purchase/sale contracts — purchases and sales at locations with significant market activity corroborated by market-based information (Level 2).

15

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Commodity swaps and options and physical commodity purchase/sale contracts transacted in less liquid markets or contracts, such as long-term arrangements with limited price availability, were classified in Level 3. Indicators of less liquid markets are those with periods of low trade activity or when broker quotes reflect wide pricing spreads. Generally, the Company’s Level 3 instruments or contracts are valued using internally generated models that include bid/ask price quotations, other market assessments obtained from multiple, independent third-party brokers or other transactional data. While the Company does not anticipate any decrease in the number of third-party brokers or market liquidity, such events could erode the quality of market information and therefore the valuing of its market positions should the number of third-party brokers decrease or if market liquidity is reduced. The Company’s valuation techniques also include basis adjustments for heat rate, sulfur and ash content, port and freight costs and credit and nonperformance risk. The Company validates its valuation inputs with third-party information and settlement prices from other sources where available. The Company has consistently applied these valuation techniques in all periods presented, and believes it has obtained the most accurate information available for the types of derivative contracts held.

The following table summarizes the changes in the Company’s recurring Level 3 net financial assets:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Beginning of period	$	9.9		$	13.8		$	18.6		$	17.0
Total gains (losses) realized/unrealized:
Included in earnings	(1.4		)	2.1			10.7			(0.6		)
Included in other comprehensive income	—			0.2			—			0.3
Settlements	(1.3		)	(0.7		)	(3.1		)	(1.4		)
Transfers in (out)	1.0			0.8			(18.0		)	0.9
End of period	$	8.2		$	16.2		$	8.2		$	16.2

The following table summarizes the changes in unrealized gains (losses) relating to Level 3 net financial assets held both as of the beginning and the end of the period:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011			2010		2011		2010
	(Dollars in millions)
Changes in unrealized gains (losses) (1)	$	(1.1	)	$	1.2	$	8.7	$	3.5

⁽¹⁾  Within the unaudited condensed consolidated statements of operations for the periods presented, unrealized gains and losses from Level 3 items are combined with unrealized gains and losses on positions classified in Level 1 or 2, as well as other positions that have been realized during the applicable periods.

The Company did not have any significant transfers between Level 1 and Level 2 during the three or nine months ended September 30, 2011 or 2010. During the nine months ended September 30, 2011, certain of the Company’s physical commodity purchase/sale contracts were transferred from Level 3 to Level 2 as the settlement dates entered a more liquid market. There were no significant transfers in or out of Level 3 during the three or nine months ended September 30, 2010. The Company’s policy is to value all transfers between levels using the beginning of period valuation.

Based on the net fair value of the Company’s coal trading positions held in “Accumulated other comprehensive loss” at September 30, 2011, unrealized losses to be reclassified from comprehensive income to earnings over the next 12 months are expected to be approximately $76 million. As these unrealized losses are associated with derivative instruments that represent hedges of forecasted transactions, the amounts reclassified to earnings may partially offset the realized transactions in the unaudited condensed consolidated statements of operations.

16

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of September 30, 2011, the timing of the estimated future realization of the value of the Company’s trading portfolio was as follows:

Year of	Percentage of
Expiration	Portfolio Total
2011	33%
2012	46%
2013	9%
2014	8%
2015	4%
	100%

Nonperformance and Credit Risk. The fair value of the Company’s coal derivative assets and liabilities reflects adjustments for nonperformance and credit risk. The Company’s exposure is substantially with electric utilities, steel producers, energy marketers and energy producers. The Company’s policy is to independently evaluate each customer’s creditworthiness prior to entering into transactions and to regularly monitor the credit extended. If the Company engages in a transaction with a counterparty that does not meet its credit standards, the Company seeks to protect its position by requiring the counterparty to provide an appropriate credit enhancement. Also, when appropriate (as determined by its credit management function), the Company has taken steps to reduce its exposure to customers or counterparties whose credit has deteriorated and who may pose a higher risk of failure to perform under their contractual obligations. These steps include obtaining letters of credit or cash collateral (margin), requiring prepayments for shipments or the creation of customer trust accounts held for the Company’s benefit to serve as collateral in the event of a failure to pay or perform. To reduce its credit exposure related to trading and brokerage activities, the Company seeks to enter into netting agreements with counterparties that permit the Company to offset asset and liability positions with such counterparties and, to the extent required, will post or receive margin amounts associated with exchange-cleared positions.

At September 30, 2011, 35% of the Company’s credit exposure related to coal trading activities was with investment grade counterparties while 54% was with non-investment grade counterparties and 11% was with counterparties that are not rated.

Performance Assurances and Collateral. Certain of the Company’s derivative trading instruments require the parties to provide additional performance assurances whenever a material adverse event jeopardizes one party’s ability to perform under the instrument. If the Company was to sustain a material adverse event (using commercially reasonable standards), the counterparties could request collateralization on derivative trading instruments in net liability positions which, based on an aggregate fair value at September 30, 2011 and December 31, 2010, would have amounted to collateral postings of approximately $48 million and $160 million, respectively, to its counterparties. As of September 30, 2011, $1.0 million of collateral was posted to counterparties for such positions while $5.8 million was posted at December 31, 2010 (reflected in “Liabilities from coal trading activities, net”).

Certain of the Company’s other derivative trading instruments require the parties to provide additional performance assurances whenever a credit downgrade occurs below a certain level as specified in each underlying contract. The terms of such derivative trading instruments typically require additional collateralization, which is commensurate with the severity of the credit downgrade. If a credit downgrade were to have occurred below contractually specified levels, the Company’s additional collateral requirement owed to its counterparties would have been approximately $2 million at September 30, 2011 and zero at December 31, 2010 based on the aggregate fair value of all derivative trading instruments with such features that were in a net liability position. As of September 30, 2011, the Company had zero posted for such instruments in a net liability position. As of December 31, 2010, $5.0 million of margin was posted with a counterparty due to timing and market fluctuations (reflected in “Liabilities from coal trading activities, net”).

The Company is required by an exchange to post certain collateral, known as initial margin, which represents an estimate of potential future adverse price movements across the Company’s portfolio under normal market conditions. As of September 30, 2011 and December 31, 2010, the Company had posted initial margin of $58.9 million and $39.5 million, respectively (reflected in “Other current assets”). In addition, the Company had posted $13.0 million and $4.4 million of margin in excess of the exchange-required variation (discussed below) and initial margin as of September 30, 2011 and December 31, 2010, respectively (also reflected in “Other current assets”).

17

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company is required to post collateral on positions that are in a net liability position with an exchange, known as variation margin, which was $72.4 million as of September 30, 2011 and $137.4 million as of December 31, 2010 (reflected in “Liabilities from coal trading activities, net”).

(7) Income Taxes

The following is a reconciliation of the expected statutory federal income tax provision to the Company’s actual income tax provision:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Expected income tax provision at federal statutory rate	$	112.2		$	134.9		$	343.3		$	296.3
Excess depletion	(13.9		)	(25.8		)	(39.0		)	(44.4		)
Foreign earnings provision differential	(34.9		)	(29.8		)	(84.5		)	(57.1		)
Foreign earnings repatriation	—			84.5			—			84.5
Remeasurement of foreign income tax accounts	(38.7		)	42.7			(16.9		)	28.8
State income taxes, net of U.S. federal tax benefit	4.8			2.1			10.5			7.0
General business tax credits	(4.4		)	(5.6		)	(12.4		)	(13.1		)
Changes in valuation allowance	2.5			(63.7		)	7.0			(45.6		)
Changes in tax reserves	6.0			2.2			10.8			(4.9		)
Other, net	3.5			6.2			5.9			5.7
Total provision	$	37.1		$	147.7		$	224.7		$	257.2

(8) Long-Term Debt

The Company’s total indebtedness consisted of the following at:

	September 30, 2011		December 31, 2010
	(Dollars in millions)
Term Loan	$	475.0	$	493.8
5.875% Senior Notes due April 2016	—		218.1
7.375% Senior Notes due November 2016	650.0		650.0
6.5% Senior Notes due September 2020	650.0		650.0
7.875% Senior Notes due November 2026	247.3		247.2
Convertible Junior Subordinated Debentures due 2066	374.7		373.3
6.34% Series B Bonds due December 2014	12.0		12.0
6.84% Series C Bonds due December 2016	33.0		33.0
Capital lease obligations	58.6		69.6
Fair value hedge adjustment	—		2.2
Other	1.8		0.8
Total Debt	$	2,502.4	$	2,750.0

18

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.875% Senior Notes Redemption

On April 15, 2011, the Company used cash on hand to redeem its 5.875% Senior Notes due in April 2016 (the 5.875% Notes) in the aggregate principal amount of $218.1 million. In compliance with the terms of the indenture governing the 5.875% Notes, the redemption price was equal to 100.979% of the aggregate principal amount of the 5.875% Notes, plus accrued and unpaid interest to April 15, 2011. The Company recognized costs of $1.7 million associated with the redemption.

Other Long-Term Debt

Other than the debt related activities discussed in Subsequent Events (Note 17), there were no other significant changes to the Company’s long-term debt since December 31, 2010.

(9) Pension and Postretirement Benefit Costs

Net periodic pension costs included the following components:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
				(Dollars in millions)
Service cost for benefits earned	$	0.4		$	0.4		$	1.3		$	1.2
Interest cost on projected benefit obligation	12.4			12.6			37.3			37.8
Expected return on plan assets	(16.1		)	(14.6		)	(48.3		)	(43.8		)
Amortization of prior service cost	0.3			0.4			0.8			1.1
Amortization of actuarial loss	7.5			5.4			22.5			16.4
Net periodic pension costs	$	4.5		$	4.2		$	13.6		$	12.7

As of September 30, 2011, the Company’s qualified defined benefit pension plans were at or above the thresholds of the Pension Protection Act of 2006 to avoid benefit restrictions and at-risk penalties for 2011. No contributions to the qualified plans are expected during 2011. However, the Company does expect to make contributions to its non-qualified defined benefit pension plans during 2011 totaling less than $2 million.

Net periodic postretirement benefit costs included the following components:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
			(Dollars in millions)
Service cost for benefits earned	$	3.6	$	3.5	$	10.1	$	9.7
Interest cost on accumulated postretirement benefit obligation	14.5		14.7		43.4		43.8
Amortization of prior service cost	0.8		0.5		1.8		1.5
Amortization of actuarial loss	6.7		6.8		20.2		19.5
Net periodic postretirement benefit costs	$	25.6	$	25.5	$	75.5	$	74.5

19

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Comprehensive Income

The following table sets forth the after-tax components of comprehensive income:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011			2010		2011			2010
	(Dollars in millions)
Net income	$	281.5		$	236.3	$	752.4		$	587.2
Net increase (decrease) in fair value of cash flow hedges, net of income taxes	(197.4		)	268.1		(100.6		)	135.9
Net unrealized losses on available-for-sale securities, net of income taxes	(4.5		)	—		(4.3		)	—
Change in actuarial loss and prior service cost associated with postretirement plans and workers’ compensation obligations, net of income taxes	10.2			11.2		33.7			27.2
Comprehensive income	$	89.8		$	515.6	$	681.2		$	750.3

Comprehensive income differs from net income by the amount of unrealized gains or losses resulting from valuation changes of the Company’s cash flow hedges (see Note 5 and Note 6) or its available-for-sale securities (see Note 3) and the change in actuarial loss and prior service cost (see Note 9) during the periods presented. None of the reconciling items between net income and comprehensive income relates to the Company’s noncontrolling interests for the periods presented.

(11) Other Commercial Events

In June 2011, the Company exchanged coal reserves in Kentucky and coal reserves and surface lands in Illinois for coal reserves in West Virginia. Based on the fair value of the coal reserves received, the Company recognized a $23.5 million gain on the exchange. Fair value was determined by using a discounted cash flow model that included assumptions for future coal sales prices, operating costs and the discount rate. This non-cash transaction was excluded from the investing section of the unaudited condensed consolidated statement of cash flows.

In June 2011, the Company recognized income associated with the receipt of a $14.6 million project development fee related to its involvement in the Prairie State Energy Campus (Prairie State), a 1,600 megawatt coal-fueled electricity generation project currently under construction.

(12) Earnings per Share (EPS)

Basic and diluted EPS are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. The Company’s restricted stock awards are considered participating securities because holders are entitled to receive non-forfeitable dividends during the vesting term. Diluted EPS includes securities that could potentially dilute basic EPS during a reporting period, which for the Company includes the Debentures and share-based compensation awards.

A conversion of the Debentures may result in payment for any conversion value in excess of the principal amount of the Debentures in the Company’s common stock. For diluted EPS purposes, potential common stock is calculated based on whether the market price of the Company’s common stock at the end of each reporting period is in excess of the conversion price of the Debentures. For a full discussion of the conditions under which the Debentures may be converted, the conversion rate to common stock and the conversion price, see Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

20

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For all but the performance units, the potentially dilutive impact of the Company’s share-based compensation awards is determined using the treasury stock method. Under the treasury stock method, awards are treated as if they had been exercised with any proceeds used to repurchase common stock at the average market price during the period. Any incremental difference between the assumed number of shares issued and purchased is included in the diluted share computation. For the Company’s other share-based compensation awards, performance units, their contingent features result in an assessment for any potentially dilutive common stock by using the end of the reporting period as if it were the end of the contingency period for all units granted. For a full discussion of the Company’s share-based compensation awards, see Note 14 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

The computation of diluted EPS excludes anti-dilutive shares of approximately 0.2 million for the three and nine months ended September 30, 2011 and less than 0.1 million for the three and nine months ended September 30, 2010. These anti-dilutive shares were due to certain share-based compensation awards calculated under the treasury stock method. This anti-dilution generally occurs where the exercise prices are higher than the average market value of the Company’s stock price during the applicable period.

The following illustrates the earnings allocation method utilized in the calculation of basic and diluted EPS.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(In millions, except per share amounts)
EPS numerator:
Income from continuing operations, net of income taxes	$	283.5		$	237.6		$	756.1		$	589.4
Less: Net income attributable to noncontrolling interests	7.4			12.2			17.0			23.2
Income from continuing operations attributable to    common stockholders, before allocation of earnings to    participating securities	276.1			225.4			739.1			566.2
Less: Earnings allocated to participating securities	(1.6		)	(1.7		)	(4.2		)	(4.1		)
Income from continuing operations attributable to    common stockholders, after earnings allocated to    participating securities (1)	274.5			223.7			734.9			562.1
Loss from discontinued operations, net of income taxes	(2.0		)	(1.3		)	(3.7		)	(2.2		)
Net income attributable to common stockholders, after    earnings allocated to participating securities (1)	$	272.5		$	222.4		$	731.2		$	559.9
EPS denominator:
Weighted average shares outstanding — basic	269.2			267.1			269.0			266.7
Impact of dilutive securities	1.4			1.5			1.5			1.7
Weighted average shares outstanding — diluted	270.6			268.6			270.5			268.4
Basic EPS attributable to common stockholders:
Income from continuing operations	$	1.02		$	0.84		$	2.73		$	2.11
Loss from discontinued operations	(0.01		)	—			(0.01		)	(0.01		)
Net income	$	1.01		$	0.84		$	2.72		$	2.10
Diluted EPS attributable to common stockholders:
Income from continuing operations	$	1.01		$	0.83		$	2.72		$	2.09
Loss from discontinued operations	(0.01		)	—			(0.01		)	(0.01		)
Net income	$	1.00		$	0.83		$	2.71		$	2.08

⁽¹⁾  The reallocation adjustment for participating securities to arrive at the numerator used to calculate diluted EPS was less than $0.1 million for the periods presented.

21

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(13) Financial Instruments and Guarantees with Off-Balance Sheet Risk

In the normal course of business, the Company is a party to guarantees and financial instruments with off-balance-sheet risk, which are not reflected in the accompanying condensed consolidated balance sheets. Such financial instruments are valued based on the amount of exposure under the instrument and the likelihood of required performance. In the Company’s past experience, virtually no claims have been made against these financial instruments. Management does not expect any material losses to result from these guarantees or off-balance-sheet instruments.

Financial Instruments with Off-Balance Sheet Risk

As of September 30, 2011, the Company had the following financial instruments with off-balance sheet risk:

	Reclamation Obligations		Lease Obligations		Workers’ Compensation Obligations		Other(1)		Total
	(Dollars in millions)
Self bonding	$	936.9	$	—	$	—	$	—	$	936.9
Surety bonds	606.4		104.7		6.2		10.4		727.7
Bank guarantees	127.4		—		—		139.2		266.6
Letters of credit	—		—		62.2		2.8		65.0
Bilateral cash collateralization agreements	—		—		—		79.7		79.7
	$	1,670.7	$	104.7	$	68.4	$	232.1	$	2,075.9

⁽¹⁾  Other includes letter of credit and bilateral cash collateralization agreement obligations described below and an additional $149.6 million in bank guarantees and surety bonds related to collateral for surety companies, road maintenance, performance guarantees and other operations.

The Company owns a 37.5% interest in Dominion Terminal Associates, a partnership that operates a coal export terminal in Newport News, Virginia under a 30-year lease that permits the partnership to purchase the terminal at the end of the lease term for a nominal amount. The partners have severally (but not jointly) agreed to make payments under various agreements which in the aggregate provide the partnership with sufficient funds to pay rents and to cover the principal and interest payments on the floating-rate industrial revenue bonds issued by the Peninsula Ports Authority, and which are supported by letters of credit from a commercial bank. As of September 30, 2011, the Company’s maximum reimbursement obligation to the commercial bank was in turn supported by four letters of credit totaling $42.7 million. The Company has a bilateral cash collateralization agreement for these letters of credit whereby the Company posted cash collateral in lieu of utilizing the Company’s unsecured credit facility (Credit Facility). See Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 for more information on the Company’s Credit Facility. Such cash collateral is classified within "Cash and cash equivalents" given the Company has the ability to substitute letters of credit at any time for this cash collateral and it is, therefore, readily available to the Company.

The Company is party to an agreement with the PBGC and TXU Europe Limited, an affiliate of the Company’s former parent corporation, under which the Company is required to make special contributions to two of the Company’s defined benefit pension plans and to maintain a $37.0 million letter of credit in favor of the PBGC. If the Company or the PBGC gives notice of an intent to terminate one or more of the covered pension plans in which liabilities are not fully funded, or if the Company fails to maintain the letter of credit, the PBGC may draw down on the letter of credit and use the proceeds to satisfy liabilities under the Employee Retirement Income Security Act of 1974, as amended. The PBGC, however, is required to first apply amounts received from a $110.0 million guarantee in place from TXU Europe Limited in favor of the PBGC before it draws on the Company’s letter of credit. The Company has a bilateral cash collateralization agreement for this letter of credit whereby the Company posted cash collateral in lieu of utilizing the Company’s Credit Facility. Such cash collateral is classified within "Cash and cash equivalents" given the Company has the ability to substitute a letter of credit at any time for this cash collateral and it is, therefore, readily available to the Company. On November 19, 2002, TXU Europe Limited was placed under the administration process in the United Kingdom (a process similar to bankruptcy proceedings in the U.S.) and continues under this process as of September 30, 2011. As a result of these proceedings, TXU Europe Limited may be liquidated or otherwise reorganized in such a way as to relieve it of its obligations under its guarantee.

22

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At September 30, 2011, the Company had a $2.8 million letter of credit outstanding for collateral for bank guarantees issued with respect to certain performance obligations related to some of the Company’s Australian mines.

Accounts Receivable Securitization

The Company has an accounts receivable securitization program (securitization program) with a maximum capacity of $275.0 million through its wholly-owned, bankruptcy-remote subsidiary (Seller). At September 30, 2011, the Company had $61.9 million available under the securitization program, net of outstanding letters of credit and amounts drawn. Under the securitization program, the Company contributes, on a revolving basis, trade receivables of most of the Company’s U.S. subsidiaries to the Seller, which then sells the receivables in their entirety to a consortium of unaffiliated asset-backed commercial paper conduits (the Conduits). After the sale, the Company, as servicer of the assets, collects the receivables on behalf of the Conduits for a nominal servicing fee. The Company utilizes proceeds from the sale of its accounts receivable as an alternative to short-term borrowings under the Company’s Credit Facility, effectively managing its overall borrowing costs and providing an additional source for working capital. The securitization program extends to May 2012, while the letter of credit commitment that supports the commercial paper facility underlying the securitization program must be renewed annually.

The Seller is a separate legal entity whose assets are available first and foremost to satisfy the claims of its creditors. Of the receivables sold to the Conduits, a portion of the amount due to the Seller is deferred until the ultimate collection of the underlying receivables. During the nine months ended September 30, 2011, the Company received total consideration of $3,740.9 million related to accounts receivable sold under the securitization program, including $2,831.7 million of cash up front from the sale of the receivables, an additional $674.4 million of cash upon the collection of the underlying receivables, and $234.8 million that had not been collected at September 30, 2011 and was recorded at fair value which approximates carrying value. The reduction in accounts receivable as a result of securitization activity with the Conduits was $150.0 million at September 30, 2011 and December 31, 2010.

The securitization activity has been reflected in the unaudited condensed consolidated statements of cash flows as operating activity because both the cash received from the Conduits upon sale of the receivables as well as the cash received from the Conduits upon the ultimate collection of the receivables are not subject to significantly different risks given the short-term nature of the Company’s trade receivables. The Company recorded expense associated with securitization transactions of $0.4 million and $0.6 million for the three months ended September 30, 2011 and 2010, respectively, and $1.5 million and $1.8 million for the nine months ended September 30, 2011 and 2010, respectively.

Other

The Company is the lessee under numerous equipment and property leases. It is common in such commercial lease transactions for the Company, as the lessee, to agree to indemnify the lessor for the value of the property or equipment leased, should the property be damaged or lost during the course of the Company’s operations. The Company expects that losses with respect to leased property would be covered by insurance (subject to deductibles). The Company and certain of its subsidiaries have guaranteed other subsidiaries’ performance under various lease obligations. Aside from indemnification of the lessor for the value of the property leased, the Company’s maximum potential obligations under its leases are equal to the respective future minimum lease payments, and the Company assumes that no amounts could be recovered from third parties.

In connection with the development of Prairie State, each owner, including one of the Company’s subsidiaries, has issued a guarantee for its proportionate share (5.06% for the Company) of the construction costs under an agreement with Bechtel Power Corporation.

From time to time, the Company enters into coal off-take agreements with counterparties where, as a part of the arrangements, the Company may provide certain financial guarantees on behalf of the counterparties. As of September 30, 2011, the Company had in place guarantees of $10.0 million on behalf of its counterparties relating to such agreements. To mitigate risk, the Company places liens on the counterparties' production equipment or requires performance bonds. 

23

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has provided financial guarantees under certain long-term debt agreements entered into by its subsidiaries, and substantially all of the Company’s subsidiaries provide financial guarantees under long-term debt agreements entered into by the Company. The maximum amounts payable under the Company’s debt agreements are equal to the respective principal and interest payments.

(14) Commitments and Contingencies

Commitments

As of September 30, 2011, purchase commitments for capital expenditures were $521.4 million, all of which is obligated within the next five years with $477.6 million obligated in the next 12 months.

A subsidiary of the Company owns a 5.06% undivided interest in Prairie State. The Company invested $29.8 million during the nine months ended September 30, 2011, representing its 5.06% share of the construction costs. Included in “Investments and other assets” in the condensed consolidated balance sheets as of September 30, 2011 and December 31, 2010 are costs of $232.3 million and $202.5 million, respectively. The Company’s share of total construction costs for Prairie State is expected to be approximately $250 million with most of the remaining funding expected in 2011.

In July 2011, the Company was named the winning bidder for control of approximately 220 million tons of low sulfur coal reserves in the Powder River Basin of Wyoming that will be assigned to the Company’s Caballo Mine. The Company made its first payment of $42.1 million in July 2011, with the remaining annual payments of $42.1 million to be made in July of each of the next four years. The related lease was executed by the U.S. Bureau of Land Management effective November 1, 2011.

There were no other material changes to the Company’s commitments from the information provided in Note 20 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Contingencies

From time to time, the Company and/or its subsidiaries are involved in legal proceedings arising in the ordinary course of business or related to indemnities or historical operations. The Company believes it has recorded adequate reserves for these liabilities and that there is no individual case pending that is likely to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. The Company discusses its significant legal proceedings below.

Litigation Relating to Continuing Operations

Navajo Nation Litigation. On June 18, 1999, the Navajo Nation served three of the Company’s subsidiaries, including Peabody Western Coal Company (Peabody Western), with a complaint that had been filed in the U.S. District Court for the District of Columbia which alleged that the defendants jointly participated in unlawful activity to obtain favorable coal lease amendments. The plaintiff sought actual and punitive damages and the termination and reformation of two coal leases. The court allowed the Hopi Tribe to intervene in this lawsuit, and the Hopi Tribe sought unspecified actual and punitive damages and reformation of its coal lease. One of the Company’s subsidiaries named as a defendant is now a subsidiary of Patriot Coal Corporation (Patriot). However, the Company was responsible for this litigation under the Separation Agreement entered into with Patriot in connection with the spin-off.

In October 2010, the Company and the other defendants settled the Hopi claims, and the court dismissed those claims. In August 2011, the Company and other defendants settled the Navajo claims, and agreed to dismiss all of the pending litigation with prejudice. In connection with this settlement, the Company recorded a provision totaling $24.5 million in the nine months ended September 30, 2011. The court has dismissed this lawsuit, and this matter has concluded.

24

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Gulf Power Company Litigation. On June 22, 2006, Gulf Power Company (Gulf Power) filed a breach of contract lawsuit against a Company subsidiary in the U.S. District Court, Northern District of Florida, contesting the force majeure declaration by the Company’s subsidiary under a coal supply agreement with Gulf Power and seeking damages for alleged past and future tonnage shortfalls of nearly five million tons under the agreement, which expired on December 31, 2007. Gulf Power filed a motion for partial summary judgment on liability, and the Company subsidiary filed a motion for summary judgment seeking complete dismissal. On June 30, 2009, the court granted Gulf Power’s motion for partial summary judgment and denied the Company subsidiary’s motion for summary judgment. The damages portion of the trial was held in February 2010. On September 30, 2010, the court entered its order on damages, awarding Gulf Power zero dollars in damages and the Company its costs to defend the lawsuit. The Company is also seeking its reasonable attorney’s fees incurred since October 15, 2008. On November 1, 2010, Gulf Power filed a motion to alter or amend the judgment, contesting the trial court’s damages order, to which the Company objected. The court entered an order on July 29, 2011, that (1) affirmed its September 30, 2010 decision in all respects except for 2007 cover coal purchases, (2) granted in part Gulf Power’s motion to alter judgment with respect to 2007 cover coal purchases, and (3) scheduled a hearing for August 25, 2011 to consider further evidence on expenses saved by Gulf Power in its 2007 cover coal purchases. On September 30, 2011, the court entered an order awarding Gulf Power damages in the amount of $20.5 million for its 2007 cover purchases. On October 4, 2011, the court ordered Gulf Power to submit within 10 days a calculation of the amount of interest to which it claims it is entitled, and Gulf Power has responded to the order requesting $6.9 million in prejudgment interest. On October 26, 2011, the court entered an order extending the time for filing notices of appeal until November 28, 2011 and referred the matter to a magistrate for a settlement conference prior to that date.  The court will defer ruling on prejudgment interest until after the settlement conference. The Company's subsidiary filed a notice of appeal on October 31, 2011. Based on the Company's evaluation of information currently available concerning the issues and their potential impact, the Company believes it will be successful in the liability appeals process and, therefore, no liability has been recorded at this time.

Claims and Litigation Relating to Indemnities or Historical Operations

Oklahoma Lead Litigation. Gold Fields Mining, LLC (Gold Fields) is a dormant, non-coal producing entity that was previously managed and owned by Hanson PLC, the Company’s predecessor owner. In a February 1997 spin-off, Hanson PLC transferred ownership of Gold Fields to the Company, despite the fact that Gold Fields had no ongoing operations and the Company had no prior involvement in its past operations. Gold Fields is currently one of the Company’s subsidiaries. The Company indemnified TXU Group with respect to certain claims relating to a former affiliate of Gold Fields. A predecessor of Gold Fields formerly operated two lead mills near Picher, Oklahoma prior to the 1950s and mined, in accordance with lease agreements and permits, approximately 0.15% of the total amount of the crude ore mined in the county.

Gold Fields and several other companies are defendants in a property damage lawsuit pending in the U.S. District Court for the Northern District of Oklahoma arising from past operations near Picher, Oklahoma. The plaintiffs are seeking compensatory damages for diminution in property values and punitive damages. This case was originally filed as putative class actions, but the court denied class certification and the case was subsequently amended to include a number of individual plaintiffs. Gold Fields was also a defendant in another case alleging property damage and pending in the U.S. District Court for the Northern District of Oklahoma arising out of past operations near Picher, Oklahoma, but the court granted summary judgment in Company's favor in that case.

Gold Fields and several other companies are also defendants in a personal injury lawsuit pending in the U.S. District Court for the Northern District of Oklahoma arising from past operations near Picher, Oklahoma. The four plaintiffs are seeking compensatory damages for cognitive impairments allegedly caused by exposure to lead and punitive damages.

In June 2005, Gold Fields and other potentially responsible parties (PRPs) received a letter from the U.S. Department of Justice alleging that the potentially responsible parties’ mining operations caused the U.S. Environmental Protection Agency (EPA) to incur approximately $125 million in residential yard remediation costs at Picher, Oklahoma and will cause the EPA to incur additional remediation costs relating to historical mining sites. In June 2008, Gold Fields and other PRPs received letters from the U.S. Department of Justice and the EPA re-initiating settlement negotiations. Gold Fields continues to participate in the settlement discussions. Gold Fields believes it has meritorious defenses to these claims.

25

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In February 2005, the state of Oklahoma, on behalf of itself and several other parties, sent a notice to Gold Fields and other companies regarding a possible natural resources damage claim. The state of Oklahoma has also indicated that it seeks to recover remediation costs from these parties.

The outcome of litigation and these claims are subject to numerous uncertainties. Based on the Company’s evaluation of the issues and their potential impact, the amount of any future loss cannot be reasonably estimated. However, based on current information, the Company believes these claims are likely to be resolved without a material adverse effect on its financial condition, results of operations or cash flows.

Environmental Claims and Litigation

Environmental claims have been asserted against Gold Fields related to activities of Gold Fields or a former affiliate. Gold Fields or the former affiliate has been named a potentially responsible party (PRP) at five national priority list sites based on the Superfund Amendments and Reauthorization Act of 1986. Claims were asserted at 13 additional sites, bringing the total to 18, which have since been reduced to 11 by completion of work, transfer or regulatory inactivity. The number of PRP sites in and of itself is not a relevant measure of liability because the nature and extent of environmental concerns varies by site, as does the estimated share of responsibility for Gold Fields or the former affiliate. Undiscounted liabilities for environmental cleanup-related costs for all of the sites noted above were $53.4 million as of September 30, 2011 and $51.1 million as of December 31, 2010, $9.6 million and $6.3 million of which was reflected as a current liability, respectively. These amounts represent those costs that the Company believes are probable and reasonably estimable.

Gold Fields is involved in other litigation and claims in the Picher area, and the Company indemnified TXU Group with respect to a defendant as is more fully discussed under the “Oklahoma Lead Litigation” caption above.

Significant uncertainty exists as to whether claims will be pursued against Gold Fields in all cases, and where they are pursued, the amount of the eventual costs and liabilities, which could be greater or less than the liabilities recorded in the consolidated balance sheets. Based on the Company’s evaluation of the issues and their potential impact, the total amount of any future loss cannot be reasonably estimated. However, based on current information, the Company believes these claims and litigation are likely to be resolved without a material adverse effect on its financial condition, results of operations or cash flows.

Native Village of Kivalina and City of Kivalina v. ExxonMobil Corporation, et al. In February 2008, the Native Village of Kivalina and the City of Kivalina filed a lawsuit in the U.S. District Court for the Northern District of California against the Company, several owners of electricity generating facilities and several oil companies. The plaintiffs are the governing bodies of a village in Alaska that they contend is being destroyed by erosion allegedly caused by global warming that the plaintiffs attribute to emissions of greenhouse gases by the defendants. The plaintiffs assert claims for nuisance, and allege that the defendants have acted in concert and are jointly and severally liable for the plaintiffs’ damages. The suit seeks damages for lost property values and for the cost of relocating the village. The defendants filed motions to dismiss on the grounds of lack of personal and subject matter jurisdiction. In June 2009, the court granted defendants’ motion to dismiss for lack of subject matter jurisdiction finding that plaintiffs’ federal claim for nuisance is barred by the political question doctrine and for lack of standing. The plaintiffs are appealing the court’s dismissal to the U.S. Court of Appeals for the Ninth Circuit. The parties have filed their respective briefs with the court. The Ninth Circuit stayed the case until July 15, 2011, pending a decision by the U.S. Supreme Court in American Electric Power Co. (AEP) v. Connecticut. On June 20, 2011, the U.S. Supreme Court reversed and remanded the decision by the Second Circuit in AEP v. Connecticut, in which the Court unanimously held that plaintiffs’ federal common law public nuisance claim, which sought abatement of the utility company defendants’ carbon dioxide emissions from power plants, is displaced by the Clean Air Act, 42 U.S.C. § 7401, et. seq. The Kivalina parties have requested the Ninth Circuit to enter a briefing schedule to supplement the parties’ briefs based on the AEP decision.

26

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other

In addition, at times the Company becomes a party to other claims, lawsuits, arbitration proceedings and administrative procedures in the ordinary course of business in the U.S., Australia and other countries where the Company does business. In June 2007, the New York Office of the Attorney General served a letter and subpoena on the Company, seeking information and documents relating to the Company’s disclosure to investors of risks associated with possible climate change and related legislation and regulations. The Company believes that it has made full and proper disclosure of these potential risks. Based on current information, the Company believes that the ultimate resolution of such other pending or threatened proceedings is not reasonably likely to have a material adverse effect on its financial position, results of operations or liquidity.

(15) Segment Information

The Company reports its operations primarily through the following reportable operating segments: “Western U.S. Mining,” “Midwestern U.S. Mining,” “Australian Mining,” “Trading and Brokerage” and “Corporate and Other.” The Company’s chief operating decision maker uses Adjusted EBITDA as the primary measure of segment profit and loss. The Company defines Adjusted EBITDA as income from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expense and depreciation, depletion and amortization.

Operating segment results were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Revenues:
Western U.S. Mining	$	758.5		$	707.4		$	2,124.5		$	2,021.6
Midwestern U.S. Mining	385.1			317.1			1,080.0			949.8
Australian Mining	757.4			733.4			2,223.3			1,777.3
Trading and Brokerage	131.5			101.8			329.5			273.7
Corporate and Other	3.4			5.0			31.5			19.3
Total	$	2,035.9		$	1,864.7		$	5,788.8		$	5,041.7
Adjusted EBITDA:
Western U.S. Mining	$	218.7		$	215.7		$	532.2		$	630.9
Midwestern U.S. Mining	104.0			77.2			295.9			222.7
Australian Mining	243.3			323.2			810.7			670.1
Trading and Brokerage	57.4			44.3			134.6			91.0
Corporate and Other	(119.0		)	(89.1		)	(273.3		)	(245.8		)
Total	$	504.4		$	571.3		$	1,500.1		$	1,368.9

27

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation of Adjusted EBITDA to consolidated income from continuing operations follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Total Adjusted EBITDA	$	504.4		$	571.3		$	1,500.1		$	1,368.9
Depreciation, depletion and amortization	113.7			116.7			327.8			327.3
Asset retirement obligation expense	15.0			9.9			43.9			30.3
Interest expense	59.2			62.2			159.3			170.1
Interest income	(4.1		)	(2.8		)	(11.7		)	(5.4		)
Income tax provision	37.1			147.7			224.7			257.2
Income from continuing operations, net of income taxes	$	283.5		$	237.6		$	756.1		$	589.4

(16) Supplemental Guarantor/Non-Guarantor Financial Information

In accordance with the indentures governing the 6.875% Senior Notes due March 2013 (redeemed in the third quarter of 2010), the 5.875% Senior Notes due April 2016 (redeemed in the second quarter of 2011 as discussed in Note 8), the 7.375% Senior Notes due November 2016, the 6.5% Senior Notes due September 2020 and the 7.875% Senior Notes due November 2026 (collectively the Senior Notes), certain wholly-owned U.S. subsidiaries of the Company have fully and unconditionally guaranteed the Senior Notes, on a joint and several basis. Separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented because management believes that such information is not material to the holders of the Senior Notes. The following historical financial statement information is provided for the Guarantor/Non-Guarantor Subsidiaries.

28

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited Supplemental Condensed Consolidating Statements of Operations

	Three Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	1,229.9		$	850.0		$	(44.0	)	$	2,035.9
Costs and expenses
Operating costs and expenses	(99.3		)	922.9			679.2			(44.0		)	1,458.8
Depreciation, depletion and amortization	—			72.1			41.6			—			113.7
Asset retirement obligation expense	—			11.2			3.8			—			15.0
Selling and administrative expenses	8.0			52.5			10.7			—			71.2
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(1.8		)	0.1			—			(1.7		)
(Income) loss from equity affiliates	(252.5		)	2.7			0.5			252.5			3.2
Interest expense	61.0			13.7			1.9			(17.4		)	59.2
Interest income	(4.1		)	(5.2		)	(12.2		)	17.4			(4.1		)
Income from continuing operations before income taxes	286.9			161.8			124.4			(252.5		)	320.6
Income tax provision (benefit)	12.9			48.3			(24.1		)	—			37.1
Income from continuing operations, net of income taxes	274.0			113.5			148.5			(252.5		)	283.5
Gain (loss) from discontinued operations, net of income taxes	0.1			(2.1		)	—			—			(2.0		)
Net income	274.1			111.4			148.5			(252.5		)	281.5
Less: Net income attributable to noncontrolling interests	—			—			7.4			—			7.4
Net income attributable to common stockholders	$	274.1		$	111.4		$	141.1		$	(252.5	)	$	274.1

29

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited Supplemental Condensed Consolidated Statements of Operations

	Three Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	1,059.9		$	1,045.3		$	(240.5	)	$	1,864.7
Costs and expenses
Operating costs and expenses	(24.8		)	763.9			744.7			(240.5		)	1,243.3
Depreciation, depletion and amortization	—			76.2			40.5			—			116.7
Asset retirement obligation expense	—			7.1			2.8			—			9.9
Selling and administrative expenses	5.5			47.3			1.3			—			54.1
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(7.1		)	0.4			—			(6.7		)
(Income) loss from equity affiliates	(248.5		)	1.3			1.4			248.5			2.7
Interest expense	61.6			13.9			3.7			(17.0		)	62.2
Interest income	(4.0		)	(5.2		)	(10.6		)	17.0			(2.8		)
Income from continuing operations before income taxes	210.2			162.5			261.1			(248.5		)	385.3
Income tax provision (benefit)	(14.8		)	55.1			107.4			—			147.7
Income from continuing operations, net of income taxes	225.0			107.4			153.7			(248.5		)	237.6
Loss from discontinued operations, net of income taxes	(0.9		)	(0.4		)	—			—			(1.3		)
Net income	224.1			107.0			153.7			(248.5		)	236.3
Less: Net income attributable to noncontrolling interests	—			—			12.2			—			12.2
Net income attributable to common stockholders	$	224.1		$	107.0		$	141.5		$	(248.5	)	$	224.1

30

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited Supplemental Condensed Consolidating Statements of Operations

	Nine Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	3,482.5		$	2,524.5		$	(218.2	)	$	5,788.8
Costs and expenses
Operating costs and expenses	(289.3		)	2,671.2			1,956.0			(218.2		)	4,119.7
Depreciation, depletion and amortization	—			215.6			112.2			—			327.8
Asset retirement obligation expense	—			31.2			12.7			—			43.9
Selling and administrative expenses	24.9			151.0			15.5			—			191.4
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(32.3		)	0.9			—			(31.4		)
(Income) loss from equity affiliates	(664.3		)	6.4			2.6			664.3			9.0
Interest expense	162.3			40.6			7.7			(51.3		)	159.3
Interest income	(12.8		)	(15.8		)	(34.4		)	51.3			(11.7		)
Income from continuing operations before income taxes	779.2			414.6			451.3			(664.3		)	980.8
Income tax provision	43.1			109.9			71.7			—			224.7
Income from continuing operations, net of income taxes	736.1			304.7			379.6			(664.3		)	756.1
Loss from discontinued operations, net of income taxes	(0.7		)	(3.0		)	—			—			(3.7		)
Net income	735.4			301.7			379.6			(664.3		)	752.4
Less: Net income attributable to noncontrolling interests	—			—			17.0			—			17.0
Net income attributable to common stockholders	$	735.4		$	301.7		$	362.6		$	(664.3	)	$	735.4

31

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited Supplemental Condensed Consolidating Statements of Operations

	Nine Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	3,123.9		$	2,530.5		$	(612.7	)	$	5,041.7
Costs and expenses
Operating costs and expenses	(65.7		)	2,286.2			1,918.9			(612.7		)	3,526.7
Depreciation, depletion and amortization	—			221.3			106.0			—			327.3
Asset retirement obligation expense	—			22.1			8.2			—			30.3
Selling and administrative expenses	23.0			133.8			6.8			—			163.6
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(15.6		)	0.2			—			(15.4		)
(Income) loss from equity affiliates	(639.6		)	5.0			4.4			628.1			(2.1		)
Interest expense	168.6			39.4			11.2			(49.1		)	170.1
Interest income	(11.6		)	(16.1		)	(26.8		)	49.1			(5.4		)
Income from continuing operations before income taxes	525.3			447.8			501.6			(628.1		)	846.6
Income tax provision (benefit)	(39.6		)	143.0			153.8			—			257.2
Income from continuing operations, net of income taxes	564.9			304.8			347.8			(628.1		)	589.4
Loss from discontinued operations, net of income taxes	(0.9		)	(1.3		)	—			—			(2.2		)
Net income	564.0			303.5			347.8			(628.1		)	587.2
Less: Net income attributable to noncontrolling interests	—			—			23.2			—			23.2
Net income attributable to common stockholders	$	564.0		$	303.5		$	324.6		$	(628.1	)	$	564.0

32

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited Supplemental Condensed Consolidating Balance Sheets

	September 30, 2011
	Parent Company		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Reclassifications/ Eliminations			Consolidated
	(Dollars in millions)
Assets
Current assets
Cash and cash equivalents	$	957.9	$	1.0		$	442.7	$	—		$	1,401.6
Accounts receivable, net	4.6		53.8			533.0		—			591.4
Inventories	—		204.3			147.6		—			351.9
Assets from coal trading activities, net	—		16.1			49.9		—			66.0
Deferred income taxes	—		62.6			34.4		(6.1		)	90.9
Other current assets	281.2		77.8			144.2		—			503.2
Total current assets	1,243.7		415.6			1,351.8		(6.1		)	3,005.0
Property, plant, equipment and mine development, net	—		4,801.4			3,006.7		—			7,808.1
Deferred income taxes	3.1		—			—		(3.1		)	—
Investments and other assets	9,845.7		204.5			155.2		(9,326.9		)	878.5
Total assets	$	11,092.5	$	5,421.5		$	4,513.7	$	(9,336.1	)	$	11,691.6
Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	25.0	$	—		$	18.8	$	—		$	43.8
Payables to (receivables from) affiliates, net	2,445.3		(2,621.7		)	176.4		—			—
Liabilities from coal trading activities, net	—		8.8			53.8		—			62.6
Deferred income taxes	6.1		—			—		(6.1		)	—
Accounts payable and accrued expenses	67.5		740.6			526.8		—			1,334.9
Total current liabilities	2,543.9		(1,872.3		)	775.8		(6.1		)	1,441.3
Long-term debt, less current maturities	2,372.0		0.1			86.5		—			2,458.6
Deferred income taxes	—		193.7			309.0		(3.1		)	499.6
Notes payable to (receivables from) affiliates, net	819.1		(823.6		)	4.5		—			—
Other noncurrent liabilities	68.5		1,670.9			230.2		—			1,969.6
Total liabilities	5,803.5		(831.2		)	1,406.0		(9.2		)	6,369.1
Peabody Energy Corporation’s stockholders’ equity	5,289.0		6,252.7			3,074.2		(9,326.9		)	5,289.0
Noncontrolling interests	—		—			33.5		—			33.5
Total stockholders’ equity	5,289.0		6,252.7			3,107.7		(9,326.9		)	5,322.5
Total liabilities and stockholders’ equity	$	11,092.5	$	5,421.5		$	4,513.7	$	(9,336.1	)	$	11,691.6

33

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental Condensed Consolidating Balance Sheets

	December 31, 2010
	Parent Company		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Reclassifications/ Eliminations			Consolidated
	(Dollars in millions)
Assets
Current assets
Cash and cash equivalents	$	903.8	$	5.2		$	386.2	$	—		$	1,295.2
Accounts receivable, net	2.1		5.5			550.6		—			558.2
Inventories	—		168.0			164.9		—			332.9
Assets from coal trading activities, net	—		23.8			168.7		—			192.5
Deferred income taxes	—		78.6			47.9		(6.1		)	120.4
Other current assets	307.9		30.7			120.4		—			459.0
Total current assets	1,213.8		311.8			1,438.7		(6.1		)	2,958.2
Property, plant, equipment and mine development, net	—		4,732.7			2,693.4		—			7,426.1
Investments and other assets	9,331.0		179.8			99.1		(8,631.1		)	978.8
Total assets	$	10,544.8	$	5,224.3		$	4,231.2	$	(8,637.2	)	$	11,363.1
Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	25.0	$	—		$	18.2	$	—		$	43.2
Payables to (receivables from) affiliates, net	2,225.3		(2,528.3		)	303.0		—			—
Liabilities from coal trading activities, net	—		29.5			152.2		—			181.7
Deferred income taxes	6.1		—			—		(6.1		)	—
Accounts payable and accrued expenses	47.4		777.2			464.2		—			1,288.8
Total current liabilities	2,303.8		(1,721.6		)	937.6		(6.1		)	1,513.7
Long-term debt, less current maturities	2,609.6		0.1			97.1		—			2,706.8
Deferred income taxes	93.2		135.4			311.2		—			539.8
Notes payable to (receivables from) affiliates, net	818.9		(825.3		)	6.4		—			—
Other noncurrent liabilities	58.6		1,652.8			202.1		—			1,913.5
Total liabilities	5,884.1		(758.6		)	1,554.4		(6.1		)	6,673.8
Peabody Energy Corporation’s stockholders’ equity	4,660.7		5,982.9			2,648.2		(8,631.1		)	4,660.7
Noncontrolling interests	—		—			28.6		—			28.6
Total stockholders’ equity	4,660.7		5,982.9			2,676.8		(8,631.1		)	4,689.3
Total liabilities and stockholders’ equity	$	10,544.8	$	5,224.3		$	4,231.2	$	(8,637.2	)	$	11,363.1

34

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited Supplemental Condensed Consolidating Statements of Cash Flows

	Nine Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidated
	(Dollars in millions)
Cash Flows From Operating Activities
Net cash provided by continuing operations	$	144.7		$	721.5		$	327.9		$	1,194.1
Net cash used in discontinued operations	(1.6		)	(2.0		)	—			(3.6		)
Net cash provided by operating activities	143.1			719.5			327.9			1,190.5
Cash Flows From Investing Activities
Additions to property, plant, equipment and mine development	—			(218.6		)	(397.6		)	(616.2		)
Federal coal lease expenditures	—			(42.4		)	—			(42.4		)
Investment in Prairie State Energy Campus	—			(29.8		)	—			(29.8		)
Proceeds from disposal of assets	—			12.1			—			12.1
Investment in equity affiliates and joint ventures	—			(2.1		)	(37.7		)	(39.8		)
Proceeds from sales of debt and equity securities	—			—			53.3			53.3
Purchases of debt and equity securities	—			—			(44.1		)	(44.1		)
Purchases of short-term investments	(75.0		)	—			(25.0		)	(100.0		)
Maturity of short-term investments	75.0			—			25.0			100.0
Investment in shares of Macarthur Coal Limited	—			—			(45.5		)	(45.5		)
Other, net	—			(4.4		)	—			(4.4		)
Net cash used in investing activities	—			(285.2		)	(471.6		)	(756.8		)
Cash Flows From Financing Activities
Proceeds from long-term debt	—			—			1.4			1.4
Payments of long-term debt	(236.9		)	—			(11.5		)	(248.4		)
Dividends paid	(69.1		)	—			—			(69.1		)
Repurchase of employee common stock relinquished for tax withholding	(16.1		)	—			—			(16.1		)
Payment of debt issuance costs	(4.0		)	—			—			(4.0		)
Excess tax benefits related to share-based compensation	6.1			—			—			6.1
Proceeds from stock options exercised	4.5			—			—			4.5
Other, net	6.3			—			(8.0		)	(1.7		)
Transactions with affiliates, net	220.2			(438.5		)	218.3			—
Net cash provided by (used in) financing activities	(89.0		)	(438.5		)	200.2			(327.3		)
Net change in cash and cash equivalents	54.1			(4.2		)	56.5			106.4
Cash and cash equivalents at beginning of period	903.8			5.2			386.2			1,295.2
Cash and cash equivalents at end of period	$	957.9		$	1.0		$	442.7		$	1,401.6

35

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited Supplemental Condensed Consolidating Statements of Cash Flows

	Nine Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidated
	(Dollars in millions)
Cash Flows From Operating Activities
Net cash provided by (used in) continuing operations	$	(323.0	)	$	1,002.7		$	223.8		$	903.5
Net cash used in discontinued operations	(9.5		)	(1.8		)	—			(11.3		)
Net cash provided by (used in) operating activities	(332.5		)	1,000.9			223.8			892.2
Cash Flows From Investing Activities
Additions to property, plant, equipment and mine development	—			(238.1		)	(53.2		)	(291.3		)
Investment in Prairie State Energy Campus	—			(52.5		)	—			(52.5		)
Proceeds from disposal of assets	—			8.5			1.2			9.7
Investment in equity affiliates and joint ventures	—			(15.0		)	(3.8		)	(18.8		)
Proceeds from sales of debt and equity securities	—			—			10.6			10.6
Purchases of debt and equity securities	—			—			(73.6		)	(73.6		)
Other, net	—			(7.2		)	(0.2		)	(7.4		)
Net cash used in investing activities	—			(304.3		)	(119.0		)	(423.3		)
Cash Flows From Financing Activities
Proceeds from long-term debt	1,150.0			—			—			1,150.0
Payments of long-term debt	(1,140.3		)	—			(8.2		)	(1,148.5		)
Dividends paid	(56.5		)	—			—			(56.5		)
Repurchase of employee common stock relinquished for tax withholding	(8.4		)	—			—			(8.4		)
Payment of debt issuance costs	(32.2		)	—			—			(32.2		)
Proceeds from stock options exercised	5.9			—			—			5.9
Other, net	5.8			—			(6.3		)	(0.5		)
Transactions with affiliates, net	521.1			(696.7		)	175.6			—
Net cash provided by (used in) financing activities	445.4			(696.7		)	161.1			(90.2		)
Net change in cash and cash equivalents	112.9			(0.1		)	265.9			378.7
Cash and cash equivalents at beginning of period	368.4			0.2			620.2			988.8
Cash and cash equivalents at end of period	$	481.3		$	0.1		$	886.1		$	1,367.5

(17) Subsequent Events

Acquisition of Macarthur

On August 1, 2011, the Company and ArcelorMittal SA (ArcelorMittal) launched an all-cash off-market takeover offer to acquire a controlling ownership interest in Macarthur. The offer was made by a newly formed Australian company, PEAMCoal Pty Ltd (PEAMCoal), indirectly owned 60% by the Company and 40% by ArcelorMittal. Subsequent to the takeover offer, ArcelorMittal elected to sell its interest in PEAMCoal to the Company in lieu of proceeding with the PEAMCoal joint venture. As a result, the Company will own 100% of PEAMCoal and will become the owner of all the Macarthur shares tendered in the takeover offer to acquire Macarthur. ArcelorMittal must continue funding PEAMCoal for 90 days from October 25, 2011, and the Company has that timeframe to complete financing to purchase ArcelorMittal's interest in PEAMCoal. Together with the Company's funding obligations, this will cover all share purchase acceptances.

36

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

PEAMCoal's offer of $16.00 Australian dollars per share, which was agreed to by Macarthur's board of directors in August 2011, will increase to $16.25 Australian dollars per share if PEAMCoal acquires relevant interests in at least 90% of Macarthur shares by 7:00 p.m. (Brisbane, Australia time) on November 11, 2011. PEAMCoal reserves the right to extend this date. The $16.25 Australian dollars per share offer price values the equity in Macarthur at approximately $4.9 billion Australian dollars (or approximately $5.1 billion U.S. dollars as of November 2, 2011).

On October 23, 2011, the Company announced that PEAMCoal had acquired more than 50.01% of Macarthur's shares and that the takeover offer had become unconditional. Any holders that have validly tendered their Macarthur shares may no longer withdraw such tendered shares, and any shares subsequently tendered may not be withdrawn.

The Company intends to finance the acquisition of Macarthur with cash on hand, borrowings under its Credit Facility, senior term loan facility (Term Loan Facility), and other long term debt financing or borrowings under our bridge loan credit agreement (Bridge Facility). The Term Loan Facility and Bridge Facility are discussed in more detail below.

During the three months ended September 30, 2011, PEAMCoal purchased shares of Macarthur in the open market for $45.5 million (see Note 3). On November 2, 2011, PEAMCoal had a 75.5% relevant interest in Macarthur’s shares.

Bridge Facility

On July 29, 2011, the Company entered into a bridge commitment letter with certain lenders that committed to provide to the Company unsecured bridge financing of up to $2.0 billion, the proceeds of which may be used to finance, in part, the acquisition of Macarthur. On October 24, 2011, the Company entered into the Bridge Facility that contains the negotiated terms and conditions originally contemplated in the bridge commitment letter. The Bridge Facility matures 364 days following its effectiveness. Any initial funding of the Bridge Facility must occur by April 29, 2012.

The Company pays certain customary fees and expenses, including fees on the unused portion of the bridge commitments and a duration fee, which are described below. For the three and nine months ended September 30, 2011, the Company recorded charges of $12.7 million related to the Bridge Facility, which were recorded in “Interest expense” in the unaudited condensed consolidated statements of operations.

On October 28, 2011, the Company reduced the Bridge Facility commitment to $1.0 billion, in connection with the Term Loan Facility described below.

Borrowings under the Bridge Facility bear interest, at the Company's option, at a rate equal to (i) LIBOR plus an applicable margin or (ii) a base rate (defined as the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50% and (c) one month LIBOR plus 1.00%) plus an applicable margin. The applicable margin increases based on the number of days that have elapsed since the initial funding under the Bridge Facility and may adjust from 3.00% up to 4.00% per year for borrowings bearing interest at LIBOR and from 2.00% up to 3.00% per year for borrowings bearing interest at the base rate, in each case, depending on the number of days elapsed. The Company will also pay a duration fee calculated as a percentage of any aggregate borrowings outstanding at the 90th, 180th, and 270th day following the initial borrowing at a rate of 1.00%, 1.50% and 2.00%, respectively. There were no borrowings outstanding under the Bridge Facility as of September 30, 2011 or November 3, 2011.

The Bridge Facility is voluntarily prepayable from time to time without premium or penalty, subject to certain customary reimbursements of the lenders’ costs, and is mandatorily prepayable with the net cash proceeds from the issuance of certain specified equity securities, the issuance of certain indebtedness, certain dispositions of assets or the receipt of certain casualty insurance proceeds.

The obligations under the Bridge Facility are unsecured and are guaranteed by the Company's direct and indirect domestic subsidiaries that guarantee the Company's Credit Facility. The Bridge Facility contains covenants, including financial covenants, and events of default substantially the same as those set forth in the Credit Facility.

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Term Loan Facility

On October 28, 2011, the Company entered into the Term Loan Facility, that permits the Company to borrow an aggregate principal amount of up to $1.0 billion, which will be available in multiple drawings for a period of six months. Borrowings under the Term Loan Facility will be used to finance, in part, the acquisition of Macarthur. Borrowings under the Term Loan Facility bear interest, at the Company's option, at a rate equal to (i) LIBOR plus an applicable margin or (ii) a base rate (defined as the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50% and (c) one month LIBOR plus 1.00%) plus an applicable margin. The applicable margin depends on the ratio of the Company's consolidated debt to its adjusted consolidated EBITDA, and may range from 1.75% to 3.00% per year for borrowings bearing interest at LIBOR and from 0.75% to 2.00% per year for borrowings bearing interest at the base rate.

The obligations under the Term Loan Facility are unsecured and are guaranteed by the Company's direct and indirect domestic subsidiaries that guarantee the Company's Credit Facility. The Term Loan Facility contains covenants, including financial covenants, and events of default substantially the same as those set forth in the Credit Facility.

The Term Loan Facility is voluntarily prepayable from time to time without premium or penalty, subject to certain customary reimbursements of the lenders’ costs. The Term Loan Facility will be subject to quarterly amortization of 1.25% commencing six months after the initial funding, with the final payment of all amounts outstanding due five years from the date of such initial funding. As of November 3, 2011, the Company had $1.0 billion of borrowings outstanding under the Term Loan Facility.

MF Global UK Limited

On October 31, 2011, MF Global UK Limited (MF Global UK), a United Kingdom (U.K.) based broker-dealer, was placed into the U.K.'s administration process (a process similar to bankruptcy proceedings in the U.S.) by the Financial Services Authority following the Chapter 11 bankruptcy filing of its U.S. parent, MF Global Holdings Ltd.  The Company had used MF Global UK to broker certain of its coal trading transactions.  The interruption of the Company's trading operations was limited as the Company opened new accounts with different brokerage firms and transferred most of its open trading positions formerly held with MF Global UK to those new accounts.  While the open trading positions were transferred from MF Global UK successfully, the related margin posted by the Company will be retained by MF Global UK pending resolution of the Company's claims with the special administrators.  As such, there will be a period of time where the Company has funds remaining at MF Global UK and margin posted with its new brokerage firms. The Company had funds remaining with MF Global UK totaling approximately $39 million as of October 31, 2011.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Notice Regarding Forward-Looking Statements

This report includes statements of our expectations, intentions, plans and beliefs that constitute “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 and are intended to come within the safe harbor protection provided by those sections. These statements relate to future events or our future financial performance, including, without limitation, the section captioned “Outlook” in Management’s Discussion and Analysis of Financial Condition and Results of Operations. We use words such as “anticipate,” “believe,” “expect,” “may,” “project,” “should,” “estimate,” or “plan” or other similar words to identify forward-looking statements.

Without limiting the foregoing, all statements relating to our future operating results, anticipated capital expenditures, future cash flows and borrowings, and sources of funding are forward-looking statements and speak only as of the date of this report. These forward-looking statements are based on numerous assumptions that we believe are reasonable, but are subject to a wide range of uncertainties and business risks and actual results may differ materially from those discussed in these statements. Among the factors that could cause actual results to differ materially are:

• demand for coal in the United States (U.S.) and the seaborne thermal and metallurgical coal markets;

• price volatility and demand, particularly in higher-margin products and in our trading and brokerage businesses;

• impact of weather and natural disasters on demand, production and transportation;

• reductions and/or deferrals of purchases by major customers and ability to renew sales contracts;

• credit and performance risks associated with customers, suppliers, co-shippers, and trading, banks and other financial counterparties;

• geologic, equipment, permitting and operational risks related to mining;

• transportation availability, performance and costs;

• availability, timing of delivery and costs of key supplies, capital equipment or commodities such as diesel fuel, steel, explosives and tires;

• successful implementation of business strategies, including our Btu Conversion and generation development initiatives;

• negotiation of labor contracts, employee relations and workforce availability;

• changes in postretirement benefit and pension obligations and their related funding requirements;

• replacement and development of coal reserves;

• availability, access to and the related cost of capital and financial markets;

• effects of changes in interest rates and currency exchange rates (primarily the Australian dollar);

• effects of acquisitions or divestitures;

• economic strength and political stability of countries in which we have operations or serve customers;

• legislation, regulations and court decisions or other government actions, including new environmental and mine safety requirements, changes in income tax regulations or other regulatory taxes;

• litigation, including claims not yet asserted;

• terrorist attacks or threats;

• impacts of pandemic illnesses; and

• other factors, including those discussed in Legal Proceedings.

When considering these forward-looking statements, you should keep in mind the cautionary statements in this document and in our other Securities and Exchange Commission (SEC) filings, including the more detailed discussion of these factors, as well as other factors that could affect our results, contained in "Risk Factors" in Part II of this Form 10-Q and in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2010. These forward-looking statements speak only as of the date on which such statements were made, and we undertake no obligation to update these statements except as required by federal securities laws.

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Overview

We are the world’s largest private sector coal company, with majority interests in 28 coal mining operations in the U.S. and Australia. In 2010, we produced 218.4 million tons of coal and sold 245.9 million tons of coal.

We conduct business through four principal operating segments: Western U.S. Mining, Midwestern U.S. Mining, Australian Mining, and Trading and Brokerage. Our fifth segment, Corporate and Other, includes mining and export/transportation joint ventures, energy-related commercial activities, as well as the management of our vast coal reserve and real estate holdings. In the U.S., we typically sell coal to utility customers under long-term contracts (those with terms longer than one year). In Australia, our production is sold primarily into the export metallurgical and thermal markets. Historically, we predominately entered into multi-year international coal agreements that contained provisions allowing either party to commence a renegotiation of the agreement price annually in the second quarter of each year. Current industry practice, and our practice, is to negotiate pricing for metallurgical coal contracts quarterly and seaborne thermal contracts annually. During 2010, approximately 91% of our worldwide sales (by volume) were under long-term contracts. For the year ended December 31, 2010, 84% of our total sales (by volume) were to U.S. electricity generators, 14% were to customers outside the U.S. and 2% were to the U.S. industrial sector.

We continue to explore Btu Conversion projects that expand the uses of coal through coal-to-liquids (CTL) and coal-to-gas (CTG) technologies. Our participation in generation development projects involves using our surface lands and coal reserves as the basis for mine-mouth plants, such as with our involvement in the Prairie State Energy Campus (Prairie State), which is planned to come online in the fourth quarter of 2011. We are also advancing several initiatives associated with clean coal technologies, including carbon capture and storage (CCS).

Acquisition of Macarthur Coal Ltd

On August 1, 2011, we announced, with ArcelorMittal SA (ArcelorMittal), that we jointly launched an all-cash off-market takeover offer to acquire a controlling ownership interest in Macarthur Coal Ltd (Macarthur). The offer was made by a newly formed Australian company, PEAMCoal Pty Ltd (PEAMCoal), indirectly owned 60% by us and 40% by ArcelorMittal. Subsequent to the takeover offer, ArcelorMittal elected to sell its interest in PEAMCoal to us in lieu of proceeding with the PEAMCoal joint venture. As a result, we will own 100% of PEAMCoal and will become the owner of all the Macarthur shares tendered in the takeover offer to acquire Macarthur. ArcelorMittal must continue funding PEAMCoal for 90 days from October 25, 2011, and we have that timeframe to complete financing to purchase ArcelorMittal's interest in PEAMCoal. Together with our funding obligations, this will cover all share purchase acceptances.

PEAMCoal's offer of $16.00 Australian dollars per share, which was agreed to by Macarthur's board of directors in August 2011, will increase to $16.25 Australian dollars per share if PEAMCoal acquires relevant interests in at least 90% of Macarthur shares by 7:00 p.m. (Brisbane, Australia time) on November 11, 2011. PEAMCoal reserves the right to extend this date. The $16.25 Australian dollars per share offer price values the equity in Macarthur at approximately $4.9 billion Australian dollars (or approximately $5.1 billion U.S. dollars as of November 2, 2011).

On October 23, 2011, we announced that PEAMCoal had acquired more than 50.01% of Macarthur's shares and that the takeover offer had become unconditional. Any holders that have validly tendered their Macarthur shares may no longer withdraw such tendered shares, and any shares subsequently tendered may not be withdrawn.

We intend to finance the acquisition of Macarthur with cash on hand, borrowings under our Credit Facility, senior term loan facility (Term Loan Facility), and other long term debt financing or borrowings under our bridge loan credit agreement (Bridge Facility), which are described in more detail in "Liquidity and Capital Resources."

During the three months ended September 30, 2011, PEAMCoal purchased shares of Macarthur in the open market for $45.5 million (see Note 3). On November 2, 2011, PEAMCoal had a 75.5% relevant interest in Macarthur’s shares.

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Results of Operations

Adjusted EBITDA

The discussion of our results of operations below includes references to and analysis of our segments’ Adjusted EBITDA results. We define Adjusted EBITDA as income from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expense and depreciation, depletion and amortization. Adjusted EBITDA is used by management to measure our segments’ operating performance, and management also believes it is a useful indicator of our ability to meet debt service and capital expenditure requirements. Because Adjusted EBITDA is not calculated identically by all companies, our calculation may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is reconciled to its most comparable measure, under U.S. generally accepted accounting principles (GAAP), in Note 15 to our unaudited condensed consolidated financial statements.

Three and Nine Months Ended September 30, 2011 Compared to Three and Nine Months Ended September 30, 2010

Summary

In China, electricity generation rose 13% through September 2011 while steel production increased 11% through August 2011, the most recent publicly available data. In addition, India's thermal imports increased more than 40% through August 2011. Coal-fueled electricity generation has also risen in Asia and Europe due to growing power demand in emerging nations and increased usage to backfill the reduction of nuclear power in Japan and Germany.

Pacific Rim growth continued to drive demand and pricing for Australian seaborne metallurgical and thermal coal. The demand led to third quarter increases of 31% and 24% in realized prices for our seaborne metallurgical and thermal coal, respectively, from our Australian mines as compared to the same period in the prior year.

In the U.S., weak economic performance and manufacturing activity has resulted in lower electricity generation than the prior year. However, higher cooling degree days this summer, greater U.S. exports and reduced shipments through the plains states due to flooding have led to the largest year-to-date inventory reduction since 1993, with Powder River Basin inventories at electricity generators estimated to be 17% below prior year levels.

Revenue increased for both periods compared to the prior year (three months, $171.2 million; nine months, $747.1 million) and Segment Adjusted EBITDA increased $158.7 million for the nine months ended September 30, 2011 as compared to the prior year, led by higher Australian metallurgical and seaborne thermal coal pricing and increased volumes and pricing in the U.S.

Segment Adjusted EBITDA decreased $37.0 million for the three months ended September 30, 2011 compared to the prior year as the benefits of higher Australian seaborne metallurgical and thermal coal pricing was more than offset by the impacts of a third quarter roof fall at our North Goonyella Mine in Queensland, Australia, resulting in reduced shipments of high quality hard coking coal and higher costs associated with the lower production and recovery of longwall operations.

Income from continuing operations, net of income taxes, increased for both periods compared to the prior year (three months, $45.9 million; nine months, $166.7 million) due to the changes in Segment Adjusted EBITDA discussed above and decreased income tax provision and interest expense, partially offset by lower Corporate and Other Adjusted EBITDA and increased asset retirement obligation expense.

At September 30, 2011, our available liquidity was $2.9 billion, as discussed further in “Liquidity and Capital Resources.”

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Tons Sold

The following table presents tons sold by operating segment:

	Three Months Ended						Nine Months Ended
	September 30,		Increase (Decrease)				September 30,		Increase (Decrease)
	2011	2010	Tons		%		2011	2010	Tons		%
	(Tons in millions)						(Tons in millions)
Western U.S. Mining	43.7	41.9	1.8		4.3	%	127.2	121.7	5.5		4.5	%
Midwestern U.S. Mining	7.8	7.2	0.6		8.3	%	22.3	21.6	0.7		3.2	%
Australian Mining	6.6	7.4	(0.8	)	(10.8	)%	19.1	20.0	(0.9	)	(4.5	)%
Trading and Brokerage	5.5	7.5	(2.0	)	(26.7	)%	14.4	18.7	(4.3	)	(23.0	)%
Total tons sold	63.6	64.0	(0.4	)	(0.6	)%	183.0	182.0	1.0		0.5	%

Revenues

The following table presents revenues by operating segment:

	Three Months Ended									Nine Months Ended
	September 30,				Increase to Revenues					September 30,				Increase to Revenues
	2011		2010		$			%		2011		2010		$		%
	(Dollars in millions)									(Dollars in millions)
Western U.S. Mining	$	758.5	$	707.4	$	51.1		7.2	%	$	2,124.5	$	2,021.6	$	102.9	5.1	%
Midwestern U.S. Mining	385.1		317.1		68.0			21.4	%	1,080.0		949.8		130.2		13.7	%
Australian Mining	757.4		733.4		24.0			3.3	%	2,223.3		1,777.3		446.0		25.1	%
Trading and Brokerage	131.5		101.8		29.7			29.2	%	329.5		273.7		55.8		20.4	%
Corporate and Other	3.4		5.0		(1.6		)	(32.0	)%	31.5		19.3		12.2		63.2	%
Total revenues	$	2,035.9	$	1,864.7	$	171.2		9.2	%	$	5,788.8	$	5,041.7	$	747.1	14.8	%

The increase in Australian Mining operations’ revenues for both periods compared to the prior year was driven by a higher weighted average sales price (three months, 15.0%; nine months, 30.6%) for seaborne metallurgical and thermal coal due to a combination of increased global coal demand and coal supply constraints resulting from weather impacts in early 2011. These favorable impacts were partially offset by lower volumes for the three and nine months ended September 30, 2011 (three months, 10.8%; nine months, 4.5%) driven by the unfavorable impact of the third quarter roof fall at our North Goonyella Mine discussed above. Volumes for the nine months ended September 30, 2011 were also negatively impacted by flooding in Queensland that began in late 2010. Metallurgical coal sales totaled 1.6 million and 2.4 million tons for the three months ended September 30, 2011 and 2010, respectively, and 6.0 million and 6.9 million tons for the nine months ended September 30, 2011 and 2010, respectively.

In the Midwestern U.S. Mining segment, revenue improvements for both periods compared to the prior year were due to a higher weighted average sales price (three months, 11.6%; nine months, 10.3%) driven by favorable contracts signed in recent years. Volumes were also higher for the three and nine months ended September 30, 2011 (three months, 8.3%; nine months, 3.2%) as the region experienced a partial recovery from coal chain disruptions and production issues caused by flooding in the Midwest in the second quarter. New mines also contributed to the volume increase (Bear Run Mine commenced operations in May 2010; Wild Boar Mine commenced operations in December 2010).

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Western U.S. Mining operations’ revenues were higher for both periods compared to the prior year as volumes and weighted average sale price were above the prior year. The volume increase (three months, 4.3%; nine months, 4.5%) was led by increased shipments from our Southwest and Powder River Basin regions on strong first quarter demand due partly to customer inventory builds prior to the peak summer electricity generation period, and increased shipments in the third quarter reflecting a partial recovery from lower second quarter shipments due to Midwest flooding that impacted rail performance. Our weighted average sales price also increased for both periods compared to the prior year (three months, 3.0%; nine months, 0.5%) as favorable contract pricing in our Southwest region was partially offset by lower pricing in the Powder River Basin region due to a combination of sales mix and the expiration of some higher-priced, long-term contracts signed before the economic recession in late 2008 and during 2009.

Trading and Brokerage revenues were higher for both periods compared to the prior year due to an increase in export volumes, which carry higher prices, and higher overall coal market pricing on our brokerage activity, partially offset by lower volumes. Trading results were consistent with the prior year.

Segment Adjusted EBITDA

The following table presents segment Adjusted EBITDA by operating segment:

					Increase (Decrease)									Increase (Decrease)
	Three Months Ended				to Segment Adjusted					Nine Months Ended				to Segment Adjusted
	September 30,				EBITDA					September 30,				EBITDA
	2011		2010		$			%		2011		2010		$			%
	(Dollars in millions)									(Dollars in millions)
Western U.S. Mining	$	218.7	$	215.7	$	3.0		1.4	%	$	532.2	$	630.9	$	(98.7	)	(15.6	)%
Midwestern U.S. Mining	104.0		77.2		26.8			34.7	%	295.9		222.7		73.2			32.9	%
Australian Mining	243.3		323.2		(79.9		)	(24.7	)%	810.7		670.1		140.6			21.0	%
Trading and Brokerage	57.4		44.3		13.1			29.6	%	134.6		91.0		43.6			47.9	%
Total Segment Adjusted EBITDA	$	623.4	$	660.4	$	(37.0	)	(5.6	)%	$	1,773.4	$	1,614.7	$	158.7		9.8	%

Australian Mining operations’ Adjusted EBITDA decreased for the three months ended September 30, 2011 compared to the prior year due to reduced volumes ($58.8 million) as discussed above, unfavorable geological conditions at our surface mines ($55.5 million), unfavorable foreign currency impact on operating costs, net of hedging ($53.8 million), cost escalations for labor, materials and services ($17.0 million), partially offset by a higher weighted average sales price ($167.4 million) as discussed above and lower production and higher costs at our North Goonyella Mine due to the roof fall and longwall move as discussed above.

Australian Mining operations’ Adjusted EBITDA increased for the nine months ended September 30, 2011 compared to the prior year due to a higher weighted average sales price ($591.2 million), partially offset by lower volumes ($115.9 million) as discussed above, unfavorable foreign currency impact on operating costs, net of hedging ($109.5 million), unfavorable geological conditions at our surface mines ($56.7 million), cost escalations for labor, materials and services ($46.5 million), increased royalty expense associated with our higher-priced coal shipments ($42.3 million) and lower production and higher costs at our North Goonyella Mine due to the roof fall and longwall move.

Midwestern U.S. Mining operations’ Adjusted EBITDA increased for both periods compared to the prior year due to a higher weighted average sales price (three months, $37.5 million; nine months, $89.7 million), increased volumes as discussed above (three months, $19.5 million; nine months, $2.8 million) and higher realizations from customers for the recovery of compliance costs (nine months, $15.6 million), partially offset by increased materials and services costs (three months, $3.4 million; nine months, $7.7 million) and labor costs (three months, $6.1 million; nine months, $4.1 million) related primarily to compliance measures at our underground mines.

Trading and Brokerage Adjusted EBITDA increased primarily due to higher realizations on our brokerage activity due to higher prices as discussed above.  

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Western U.S. Mining operations’ Adjusted EBITDA increased modestly for the three months ended September 30, 2011 as compared to the prior year due to increased volumes ($14.6 million) and a higher weighted average sales price ($15.7 million) as discussed above, partially offset by volume-driven materials and services costs ($8.6 million) and labor increases ($8.1 million), and higher equipment repairs and maintenance costs ($7.6 million).

Western U.S. Mining operations’ Adjusted EBITDA decreased for the nine months ended September 30, 2011 as compared to the prior year due to higher equipment repairs and maintenance costs ($35.3 million), lower shipments and higher operating costs associated with geologic issues encountered at our Twentymile Mine (approximately $34 million), volume-driven materials and services ($31.9 million) and labor costs ($24.3 million), and a provision related to litigation recorded in the second quarter of 2011 ($24.5 million). See Note 14 to our unaudited condensed consolidated financial statements for additional information. The above decreases to the segment's Adjusted EBITDA were partially offset by increased volumes ($49.6 million) and a higher weighted average sales price ($9.6 million) as discussed above.

Income From Continuing Operations Before Income Taxes

The following table presents income from continuing operations before income taxes:

	Three Months Ended						Increase (Decrease)					Nine Months Ended						Increase (Decrease)
	September 30,						to Income					September 30,						to Income
	2011			2010			$			%		2011			2010			$			%
	(Dollars in millions)											(Dollars in millions)
Total Segment Adjusted EBITDA	$	623.4		$	660.4		$	(37.0	)	(5.6	)%	$	1,773.4		$	1,614.7		$	158.7		9.8	%
Corporate and Other Adjusted EBITDA (1)	(119.0		)	(89.1		)	(29.9		)	(33.6	)%	(273.3		)	(245.8		)	(27.5		)	(11.2	)%
Depreciation, depletion and amortization	(113.7		)	(116.7		)	3.0			2.6	%	(327.8		)	(327.3		)	(0.5		)	(0.2	)%
Asset retirement obligation expense	(15.0		)	(9.9		)	(5.1		)	(51.5	)%	(43.9		)	(30.3		)	(13.6		)	44.9	%
Interest expense	(59.2		)	(62.2		)	3.0			4.8	%	(159.3		)	(170.1		)	10.8			(6.3	)%
Interest income	4.1			2.8			1.3			46.4	%	11.7			5.4			6.3			116.7	%
Income from continuing operations before income taxes	$	320.6		$	385.3		$	(64.7	)	(16.8	)%	$	980.8		$	846.6		$	134.2		15.9	%

⁽¹⁾  Corporate and Other Adjusted EBITDA results include selling and administrative expenses, equity income (loss) from our joint ventures, net gains on asset disposals or exchanges, activity related to our captive insurance entity, costs associated with past mining obligations, and revenues and expenses related to our other commercial activities such as generation development and Btu Conversion development costs.

Income from continuing operations before income taxes for the three months ended September 30, 2011 was below the prior year primarily due to the lower Total Segment Adjusted EBITDA discussed above, lower Corporate and Other Adjusted EBITDA, and increased asset retirement obligation expense, partially offset by lower interest expense.

Income from continuing operations before income taxes for the nine months ended September 30, 2011 was greater than the prior year primarily due to the higher Total Segment Adjusted EBITDA discussed above and lower interest expense, partially offset by lower Corporate and Other Adjusted EBITDA and increased asset retirement obligation expense.

Corporate and Other Adjusted EBITDA reflects higher expenses for both periods compared to the prior year due primarily to the following:

• Higher current year expenses in support of our international expansion, acquisition activity and other growth initiatives, including $9.2 million of expenses associated with the acquisition of Macarthur (three months, $27.4 million; nine months, $47.4 million);

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• Lower current year results from equity affiliates (nine months, $11.1 million) due primarily to earnings recognized in the prior year associated with transaction services related to our Mongolian joint venture ($10.0 million); partially offset by

• Increased gains on disposal or exchange of assets (nine months, $16.0 million) driven by non-cash exchanges of coal reserves in Kentucky and coal reserves and surface lands in Illinois for coal reserves in West Virginia; and

• A current year gain associated with the receipt of a $14.6 million project development fee related to our involvement in Prairie State (nine months).

Asset retirement obligation expense increased for both periods compared to the prior year (three months, $5.1 million; nine months, $13.6 million) due to an overall increase in the number of acres disturbed and an increase in estimated fuel costs across the mining platform, led by our Bear Run and Wild Boar mines in the U.S. (Bear Run Mine commenced operations in May 2010; Wild Boar Mine commenced operations in December 2010) and our Wilpinjong Mine in Australia. The three and nine months ended September 30, 2011 also included increased expense associated with our inactive mining sites driven by higher estimated labor, fuel and equipment costs.

Interest expense was lower for both periods compared to the prior year primarily due to charges of $8.4 million associated with the extinguishment of $650.0 million of senior notes in the third quarter of 2010, charges of $9.3 million incurred in the second quarter of the prior year associated with the refinancing of our five-year Credit Facility, and reduced current year interest expense due to a lower average debt balance. These decreases to interest expense were partially offset by current year charges of $12.7 million related to a bridge commitment letter associated with the Macarthur acquisition (see "Liquidity and Capital Resources" below for additional information related to the Macarthur acquisition). In addition, we incurred extinguishment costs of $1.7 million associated with the redemption of our 5.875% Senior Notes due in April 2016 (the 5.875% Notes) in the second quarter of 2011. See Note 8 to our unaudited condensed consolidated financial statements for additional information related to the 5.875% Notes redemption.

Net Income Attributable to Common Stockholders

The following table presents net income attributable to common stockholders:

	Three Months Ended						Increase (Decrease)					Nine Months Ended						Increase (Decrease)
	September 30,						to Income					September 30,						to Income
	2011			2010			$			%		2011			2010			$			%
	(Dollars in millions)											(Dollars in millions)
Income from continuing operations before income taxes	$	320.6		$	385.3		$	(64.7	)	(16.8	)%	$	980.8		$	846.6		$	134.2		15.9	%
Income tax provision	(37.1		)	(147.7		)	110.6			74.9	%	(224.7		)	(257.2		)	32.5			12.6	%
Income from continuing operations, net of income taxes	283.5			237.6			45.9			19.3	%	756.1			589.4			166.7			28.3	%
Loss from discontinued operations, net of income taxes	(2.0		)	(1.3		)	(0.7		)	(53.8	)%	(3.7		)	(2.2		)	(1.5		)	(68.2	)%
Net income	281.5			236.3			45.2			19.1	%	752.4			587.2			165.2			28.1	%
Less: Net income attributable to noncontrolling interests	7.4			12.2			4.8			(39.3	)%	17.0			23.2			6.2			26.7	%
Net income attributable to common stockholders	$	274.1		$	224.1		$	50.0		22.3	%	$	735.4		$	564.0		$	171.4		30.4	%

Net income attributable to common stockholders increased for both periods compared to the prior year due to the changes in income from continuing operations before income taxes as discussed above and decreased income tax provision. The income tax provision decreased for both periods compared to the prior year due to the following:

• Prior year tax expense associated with foreign earnings repatriation (three and nine months, $84.5 million);

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• Current year tax benefit as compared to prior year expense related to the remeasurement of non-U.S. tax accounts due to the current year weakening of the Australian dollar (three months, $81.4 million; nine months, $45.7 million); and

• Lower third quarter earnings (three months, $22.7 million); partially offset by

• Increased expense associated with changes in valuation allowances (three months, $66.2 million; nine months, $52.6 million) driven by a prior year valuation allowance release related to alternative minimum tax credits and general business credits;

• Changes in tax reserves (nine months, $15.7 million) due to the prior year reduction of our gross unrecognized tax benefit resulting from the completion of the Internal Revenue Service examination of the 2005 federal income tax return in the second quarter of 2010; and

• Higher year-to-date earnings (nine months, $47.0 million).

Other

The net fair value of our foreign currency hedges decreased from an asset of $640.1 million at December 31, 2010 to an asset of $411.9 million at September 30, 2011 due to the weakening of the Australian dollar against the U.S. dollar in 2011. This decrease is reflected in “Other current assets” and “Investments and other assets” in the condensed consolidated balance sheets.

The fair value of our coal trading positions, before the application of margin, designated as cash flow hedges of future sales changed from a liability of $174.2 million at December 31, 2010 to a liability of $109.5 million at September 30, 2011 due to favorable market price movements on our positions held.

Outlook

Our near-term outlook is intended to address the remainder of 2011 and full year 2012, with any subsequent periods addressed in our long-term outlook.

Near-Term Outlook

Global coal supply-demand fundamentals are largely positive despite a decline in commodity prices that occurred in the third quarter. Pacific markets are continuing to lead global demand growth, and Europe has increased coal imports due to high natural gas prices and a reduction in nuclear generation. U.S. market demand has remained soft given poor economic growth, though supply has fallen faster than domestic demand due to increased exports and weather-related disruptions to domestic shipments.

The International Monetary Fund's September 2011 World Economic Outlook estimates global economic activity, as measured by gross domestic product (GDP), will grow 4.0% in 2011 and 2012, led by China and India. China's GDP is projected to grow 9.5% in 2011 and 9.0% in 2012. India, the world's second fastest growing economy, is projected to grow 7.8% in 2011 and 7.5% in 2012.

According to the World Steel Association (WSA), global steel use is expected to increase 6.5% in 2011 and another 5.4% in 2012, and China is expected to grow its steel use by 7.5% in 2011and 6.0% in 2012.

Given coal supply constraints and continued growth in steel production and electricity generation from coal, prices for seaborne metallurgical and thermal coal have been high relative to prior years. High-quality hard coking coal settled at $285 per tonne for quarterly contracts commencing October 2011, which is 36% above year-ago levels. We are settling fourth quarter metallurgical coal shipments in line with these recent settlements, with essentially all metallurgical coal production unpriced for 2012. We are targeting total 2011 metallurgical coal sales of approximately 8.5 to 9.5 million tons.

Seaborne thermal coal originating from Newcastle, Australia, has been settled for annual contracts beginning in October 2011 at $126.50 per tonne. As of October 25, 2011, we had less than 1 million tons of seaborne thermal coal volumes available for pricing in Australia for the fourth quarter of 2011. For 2012 in Australia, 75% to 80% of our estimated seaborne thermal coal sales are available to price.

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In the U.S., coal consumption is expected to fall by 1.9% in 2011 according to the U.S. Energy Information Administration's (EIA) Short-Term Energy Outlook for October 2011. The EIA also projects utility stockpiles to decline and production to fall by 1.5%. Coal demand from the electric power sector is projected to decline another 3.9% in 2012. The EIA expects U.S. coal exports to remain elevated over the second half of 2011 and reach an annual total of 99 million tons, and the EIA projects exports to decline to 86 million tons in 2012. The EIA projects natural gas consumption to increase both for generation and industrial use in 2012. We are essentially fully committed and priced for coal for 2011 delivery with 10% to 15% available to be priced for 2012 and 50% to 60% for 2013. We may continue to adjust our production levels in response to changes in market demand.

We expect our fourth quarter of 2011 to benefit from higher volumes, in part due to the first coal coming from our expanded Wilpinjong, Millennium and Wambo Open-Cut mines, and continued strong pricing for Australian seaborne metallurgical and thermal coal. These Australian volumes are expected to be tempered to an extent by the effects of the recovery from a roof fall and longwall relocation at our North Goonyella Mine and co-shipper issues in Australia. We are working through challenging geology related to resumption of the North Goonyella longwall, which is expected to return to full operations in mid-November. In the U.S., we are expecting continued strong volumes.

We continue to manage costs and operating performance in an effort to mitigate external cost pressures, geologic issues and potential shipping delays resulting from adverse port and rail performance. We may have higher per ton costs as a result of suboptimal production levels due to market-driven changes in demand. We may also encounter poor geologic conditions, lower third-party contract miner or brokerage performance or unforeseen equipment problems that limit our ability to produce at forecasted levels. To the extent upward pressure on costs exceeds our ability to realize sales increases, or if we experience unanticipated operating or transportation difficulties, our operating margins would be negatively impacted. Reductions in the relative cost of other fuels, including natural gas, could impact the use of coal for electricity generation. See Cautionary Notice Regarding Forward-Looking Statements, "Risk Factors" in Part II of this Form 10-Q and Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2010 for additional considerations regarding our outlook.

We rely on ongoing access to worldwide financial markets for capital, insurance, hedging and investments through a wide variety of financial instruments and contracts. To the extent these markets are not available or increase significantly in cost, this could have a negative impact on our ability to meet our business goals. Similarly, many of our customers and suppliers rely on the availability of the financial markets to secure the necessary financing and financial surety (letters of credit, bank guarantees, performance bonds, etc.) to complete transactions with us. To the extent customers and suppliers are not able to secure this financial support, it could have a negative impact on our results of operations and/or counterparty credit exposure.

Financial Regulation. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) was enacted, which includes a number of provisions applicable to us in the areas of corporate governance, executive compensation and mine safety and extractive industries disclosure. In addition, the Dodd-Frank Act imposes additional regulation of financial derivatives transactions that may apply to our hedging and our trading and brokerage activities. Although the Dodd-Frank Act became generally effective upon its enactment, many provisions have extended implementation periods and delayed effective dates and require further action by the federal regulatory authorities. As a result, in many respects the ultimate impact of the Dodd-Frank Act on us may not be fully known for an extended period of time. We do expect that the Dodd-Frank Act will increase compliance and transaction costs associated with our hedging and trading and brokerage activities, which may include increased collateral requirements, position limits and additional financial statement disclosures. Until the various provisions of the Dodd-Frank Act are finalized, along with any clarifying or implementation guidance, the extent of any impact cannot be determined at this time.

The potential for increased financial regulation is also evident in the European Union as the European Commission is considering a number of initiatives around financial derivatives transactions. These new regulations could also impact our hedging and trading and brokerage activities.

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Minerals Resource Rent Tax. On May 2, 2010, the Australian government released a report on Australia’s Future Tax System, which included a recommendation to replace the current resource taxing arrangements imposed on non-renewable resources by the Australian federal and state governments with a super profit resource rent tax (the Resource Tax) imposed and administered by the Australian government. As proposed, the Resource Tax would be profit-based and would apply to non-renewable resources projects, including existing projects. On July 2, 2010, the Australian government announced changes to the Resource Tax and proposed a new minerals resource rent tax (the MRRT). The MRRT would still be profit-based, but measures were introduced to lessen the impact of the MRRT. The Australian government and major industry policy makers are actively engaged to work through various structural aspects of the proposed MRRT together with detailed implementation issues. A committee charged with consulting with industry and preparing recommendations as to the final form of the MRRT submitted its report in late December 2010. That committee’s recommendations largely endorse the mining industry’s understanding as to what was agreed with the federal government prior to the federal election. In March 2011, those recommendations were accepted by the federal government, which included the recommendation that all state royalties (current and future) are creditable against MRRT payments. An implementation group was formed, which includes industry participants, to assist with drafting the legislation. Draft legislation and an accompanying explanatory memorandum was released for public consultation on June 7, 2011. The final exposure draft was released for further consultation on September 16, 2011. If the MRRT becomes law, the MRRT will apply to mining profits attributable to the value of resources earned after July 1, 2012 and may affect the level of taxation incurred by our Australian operations going forward.

Carbon Pricing Framework. On October 12, 2011, the Australian House of Representatives passed a legislative package that included a carbon pricing framework that, as proposed, would commence on July 1, 2012. The carbon price would initially be $23 Australian dollars per tonne of carbon dioxide emissions, escalated by 2.5% per year for inflation over a three year period. After June 30, 2015, the proposed carbon price mechanism would transition to an emissions trading scheme. The legislative package is expected to be introduced to the Australian Senate by the end of 2011. It is not certain that this proposal will become law, in its current form or at all. We are still evaluating the proposal to determine the potential impact on the financial performance of our Australian operations, however, it is expected that all Australian operations will be impacted due to the inclusion of fugitive emissions (defined in the carbon pricing framework as the methane and carbon dioxide which escapes into the atmosphere when coal is mined and gas is produced) and the phased reduction of the government's diesel fuel rebate to capture emissions from fuel combustion. Our North Goonyella, Wambo and Metropolitan mines will be eligible to apply for a portion of the government’s approximately $1.3 billion Australian dollars of transition benefits that would provide assistance based on historical emissions intensity data to the most emissions-intensive coal mines over a six-year period.

Cross-State Air Pollution Rule. On July 6, 2011, the U.S. Environmental Protection Agency (EPA) finalized its Cross-State Air Pollution Rule (CSAPR), which requires 27 states in the eastern half of the U.S. to significantly improve air quality by reducing power plant emissions that cross state lines and contribute to ozone and/or fine particle pollution in other states. The CSAPR is one of a number of significant regulations that the EPA has issued or expects to issue that will impose more stringent requirements relating to air, water and waste controls on electric generating units. Under the CSAPR, the first phase of the nitrogen oxide and sulfur dioxide emissions reductions would commence in 2012 with further reductions effective in 2014. In October 2011, the EPA proposed amendments to the CSAPR to increase emission budgets in ten states, including Texas, and ease limits on market-based compliance options. We continue to evaluate the possible scenarios associated with the CSAPR and the impacts it may have on our business and our results of operations, financial condition or cash flows.

Long-Term Outlook

Our long-term global outlook remains positive. According to the BP Statistical Review of World Energy 2011, coal has been the fastest-growing fuel in the world for the past decade.

The International Energy Agency (IEA) estimates in its World Energy Outlook 2010, current policies scenario, that world primary energy demand will grow 47% between 2008 and 2035. Demand for coal is projected to rise 59%, and the growth in global electricity generation from coal is expected to be greater than the growth in oil, natural gas, nuclear, hydro, biomass, geothermal and solar combined. China and India account for more than 85% of the 2008 - 2035 coal-based primary energy demand growth.

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Under the current policies scenario, the IEA expects coal to retain its strong presence as a fuel for the power sector worldwide. Coal’s share of the power generation mix was 41% in 2008. By 2035, the IEA estimates coal’s fuel share to be 43% as it continues to have the largest share of worldwide electric power production. According to industry reports, approximately 370 gigawatts of coal-fueled electricity generating plants are currently planned or under construction around the world, with expected online dates ranging between 2012 and 2016. Based on those estimates, when complete, those plants would require an estimated 1.3 billion tons of annual coal demand. While coal-based plant retirements are expected, the EIA is projecting U.S. coal demand to remain relatively constant through 2016.

The IEA projects that global natural gas-fueled electricity generation will have a compound annual growth rate of 2.5%, from 4.3 trillion kilowatt hours in 2008 to 8.3 trillion kilowatt hours in 2035. The total amount of electricity generated from natural gas is expected to be approximately one-half the total for coal, even in 2035. Renewables are projected to comprise 23% of the 2035 fuel mix versus 19% in 2008. Nuclear power is expected to grow 52%, however its share of total generation is expected to fall from 13.5% to 11% between 2008 and 2035. The recent events in Japan and Germany may impact these projections. Generation from liquid fuels is projected to decline an average of 2.2% annually to 1.5% of the 2035 generation mix.

We believe that Btu Conversion applications such as CTG and CTL plants represent an avenue for potential long-term industry growth. Several CTG and CTL facilities are currently under development in China and India.

We continue to support clean coal technology development toward the ultimate goal of near-zero emissions, and we are advancing more than a dozen projects and partnerships in the U.S., China and Australia. Clean coal technology development in the U.S. has funding earmarked under the American Recovery and Reinvestment Act of 2009. In addition, the Interagency Task Force on Carbon Capture and Storage was formed to develop a comprehensive and coordinated federal strategy surrounding the commercial development of commercial CCS projects.

Our long-term plans also include advancing projects to expand our presence in the Asia-Pacific region, some of which include sourcing coal to be sold through our Trading and Brokerage segment and partnerships to utilize our mining experience for joint mine development. In July 2011, we entered into a framework agreement to pursue development of a 50 million-ton-per-year surface mine in Xinjiang, China. Also in July 2011, we were selected to be part of a consortium to develop the Tavan Tolgoi coking coal reserve in the South Gobi region of Mongolia. The Government of Mongolia continues to evaluate the structure and components of the mine development, and we are negotiating with other parties and the Government of Mongolia regarding long-term agreements related to the project. Any agreements would then be submitted for consideration and approval by government agencies and the Parliament of Mongolia.

Enactment of laws or passage of regulations regarding emissions from the combustion of coal by the U.S. or some of its states or by other countries, or other actions to limit such emissions, could result in electricity generators switching from coal to other fuel sources. The potential financial impact on us of future laws or regulations will depend upon the degree to which any such laws or regulations force electricity generators to diminish their reliance on coal as a fuel source. That, in turn, will depend on a number of factors, including the specific requirements imposed by any such laws or regulations, the time periods over which those laws or regulations would be phased in and the state of commercial development and deployment of CCS technologies. In view of the significant uncertainty surrounding each of these factors, it is not possible for us to reasonably predict the impact that any such laws or regulations may have on our results of operations, financial condition or cash flows.

Liquidity and Capital Resources

Capital Resources

Our primary sources of cash include sales of our coal production to customers, cash generated from our trading and brokerage activities, sales of non-core assets and financing transactions. Along with cash and cash equivalents, our liquidity includes the available balances from our revolving credit facility (the Revolver) under our unsecured credit facility (Credit Facility), accounts receivable securitization program and a bank overdraft facility in Australia. Our available liquidity includes $1.5 billion available for borrowing under the Revolver, net of outstanding letters of credit of $3.5 million, and available capacity under our accounts receivable securitization program of $61.9 million, net of outstanding letters of credit and amounts drawn. Our liquidity is also impacted by activity under certain bilateral cash collateralization arrangements. As of September 30, 2011, we had cash and cash equivalents of $1.4 billion and our total available liquidity was $2.9 billion.

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We currently expect that our available liquidity and cash flow from operations will be sufficient to meet our anticipated capital requirements for our existing operations during the next 12 months and for the foreseeable future. In addition to the above, alternative sources of liquidity include our ability to offer and sell securities under our shelf registration statement on file with the SEC. However, additional resources will be required to complete the acquisition of Macarthur, as discussed later in this section.

Capital Requirements

Our primary uses of cash include our cash costs of coal production, capital expenditures, coal reserve lease and royalty payments, debt service costs (interest and principal), lease obligations, take or pay obligations and costs related to past mining obligations. When in compliance with the financial covenants and customary default provisions of our Credit Facility, we are not restricted in our ability to pay dividends or repurchase capital stock. We generally fund our capital expenditure requirements with cash generated from operations. As discussed later in this section, we have entered into new debt arrangements to fund, in part, the acquisition of Macarthur.

Capital Expenditures. Capital expenditures for 2011 are anticipated to be $900 million to $950 million, most of which is earmarked for new mines, expansion and extension projects. Approximately 70% of the growth and expansion capital is targeted for various Australian projects for metallurgical and thermal coal, with the remainder in the U.S. Estimated capital expenditures also include funding for our share of construction costs for Prairie State.

Federal Coal Lease Expenditures. In July 2011, we were named the winning bidder for control of approximately 220 million tons of low sulfur coal reserves in the Powder River Basin of Wyoming that will be assigned to our Caballo Mine. Based on our bid of $0.95 per mineable ton, we made our first payment of $42.1 million in July 2011, with the remaining annual payments of $42.1 million to be made in July of each of the next four years. The related lease was executed by the U.S. Bureau of Land Management effective November 1, 2011.

Prairie State. We spent $29.8 million during the nine months ended September 30, 2011 representing our 5.06% share of the construction costs. Included in “Investments and other assets” in the condensed consolidated balance sheets as of September 30, 2011 and December 31, 2010 are costs of $232.3 million and $202.5 million, respectively. Our share of total construction costs for Prairie State is expected to be approximately $250 million, with most of the remaining funding expected in 2011.

Total Indebtedness. Our total indebtedness as of September 30, 2011 and December 31, 2010, consisted of the following:

	September 30, 2011		December 31, 2010
	(Dollars in millions)
Term Loan	$	475.0	$	493.8
5.875% Senior Notes due April 2016	—		218.1
7.375% Senior Notes due November 2016	650.0		650.0
6.5% Senior Notes due September 2020	650.0		650.0
7.875% Senior Notes due November 2026	247.3		247.2
Convertible Junior Subordinated Debentures due 2066	374.7		373.3
6.34% Series B Bonds due December 2014	12.0		12.0
6.84% Series C Bonds due December 2016	33.0		33.0
Capital lease obligations	58.6		69.6
Fair value hedge adjustment	—		2.2
Other	1.8		0.8
Total Debt	$	2,502.4	$	2,750.0

Certain of our long-term debt arrangements contain various administrative, reporting, legal and financial covenants. As of September 30, 2011, we were in compliance with all such covenants.

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On April 15, 2011, we used cash on hand to redeem the 5.875% Notes in the aggregate principal amount of $218.1 million. In compliance with the terms of the indentures governing the 5.875% Notes, the redemption price was equal to 100.979% of the aggregate principal amount of the notes, plus accrued and unpaid interest to April 15, 2011. We recognized costs of $1.7 million associated with the redemption.

Margin. As part of our trading and brokerage activities, we may be required to post margin with an exchange or one of our counterparties. The amount and timing of margin posted can vary with the volume of trades and market price volatility. Total margin posted at September 30, 2011 and December 31, 2010 was $145.3 million and $192.1 million, respectively. For the nine months ended September 30, 2011, net cash inflows for margin were $46.8 million. For the nine months ended September 30, 2010, net cash inflows for margin were $10.2 million.

Acquisition of Macarthur

As described earlier, we announced, with ArcelorMittal, that we jointly launched an all-cash off-market takeover offer to acquire a controlling ownership interest in Macarthur. The proposal price values the equity of Macarthur at approximately $4.9 billion Australian dollars (or approximately $5.1 billion U.S. dollars as of November 2, 2011). We intend to finance the acquisition of Macarthur with cash on hand, borrowings under our Credit Facility, the Term Loan Facility, and other long term debt financing or borrowings under our Bridge Facility, which is discussed in more detail below. During the three months ended September 30, 2011, we purchased in the open market shares of Macarthur totaling $45.5 million.

Bridge Facility. As discussed in Note 17 to our unaudited condensed consolidated financial statements, we have a $1.0 billion Bridge Facility that contains the negotiated terms and conditions originally contemplated in the bridge commitment letter. The Bridge Facility matures 364 days following its effectiveness. Any initial funding of the Bridge Facility must occur by April 29, 2012.

Term Loan Facility. On October 28, 2011, we entered into a Term Loan Facility, that permits us to borrow an aggregate principal amount of up to $1.0 billion, which will be available in multiple drawings for a period of six months. Borrowings under the Term Loan Facility will be used to finance, in part, the acquisition of Macarthur, and will be available to us in minimum principal amounts of either $0.5 million or $5.0 million, depending upon the interest rate option in the Term Loan Facility chosen by us. The Term Loan Facility will mature on October 28, 2016. See Note 17 to our unaudited condensed consolidated financial statements for additional information on the Term Loan Facility.

There were no other material changes to our capital resources or capital requirements from the information provided in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2010.

Historical Cash Flows

	Nine Months Ended						Increase (Decrease)
	September 30,						To Cash Flow
	2011			2010			$			%
	(Dollars in millions)
Net cash provided by operating activities	$	1,190.5		$	892.2		$	298.3		33.4	%
Net cash used in investing activities	(756.8		)	(423.3		)	(333.5		)	(78.8	)%
Net cash used in financing activities	(327.3		)	(90.2		)	(237.1		)	(262.9	)%

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Operating Activities. The changes from the prior year were driven by the following:

• Increased operating cash flows generated from our Australian Mining operations driven by higher pricing;

• a prior year decrease in the utilization of our accounts receivable securitization program; and

• higher cash inflows associated with margin activity.

Investing Activities. The changes from the prior year were primarily driven by the higher current year capital spending of $324.9 million, much of which is associated with our organic growth projects in Australia and the U.S.

Financing Activities. The increase in cash used compared to the prior year was due to the following:

• The redemption of our 5.875% Notes in the current year, which had an aggregate principal balance of $218.1 million at the time of redemption; and

• Increased dividends paid of $12.6 million due to a higher dividend rate in the current year; partially offset by

• Prior year debt issuance costs of $32.2 million related to the refinancing of our Credit Facility and issuance of our 6.5% Senior Notes due September 2020. The proceeds from long-term debt include $500.0 million from our Term Loan and $641.9 million of net proceeds from the issuance of the 6.5% Senior Notes. The proceeds were used to pay off the $490.3 million balance due on our previous term loan facility and the previously outstanding $650 million 6.875% Senior Notes.

Off-Balance Sheet Arrangements

In the normal course of business, we are a party to certain off-balance sheet arrangements. These arrangements include guarantees, indemnifications, financial instruments with off-balance sheet risk, such as bank letters of credit, bank guarantees and surety bonds and our accounts receivable securitization program. Assets and liabilities related to these arrangements are not reflected in our condensed consolidated balance sheets, and we do not expect any material adverse effects on our financial condition, results of operations or cash flows to result from these off-balance sheet arrangements.

Accounts Receivable Securitization. We have an accounts receivable securitization program (securitization program) with a maximum capacity of $275.0 million through our wholly-owned, bankruptcy-remote subsidiary (Seller). At September 30, 2011, we had $61.9 million available under the securitization program, net of outstanding letters of credit and amounts drawn. Under the securitization program, we contribute, on a revolving basis, trade receivables of most of our U.S. subsidiaries to the Seller, which then sells the receivables in their entirety to a consortium of unaffiliated asset-backed commercial paper conduits (the Conduits). After the sale we, as servicer of the assets, collect the receivables on behalf of the Conduits for a nominal servicing fee. We utilize proceeds from the sale of our accounts receivable as an alternative to short-term borrowings under our Credit Facility, effectively managing our overall borrowing costs and providing an additional source for working capital. The securitization program extends to May 2012, while the letter of credit commitment that supports the commercial paper facility underlying the securitization program must be renewed annually.

The Seller is a separate legal entity whose assets are available first and foremost to satisfy the claims of its creditors. Of the receivables sold to the Conduits, a portion of the amount due to the Seller is deferred until the ultimate collection of the underlying receivables. During the nine months ended September 30, 2011, we received total consideration of $3,740.9 million related to accounts receivable sold under the securitization program, including $2,831.7 million of cash up front from the sale of the receivables, an additional $674.4 million of cash upon the collection of the underlying receivables, and $234.8 million that had not been collected at September 30, 2011 and was recorded at fair value which approximates carrying value. The reduction in accounts receivable as a result of securitization activity with the Conduits was $150.0 million at September 30, 2011 and December 31, 2010.

The securitization activity has been reflected in the unaudited condensed consolidated statements of cash flows as operating activity because both the cash received from the Conduits upon the sale of receivables as well as the cash received from the Conduits upon the ultimate collection of receivables are not subject to significantly different risks given the short-term nature of our trade receivables. We recorded expense associated with securitization transactions of $0.4 million and $0.6 million for the three months ended September 30, 2011 and 2010, respectively, and $1.5 million and $1.8 million for the nine months ended September 30, 2011 and 2010, respectively.

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Other Off-Balance Sheet Arrangements. From time to time, we enter into coal off-take agreements with counterparties where, as a part of the arrangements, we may provide certain financial guarantees on behalf of the counterparties. As of September 30, 2011, we had in place guarantees of $10 million on behalf of our counterparties relating to such agreements. To mitigate risk, we place liens on the counterparties' production equipment or require performance bonds.

In January 2011, we entered into a bilateral cash collateralization agreement in support of certain letters of credit whereby we posted cash collateral in lieu of utilizing our Credit Facility. The capacity under this new agreement is $37.0 million, all of which was posted as collateral at September 30, 2011. As of September 30, 2011, we had a total of $80.0 million posted as collateral under such agreements. The cash collateral is classified within "Cash and cash equivalents" given our ability to substitute letters of credit at any time for this cash collateral.

See Note 13 to our unaudited condensed consolidated financial statements for a discussion of our guarantees.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources is based upon our financial statements, which have been prepared in accordance with U.S. GAAP. We are also required under U.S. GAAP to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Our critical accounting policies are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2010. Our critical accounting policies remained unchanged at September 30, 2011. The following provides additional information about Level 3 fair value measurements.

Level 3 Fair Value Measurements. In accordance with the “Fair Value Measurements and Disclosures” topic of the Financial Accounting Standards Board Accounting Standards Codification, we evaluate the quality and reliability of the assumptions and data used to measure fair value in the three level hierarchy, Levels 1, 2 and 3. Commodity swaps and options and physical commodity purchase/sale contracts transacted in less liquid markets or contracts, such as long-term arrangements, with limited price availability were classified in Level 3. Indicators of less liquid markets are those with periods of low trade activity or when broker quotes reflect wide pricing spreads. Generally, our Level 3 instruments or contracts are valued using internally generated models that include bid/ask price quotations, other market assessments obtained from multiple, independent third-party brokers or other transactional data. While we do not anticipate any decrease in the number of third-party brokers or market liquidity, such events could erode the quality of market information and therefore the valuing of its market positions should the number of third-party brokers decrease or if market liquidity is reduced. Our valuation techniques also include basis adjustments for heat rate, sulfur and ash content, port and freight costs, and credit and nonperformance risk. We validate our valuation inputs with third-party information and settlement prices from other sources where available. We also consider credit and nonperformance risk in the fair value measurement by analyzing the counterparty’s exposure balance, credit rating and average default rate, net of any counterparty credit enhancements (e.g., collateral), as well as our own credit rating for financial derivative liabilities.

We have consistently applied these valuation techniques in all periods presented, and believe we have obtained the most accurate information reasonably available for the types of derivative contracts held. Valuation changes from period to period for each level will increase or decrease depending on: (i) the relative change in fair value for positions held, (ii) new positions added, (iii) realized amounts for completed trades, and (iv) transfers between levels. Our coal trading strategies utilize various swaps and derivative physical contracts. Periodic changes in fair value for purchase and sale positions, which are executed to lock in coal trading spreads, occur in each level and therefore the overall change in value of our coal-trading platform requires consideration of valuation changes across all levels.

Our Level 3 net financial assets represented approximately 2% ($8 million) and 3% ($19 million) of our total net financial assets as of September 30, 2011 and December 31, 2010, respectively. See Notes 5 and 6 to our unaudited condensed consolidated financial statements for additional information regarding fair value measurements.

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Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented

See Note 2 to our unaudited condensed consolidated financial statements for a discussion of newly adopted accounting standards and accounting standards not yet implemented.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The potential for changes in the market value of our coal and freight trading, crude oil, diesel fuel, natural gas, explosives, interest rate and currency portfolios is referred to as “market risk.” Market risk related to our coal trading and freight portfolio, which includes bilaterally-settled and exchange-settled over-the-counter trading as well as brokered trading of coal, is evaluated using a value at risk (VaR) analysis. VaR analysis is not used to evaluate our non-trading interest rate, diesel fuel, explosives and currency hedging portfolios or coal trading activities we employ in support of coal production (as discussed below). We attempt to manage market risks through diversification, controlling position sizes and executing hedging strategies. Due to lack of quoted market prices and the long-term, illiquid nature of the positions, we have not quantified market risk related to our non-trading, long-term coal supply agreement portfolio.

Coal Trading Activities

Coal Price Risk Monitored Using VaR. We engage in direct and brokered trading of coal, ocean freight and fuel-related commodities in over-the-counter markets. These activities give rise to commodity price risk, which represents the potential loss that can be caused by an adverse change in the market value of a particular commitment. We actively measure, monitor and adjust traded position levels to remain within risk limits prescribed by management. For example, we have policies in place that limit the amount of risk, as measured by VaR, that we may assume at any point in time on trading and brokerage activities.

We account for coal trading using the fair value method, which requires us to reflect financial instruments with third parties at market value in our condensed consolidated financial statements. Our trading portfolio included forwards, swaps and options as of September 30, 2011.

We perform a VaR analysis on our coal trading portfolio, which includes bilaterally-settled and exchange-settled over-the-counter and direct coal trading. The use of VaR allows us to quantify in dollars, on a daily basis, a measure of price risk inherent in our trading portfolio. VaR represents the expected loss in portfolio value due to adverse market movements over a defined time horizon (liquidation period) within a specified confidence level. Our VaR model is based on a variance/co-variance approach. This captures our exposure related to forwards, swaps and options positions. Our VaR model calculates a 5 to 15-day holding period dependent upon the products within our coal trading portfolio at the time of VaR measurement and a 95% one-tailed confidence interval. This means that there is a one in 20 statistical chance that the portfolio would lose more than the VaR estimates during the liquidation period. Our volatility calculation incorporates an exponentially weighted moving average algorithm based on the previous 60 market days, which makes our volatility more representative of recent market conditions, while still reflecting an awareness of historical price movements. VaR does not estimate the maximum loss expected in the 5% of the time the portfolio value exceeds measured VaR.

The use of VaR allows us to aggregate pricing risks across products in the portfolio, compare risk on a consistent basis and identify the drivers of risk. We use historical data to estimate price volatility as an input to VaR. Given our reliance on historical data, we believe VaR is reasonably effective in characterizing risk exposures in markets in which there are not sudden fundamental changes or shifts in market conditions. Due to the subjectivity in the choice of the liquidation period, reliance on historical data to calibrate the models and the inherent limitations in the VaR methodology, we perform regular stress and scenario analyses to estimate the impacts of market changes on the value of the portfolio. Additionally, back-testing is regularly performed to monitor the effectiveness of our VaR measure. The results of these analyses are used to supplement the VaR methodology and identify additional market-related risks. An inherent limitation of VaR is that past changes in market risk factors may not produce accurate predictions of future market risk.

During the nine months ended September 30, 2011, the actual low, high, and average VaR for our coal trading portfolio was $6.2 million, $30.6 million and $15.2 million, respectively.

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Other Risk Exposures. We also use our coal trading and brokerage platform to support various coal production-related activities. These transactions may involve coal to be produced from our mines, coal sourcing arrangements with third-party mining companies, equity/joint venture positions with producers or off-take agreements with producers. While the support activities (e.g. forward sale of coal to be produced and/or purchased) may ultimately involve market risk sensitive instruments, the sourcing of coal in these arrangements does not involve market risk sensitive instruments and does not encompass the commodity price risks that we monitor through VaR, as discussed above.

There have been no other material changes in market risk from the information provided in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2010.

Item 4. Controls and Procedures.

Our disclosure controls and procedures are designed to, among other things, provide reasonable assurance that material information, both financial and non-financial, and other information required under the securities laws to be disclosed is accumulated and communicated to senior management, including the principal executive officer and principal financial officer, on a timely basis. Our Chief Executive Officer and our Chief Financial Officer have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of September 30, 2011, and have concluded that such controls and procedures are effective to provide reasonable assurance that the desired control objectives were achieved.

Additionally, during the most recent fiscal quarter, there have been no changes to our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

See Note 14 to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this report relating to certain legal proceedings, which information is incorporated by reference herein.

Item 1A. Risk Factors.

The risk factors set forth below are in addition to the risk factors previously disclosed in Part I, Item 1A. “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 28, 2011.

Risks Related to the Macarthur Acquisition

The extent to which we are able to successfully manage the newly acquired Macarthur operations and successfully operate and develop the mine sites acquired from Macarthur will have a bearing on our future financial results.

The process of managing the operations of Macarthur could cause an interruption of, or loss of momentum in, the activities of the business or the development of new mines. Macarthur currently has two primary producing mines with a third mine expected to ramp up production in the next 12 months, several development projects and a portfolio of exploration projects. All of these properties are held through joint ventures. Our interests in these joint ventures could conflict with the interests of the other joint venture participants. In addition, we may need to seek the consent of the other joint venture participants in order to take certain actions, and those consents may not be forthcoming. Delays in optimizing the operations of the producing mines and in advancing the development projects could impact our future financial results.

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Managing the operations of Macarthur may place a significant burden on management and internal resources. Any significant diversion of management attention away from ongoing business and new business opportunities and any difficulties encountered in the transition process could affect our future financial results. Additionally, our ability to manage the Macarthur operations will have a direct bearing on the realization of anticipated synergies and benefits. We may experience disruption in relationships with current and new employees, customers, suppliers and joint venture participants. Further, we may encounter unanticipated risks associated with the Macarthur acquisition and may encounter difficulties, delays or failure in achieving anticipated synergies, including the expected increases in earnings and cost savings. If such risks, difficulties or costs are significant, this could adversely affect our business, cash flow and results of operations.

We may incur higher than expected transaction and transition costs.

We have incurred and will continue to incur non-recurring transaction and transition costs associated with the Macarthur acquisition. Although we believe that the synergies and benefits of the acquisition will offset these costs over time, our assumptions relating to the forecast level of cost savings, synergies and associated costs of the Macarthur acquisition may be inaccurate, including as the result of the failure to realize the expected benefits of the acquisition, higher than expected transaction and transition costs, unknown liabilities as well as general economic and business conditions, which could adversely affect our future financial results and result in our anticipated net benefit not being achieved within the expected timetable.

We expect to incur substantial additional indebtedness in connection with the Macarthur acquisition.

We intend to finance the acquisition of Macarthur with cash on hand, borrowings under our Credit Facility, Term Loan Facility, other long term debt financing or borrowings under our Bridge Facility. Assuming 100% of the Macarthur shares are tendered in the offer, we expect to incur additional indebtedness, including amounts needed to fund the purchase of ArcelorMittal's interest in the joint venture established to acquire Macarthur. Any borrowings would be in addition to our $2.5 billion of indebtedness outstanding at September 30, 2011. None of this indebtedness will be guaranteed by Macarthur.

The degree to which we are leveraged could have important consequences, including, but not limited to:

• making it more difficult for us to pay interest and satisfy our debt obligations;

• increasing the costs of borrowing under our existing credit facilities;

• increasing our vulnerability to general adverse economic and industry conditions;

• requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal and interest on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, business development, Btu Conversion and clean coal technology projects or other general corporate requirements;

• limiting our ability to obtain additional financing to fund future working capital, capital expenditures, business development, Btu Conversion and clean coal technology projects or other general corporate requirements;

• making it more difficult to obtain surety bonds, letters of credit or other financing, particularly during periods in which credit markets are weak;

• limiting our flexibility in planning for, or reacting to, changes in our business and in the coal industry; 

• causing a decline in our credit ratings; and

• placing us at a competitive disadvantage compared to less leveraged competitors.

In addition, our debt agreements subject us to financial and other restrictive covenants. Failure by us to comply with these covenants could result in an event of default that, if not cured or waived, could have a material adverse effect on us and result in amounts outstanding thereunder to be immediately due and payable.

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Any downgrade in our credit ratings could result in an increase in interest rates on our credit facilities, requirements to post additional collateral on derivative trading instruments, or the loss of trading counterparties for corporate hedging and commodity brokerage and trading.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to sell assets, seek additional capital or seek to restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to sell material assets or operations to attempt to meet our debt service and other obligations. Certain agreements governing our indebtedness restrict our ability to sell assets and use the proceeds from the sales. We may not be able to complete those sales or to obtain the proceeds which we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due.

We will be more exposed to currency exchange rate fluctuations following completion of the Macarthur acquisition, and there will be an increased proportion of assets, liabilities and expenses denominated in non-U.S. dollar currencies.

As a result of the completion of the Macarthur acquisition, our consolidated financial results will be more exposed to currency exchange rate fluctuations, and an increased proportion of assets, liabilities and expenses will be denominated in non-U.S. dollar currencies.

We will present our consolidated financial statements in U.S. dollars and will have a significant proportion of net assets and expenses in the Australian dollar. Our consolidated financial results and capital ratios will, therefore, be sensitive to movements in foreign exchange rates. An appreciation of the Australian dollar relative to the U.S. dollar could have an adverse impact on our consolidated financial results.

Integrating and maintaining internal controls for the combined business may strain our resources and divert management's attention. If we fail to establish and maintain proper internal controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.

Prior to the acquisition, Macarthur was not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Sarbanes-Oxley Act of 2002. As a subsidiary consolidated with our financial statements, Macarthur will be subject to such rules and regulations. Implementing and maintaining appropriate internal controls and procedures for Macarthur will require specific compliance training of certain officers and employees, will entail substantial costs in order to modify existing accounting systems, and will take a significant period of time to complete.

We will incorporate the internal controls and procedures of Macarthur into our internal control over financial reporting following the acquisition, and we expect to be able to perform an assessment of and report on internal control over financial reporting for the combined business for the year ending December 31, 2012. We may not, however, be efficient in establishing adequate of internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could impair our ability to operate the business. If we are not able to demonstrate compliance with Section 404 of the Sarbanes-Oxley Act in a timely manner, or if our internal controls are perceived as inadequate, or we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On October 24, 2008, we announced that our Board of Directors authorized a share repurchase program of up to $1 billion of the then outstanding shares of our common stock. The repurchases may be made from time to time based on an evaluation of our outlook and general business conditions, as well as alternative investment and debt repayment options. Our Chairman and Chief Executive Officer also has the authority to direct us to repurchase up to $100 million of our common stock outside the share repurchase program. The repurchase program does not have an expiration date and may be discontinued at any time. Through September 30, 2011, we have made repurchases of 7.7 million shares at a cost of $299.6 million ($199.8 million and $99.8 million in 2008 and 2006, respectively), leaving $700.4 million available for share repurchases under the program.

Period	Total Number of Shares Purchased(1)	Average Price per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Dollar Value that May Yet Be Used to Repurchase Shares Under the Publicly Announced Program (In millions)
July 1 through July 31, 2011	2,877	$	59.39	—	$	700.4
August 1 through August 31, 2011	1,613	55.35		—	700.4
September 1 through September 30, 2011	11,119	46.10		—	700.4
Total	15,609	$	49.51	—

⁽¹⁾  Represents shares withheld to cover the withholding taxes upon the vesting of restricted stock, which are not a part of the share repurchase program.

Item 5. Other Information.

(a) Mine Safety Disclosures

Safety is a core value that is integrated into all areas of our business. Our goal is to provide a workplace that is incident free. We believe that it is our responsibility to our employees to provide a superior safety and health environment. We seek to implement this goal by: training employees in safe work practices; openly communicating with employees; establishing, following and improving safety standards; involving employees in safety processes; and recording, reporting and investigating accidents, incidents and losses to avoid reoccurrence. As part of our training, we collaborate with the Mine Safety and Health Administration (MSHA) and other government agencies to identify and test emerging safety technologies. We also believe that personal accountability is key. Every employee commits to our safety goals and governing principles. Managers, frontline supervisors and employees are held responsible for individual safety and the safety of other employees.

We also partner with several companies and governmental agencies to pursue new technologies that have the potential to improve our safety performance and provide better safety protections for our employees. We have signed letters of intent to field test a new mine emergency vehicle under development by outside companies. We are in the process of installing new communications and tracking systems at our U.S. underground mines, which will allow persons on the surface to determine the location of and communicate with all persons underground. In addition, we are exploring the use of proximity detection and collision avoidance systems to enhance the safety around our large equipment fleets in the U.S. and Australia. We are currently testing these systems at a section of one of our U.S. underground mines.

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As discussed above, our goal is to operate free of injuries, occupational illnesses, property damage and near misses. One of the ways we monitor safety performance is by incidence rate. We compute the incidence rate as the number of injuries (MSHA injury degree code 1 to 6) divided by employee hours worked, multiplied by 200,000 hours. Our incidence rate excludes the injuries and hours associated with office workers. The following table reflects our incidence rates:

	Nine Months Ended September 30,
	2011	2010
U.S.	1.33	2.13
Australia	2.62	4.36
Total Peabody Energy Corporation	1.83	2.91

For the U.S., the comparable MSHA incidence rate is from MSHA’s Mine Injury and Worktime Operators report and represents the all incidence rate for all U.S. coal mines, excluding the impact of office workers (“All Incidence Rate”). As of November 2, 2011, MSHA’s Mine Injury and Worktime Operators report for the nine months ended September 30, 2011 had not yet been published. The MSHA All Incidence Rate for the six months ended June 30, 2011 was 3.58. The MSHA All Incidence Rate for the nine months ended September 30, 2010 was 3.92.

We monitor MSHA compliance using violations per inspection day (in the U.S. only), which is calculated as the total count of violations per five hour MSHA inspector day. For the nine months ended September 30, 2011 and 2010, our violations per inspection day were 0.81 and 0.84, respectively.

The following disclosures are provided pursuant to the recently enacted Dodd-Frank Act, which requires certain disclosures by companies required to file periodic reports under the Securities Exchange Act of 1934, as amended, that operate coal mines regulated under the Federal Mine Safety and Health Act of 1977 (the Mine Act). The disclosures reflect U.S. mining operations only as the requirements of the Dodd-Frank Act do not apply to our mines operated outside the U.S. Under the Dodd-Frank Act, the SEC is authorized to issue rules and regulations to carry out the purposes of these provisions. In December 2010, the SEC issued a proposed rule for the mine safety disclosures. With the comment period completed, a final rule is expected from the SEC by the end of 2011.

Mine Safety Information.Whenever MSHA believes that a violation of the Mine Act, any health or safety standard, or any regulation has occurred, it may issue a citation which describes the violation and fixes a time within which the operator must abate the violation. In some situations, such as when MSHA believes that conditions pose a hazard to miners, MSHA may issue an order removing miners from the area of the mine affected by the condition until hazards are corrected. Whenever MSHA issues a citation or order, it generally proposes a civil penalty, or fine, as a result of the violation that the operator is ordered to pay. Citations and orders can be contested and appealed, and as part of that process, are often reduced in severity and amount, and are sometimes dismissed. The number of citations, orders and proposed assessments vary depending on the size and type (underground or surface) of the mine as well as by the MSHA inspector(s) assigned to that mine. Since MSHA is a branch of the U.S. Department of Labor, its jurisdiction applies only to our U.S. mines. While our Australian mines are not required to report safety information to MSHA, in 2008 we modified our injury reporting processes such that our Australian operations began capturing safety data using the same criteria as that of our U.S. operations. However, the safety data for our Australian mines does not include MSHA issued citations, orders and proposed assessments. As such, the mine safety disclosures that follow contain no information for our Australian mines.

MSHA Citations and Orders. The table that follows reflects citations and orders issued to us by MSHA during the three and nine months ended September 30, 2011, as reflected in our systems. Due to timing and other factors, our data may not agree with the mine data retrieval system maintained by MSHA. The proposed assessments for the three and nine months ended September 30, 2011 were taken from the MSHA system as of November 2, 2011.

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Additional information follows about MSHA references used in the table.

• Section 104 Citations: The total number of violations received from MSHA under section 104 of the Mine Act, which includes citations for health or safety standards that could significantly and substantially contribute to a serious injury if left unabated.

• Section 104(b)Orders: The total number of orders issued by MSHA under section 104(b) of the Mine Act, which represents a failure to abate a citation under section 104(a) within the period of time prescribed by MSHA. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated.

• Section 104(d)Citations and Orders: The total number of citations and orders issued by MSHA under section 104(d) of the Mine Act for unwarrantable failure to comply with mandatory health or safety standards.

• Section 110(b)(2)Violations: The total number of flagrant violations issued by MSHA under section 110(b)(2) of the Mine Act.

• Section 107(a)Orders: The total number of orders issued by MSHA under section 107(a) of the Mine Act for situations in which MSHA determined an imminent danger existed.

• Proposed MSHA Assessments: The total dollar value of proposed assessments from MSHA.

• Fatalities: The total number of related fatalities.

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Three Months Ended September 30, 2011

Mine(1)	Section 104 Citations	Section 104(b) Orders	Section 104(d) Citations and Orders	Section 104(e) Potential Pattern of Violations	Section 110(b)(2) Violations	Section 107(a) Orders	($) Proposed MSHA Assessments	Fatalities
							(in thousands)
Western U.S. Mining
Caballo	1	—	—	—	—	—	—	—
E1 Segundo	20	—	—	—	—	—	10.8	—
Kayenta	22	—	—	—	—	—	14.6	—
Lee Ranch	7	—	—	—	—	—	5.0	—
North Antelope Rochelle	15	—	—	—	—	—	3.4	—
Rawhide	3	—	—	—	—	—	3.0	—
Twentymile (Foidel Creek)	39	—	—	—	—	—	12.3	—
Midwestern U.S. Mining
Air Quality (Air Quality Mine and South Wash Plant)	122	—	10	—	—	1	99.4	—
Bear Run	1	—	—	—	—	—	0.1	—
Cottage Grove (Wildcat Hills-Cottage Grove Pit)	1	—	—	—	—	—	—	—
Farmersburg(2)	2	—	—	—	—	—	0.1
Francisco Surface(2)	5	—	—	—	—	—	2.1
Francisco Underground	142	—	1	—	—	1	83.2	—
Gateway	125	—	4	—	—	—	70.8	—
Midwest Repair Facility (Columbia Maintenance Services)	4	—	—	—	—	1	1.0	—
Sage Creek(3)	3	—	—	—	—	—	0.3	—
Somerville Central	1	—	1	—	—	—	—	—
Viking (Viking-Corning and Knox Pit)	7	—	—	—	—	—	1.2	—
Wild Boar	—	—	—	—	—	—	—	—
Wildcat Hills Underground	102	—	—	—	—	—	25.2	—
Willow Lake (Willow Lake Portal and Central Preparation Plant)	162	—	4	—	—	—	69.2	—

⁽¹⁾  The definition of mine under section 3 of the Mine Act includes the mine, as well as other items used in, or to be used in, or resulting from, the work of extracting coal, such as land, structures, facilities, equipment, machines, tools, and coal preparation facilities. Unless otherwise indicated, any of these other items associated with a single mine have been aggregated in the totals for that mine. Also, there are instances where the mine name per the MSHA system differs from the mine name utilized by us. Where applicable, we have parenthetically listed the name(s) of the mine per the MSHA system.

⁽²⁾  Mine was closed as of January 1, 2011.

⁽³⁾  Mine has yet to commence operations.

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Nine Months Ended September 30, 2011

Mine(1)	Section 104 Citations	Section 104(b) Orders	Section 104(d) Citations and Orders	Section 104(e) Potential pattern of Violations	Section 110(b)(2) Violations	Section 107(a) Orders	($) Proposed MSHA Assessments	Fatalities
							(in thousands)
Western U.S. Mining
Caballo	16	—	—	—	—	—	5.3	—
El Segundo	34	—	—	—	—	—	16.6	—
Kayenta	63	—	—	—	—	—	50.9	1
Lee Ranch	19	—	—	—	—	—	12.8	—
North Antelope Rochelle	18	—	—	—	—	—	160.9	—
Rawhide	4	—	—	—	—	—	3.1	—
Twentymile (Foidel Creek)	163	—	2	—	—	—	257.8	—
Midwestern U.S. Mining
Air Quality (Air Quality Mine and South Wash Plant)	376	1	12	—	—	2	441.6	—
Bear Run	18	—	—	—	—	—	7.3	—
Cottage Grove (Wildcat Hills-Cottage Grove Pit)	16	—	—	—	—	—	9.4	—
Farmersburg(2)	3	—	—	—	—	—	0.3	—
Francisco Surface(2)	11	—	—	—	—	—	8.9	—
Francisco Underground	380	—	5	—	—	1	342.8
Gateway	274	—	4	—	—	—	187.6	—
Midwest Repair Facility (Columbia Maintenance Services)	4	—	—	—	—	1	1.0	—
Sage Creek(3)	3	—	—	—	—	—	0.3	—
Somerville Central	12	—	1	—	—	—	11.6	—
Viking (Viking-Corning and Knot Pit)	24	—	—	—	—	—	22.3	—
Wild Boar	6	—	—	—	—	—	0.6	—
Wildcat Hills Underground	196	—	—	—	—	—	129.8	—
Willow Lake (Willow Lake Portal and Central Preparation Plant)	652	1	26	—	—	—	927.8	—

⁽¹⁾  The definition of mine under section 3 of the Mine Act includes the mine, as well as other items used in, or to be used in, or resulting from, the work of extracting coal, such as land, structures, facilities, equipment, machines, tools, and coal preparation facilities. Unless otherwise indicated, any of these other items associated with a single mine have been aggregated in the totals for that mine. Also, there are instances where the mine name per the MSHA system differs from the mine name utilized by us. Where applicable, we have parenthetically listed the name(s) of the mine per the MSHA system.

⁽²⁾  Mine was closed as of January 1, 2011.

⁽³⁾  Mine has yet to commence operations.

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Pattern or Potential Pattern of Violations. During the three and nine months ended September 30, 2011, none of the mines operated by us received written notice from MSHA of (a) a pattern of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of coal mine health or safety hazards under section 104(e) of the Mine Act or (b) the potential to have such a pattern.

On November 19, 2010, we received a written notice from MSHA that a potential pattern of violations existed at our Willow Lake Mine. On March 15, 2011, the Willow Lake Mine was notified by MSHA that it will not be considered for a Pattern of Violation notice pursuant to section 104(e)(1) of the Mine Act as a result of the mine’s progress during the evaluation period.

Pending Legal Actions. The Federal Mine Safety and Health Review Commission (the Commission) is an independent adjudicative agency that provides administrative trial and appellate review of legal disputes arising under the Mine Act. These cases may involve, among other questions, challenges by operators to citations, orders and penalties they have received from MSHA, or complaints of discrimination by miners under Section 105 of the Mine Act. The following is a brief description of the types of legal actions that may be brought before the Commission.

• Contests of Citations and Orders — A contest proceeding may be filed with the Commission by operators, miners or miners’ representatives to challenge the issuance of a citation or order issued by MSHA.

• Contests of Proposed Penalties (Petitions for Assessment of Penalties) — A contest of a proposed penalty is an administrative proceeding before the Commission challenging a civil penalty that MSHA has proposed for the violation contained in a citation or order.

• Complaints for Compensation — A complaint for compensation may be filed with the Commission by miners entitled to compensation when a mine is closed by certain withdrawal orders issued by MSHA. The purpose of the proceeding is to determine the amount of compensation, if any, due miners idled by the orders.

• Complaints of Discharge, Discrimination or Interference — A discrimination proceeding is a case that involves a miner’s allegation that he or she has suffered a wrong by the operator because he or she engaged in some type of activity protected under the Mine Act, such as making a safety complaint.

• Temporary Reinstatement Proceedings — Temporary reinstatement proceedings involve cases in which a miner has filed a complaint with MSHA stating he or she has suffered discrimination and the miner has lost his or her position.

• Emergency Response Plan (ERP) Dispute Proceedings — ERP dispute proceedings are cases brought before the Commission when an operator is issued a citation because it has not agreed to include a certain provision in its ERP.

63

The table that follows presents information by mine regarding pending legal actions before the Commission at September 30, 2011. Each legal action is assigned a docket number by the Commission and may have as its subject matter one or more citations, orders, penalties or complaints.

Mine(1)	Legal Actions
Western U.S. Mining
Kayenta	6
North Antelope Rochelle	7
Rawhide	4
Twentymile (Foidel Creek)	31
Midwestern U.S. Mining
Air Quality (Air Quality Mine and South Wash Plant)	30
Cottage Grove (Wildcat Hills-Cottage Grove Pit)	2
Francisco Underground	10
Gateway	28
Midwest Repair Facility (Columbia Maintenance Services)	2
Somerville Central	1
Vermilion Grove	1
Viking (Viking-Corning and Knot Pit)	1
Wildcat Hills Underground	2
Willow Lake (Willow Lake Portal and Central Preparation Plant)	69

⁽¹⁾  The definition of mine under section 3 of the Mine Act includes the mine, as well as other items used in, or to be used in, or resulting from, the work of extracting coal, such as land, structures, facilities, equipment, machines, tools and coal preparation facilities. Unless otherwise indicated, any of these other items associated with a single mine have been aggregated in the totals for that mine. Also, there are instances where the mine name per the MSHA system differs from the mine name utilized by us. Where applicable, we have parenthetically listed the name(s) of the mine per the MSHA system.

(b) None

64

Item 6. Exhibits.

See Exhibit Index at page 67 of this report.

65

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		PEABODY ENERGY CORPORATION
Date:	November 4, 2011	By:	/s/ MICHAEL C. CREWS
			Michael C. Crews
			Executive Vice President and Chief Financial Officer (On behalf of the registrant and as Principal Financial Officer)

66

EXHIBIT INDEX

The exhibits below are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.

Exhibit
No.	Description of Exhibit
3.1	Third Amended and Restated Certificate of Incorporation of the Registrant, as amended (Incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).
3.2	Amended and Restated By-Laws of the Registrant (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed on September 16, 2008).
10.1	Implementation Deed, dated as of August 30, 2011, between PEAMCoal Pty Ltd and Macarthur Coal Limited (Incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed on September 2, 2011).
10.2*	Amended and Restated Co-Operation and Contribution Agreement, dated as of September 13, 2011, among Peabody Acquisition Co. No. 2 Pty Ltd, ArcelorMittal Netherlands B.V., ArcelorMittal Mining Australasia B.V., PEAMCoal Holdings Pty Ltd and PEAMCoal Pty Ltd.
10.3	Pre-Bid Acceptance Deed, dated as of July 29, 2011, between ArcelorMittal Netherlands B.V. and Peabody Acquisition Co. No.4 Pty Ltd (Incorporated by reference to Exhibit 10.2 of the Registrant's Current Report on Form 8-K filed on August 4, 2011).
10.4*	Amended and Restated Deed of Guarantee, dated as of September 13, 2011, among Peabody Energy Corporation, ArcelorMittal S.A., Peabody Acquisition Co. No. 2 Pty Ltd, ArcelorMittal Netherlands B.V., ArcelorMittal Mining Australasia B.V. and PEAMCoal Holdings Pty Ltd.
10.5	CCA Acknowledgement dated August 2, 2011 among Peabody Acquisition Co. No. 2 Pty Ltd, Peabody Acquisition Co. No. 3 Pty Ltd and Peabody Acquisition Co. No. 2 Pty Ltd, ArcelorMittal Netherlands B.V. and ArcelorMittal Mining Australasia B.V. (Incorporated by reference to Exhibit 10.4 of the Registrant's Current Report on Form 8-K filed on August 4, 2011).
10.6*	Amended and Restated Bridge Facility Commitment Letter, dated as of September 12, 2011, among Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of America, N.A., UBS Securities LLC, UBS Loan Finance LLC, Morgan Stanley Senior Funding, Inc., Citigroup Global Markets, Inc., Citibank, N.A., HSBC Bank USA, N.A., HSBC Securities (USA) Inc., The Royal Bank of Scotland Plc and RBS Securities Inc.
31.1*	Certification of periodic financial report by Peabody Energy Corporation’s Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of periodic financial report by Peabody Energy Corporation’s Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Peabody Energy Corporation’s Chief Executive Officer.
32.2*	Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Peabody Energy Corporation’s Chief Financial Officer.
101*	Interactive Data File (Form 10-Q for the quarterly period ended September 30, 2011 filed in XBRL). The financial information contained in the XBRL-related documents is “unaudited” and “unreviewed.”

* Filed herewith.

67

EX-10.2

Deed of Amendment

13September 2011

Between the parties Peabody Acquisition Co. No. 2 Pty Ltd ACN 146 797 417of Level 13, BOQ Centre, 259 Queen Street, Brisbane, Queensland 4000 ArcelorMittal Netherlands B.V. of Eemhavenweg 70, 3089 KH Rotterdam, Netherlands ArcelorMittal Mining Australasia B.V. of Eemhavenweg 70, 3089 KH Rotterdam, Netherlands PEAMCoal Holdings Pty Ltd (ACN 152 004 398) of Level 13, BOQ Centre, 259 Queen Street, Brisbane, QLD 4000 (formerly Peabody Acquisition Co. No. 3 Pty Ltd) PEAMCoal Pty Ltd (ACN 152 004 772) of Level 13, BOQ Centre, 259 Queen Street, Brisbane, QLD 4000 (formerly Peabody Acquisition Co. No. 4 Pty Ltd)

1 We, the parties, refer to the Co-operation and Contribution Agreement between us dated 29 July 2011 (the CCA).

2 The CCA is amended and restated to read as set out in the Schedule (with the amendments marked for ease of identification).

3 This Deed takes effect, and we agree to be bound by the CCA (as amended by this Deed), from the date of this Deed.

4 Except as specifically amended by this Deed, all terms and conditions of the CCA remain in full force and effect. With effect from the date of this Deed, the CCA (as amended by this Deed), is to be read as a single integrated document incorporating the amendments effected by this Deed.

5 This Deed is governed by the laws of New South Wales. We irrevocably submit to the non-exclusive jurisdiction of the courts of New South Wales and courts competent to hear appeals from those courts.

6 This Deed may be executed in any number counterparts. All counterparts, taken together, constitute one instrument. We may execute this Deed by signing any counterpart.

Executed and delivered as a deed

	Signed for Peabody Acquisition Co. No. 2 Pty Ltd in accordance with section 127 of the Corporations Act 2001 (Cth) by
sign here	/s/ Julian Derek Thornton
	Director
print name	Julian Derek Thornton
sign here	/s/ Murray Hundleby
	Company Secretary
print name	Murray Hundleby
	Signed for PEAMCoal Holdings Pty Ltd in accordance with section 127 of the Corporations Act 2001 (Cth) by
sign here	/s/ Julian Derek Thornton
	Director
print name	Julian Derek Thornton
sign here	/s/ Murray Hundleby
	Company Secretary
print name	Murray Hundleby
	Signed for PEAMCoal Pty Ltd in accordance with section 127 of the Corporations Act 2001 (Cth) By
sign here	/s/ Julian Derek Thornton
	Director
print name	Julian Derek Thornton
sign here	/s/ Murray Hundleby
	Director/Company Secretary
print name	Murray Hundleby

	Signed for ArcelorMittal Netherlands B.V. by its attorney
sign here	/s/ Carole Whittall
	Attorney
print name	Carole Whittall
	in the presence of
sign here	/s/ Guillaume Vercaemer
	Witness
print name	Guillaume Vercaemer

	Signed for ArcelorMittal Mining Australasia B.V. by its attorney
sign here	/s/ Carole Whittall
	Attorney
print name	Carole Whittall
	in the presence of
sign here	/s/ Guillaume Vercaemer
	Witness
print name	Guillaume Vercaemer

Schedule

Amended and Restated Co-operation and Contribution Agreement

	Agreement
Co-operation and contribution agreement
Peabody Acquisition Co. No. 3 Pty Ltd ArcelorMittal Netherlands B.V. ArcelorMittal Mining Australasia B.V. Peabody Acquisition Co. No. 2 Pty Ltd Peabody Acquisition Co. No. 4 Pty Ltd

Contents

Table of contents

The agreement1

1 Definitions, interpretation and agreement components3

1.1 Agreement components3

1.2 Definitions3

1.3 Interpretation9

1.4 Inclusive expressions10

2 The Takeover Bid10

3 Takeover Bid funding arrangements10

3.1 Initial subscription by Peabody and AM BV210

3.2 Further subscriptions by Peabody and AM BV211

3.3 Set-off15

3.4 Fractions15

3.5 Constitution15

3.6 Rights and ranking16

3.7 Holdco's obligations16

4 Conduct of the Offer16

4.1 Substantial holder notifications16

4.2 Conduct of the Offer16

4.3 Reserved decisions in respect of the Offer17

4.4 Public announcements18

4.5 Dealings with Governmental Agencies19

4.6 Compulsory acquisition19

5 Bidder's Statement19

5.1 Preparation19

5.2 Compliance20

5.3 Peabody Information20

5.4 AM Information20

5.5 Statements in the Bidder's Statement21

5.6 Updating information21

5.7 Standstill21

6 Exclusivity arrangements22

6.1 Prohibition22

6.2 Cease existing discussions24

6.3 Notification of approaches24

7 Director arrangements24

7.1 Notifications24

7.2 Board resolution25

7.3 Holdco constitution25

7.4 Observer rights25

8 Termination25

8.1 Termination25

8.2 Effect of termination26

8.3 Duties imposed as a result of termination26

8.4 Automatic termination27

8.5 Termination by AM27

9 Warranties29

9.1 Mutual warranties29

9.2 Warranties by AM30

9.3 Warranties by Peabody31

9.4 Warranties by Peabody, Holdco and Bidco32

9.5 Reliance on representations and warranties33

9.6 Notification33

9.7 Independent warranties33

10 Confidentiality33

11 Duties, costs and expenses33

11.1 Duties33

11.2 Parties to pay own other costs33

11.3 Common advisory costs34

11.4 Break fees and other payments34

12 GST34

12.1 Definitions34

12.2 GST35

12.3 Tax invoices35

12.4 Reimbursements35

13 General35

13.1 Notices35

13.2 Governing law and jurisdiction38

13.3 Service of process38

13.4 Waivers and variation39

13.5 Assignment39

13.6 Further assurances39

13.7 Approvals and consent39

13.8 Remedies cumulative39

13.9 Counterparts39

13.10 Prohibition and enforceability39

13.11 No merger39

13.12 Entire agreement40

13.13 Contra proferentem excluded40

13.14 Specific performance40

13.15 Attorneys40

Schedules

Schedule 1

Agreed Announcement42

Schedule 2

Transfer steps44

The agreement

Co-operation and contribution agreement

Date 29 July 2011 (as amended and restated on 13 September 2011)

Between the parties
Peabody	Peabody Acquisition Co. No. 2 Pty Ltd ACN 146 797 417of Level 13, BOQ Centre, 259 Queen Street, Brisbane, Queensland 4000 (Peabody)
AM	ArcelorMittal Netherlands B.V. of Eemhavenweg 70, 3089 KH Rotterdam, Netherlands (AM)
AM BV2	ArcelorMittal Mining Australasia B.V. of Eemhavenweg 70, 3089 KH Rotterdam, Netherlands (AM BV2)
Holdco	Peabody Acquisition Co. No. 3 Pty Ltd ACN 152 004 398 of Level 13, BOQ Centre, 259 Queen Street, Brisbane, Queensland 4000 (Holdco)
Bidco	Peabody Acquisition Co. No. 4 Pty Ltd ACN 152 004 772 of Level 13, BOQ Centre, 259 Queen Street, Brisbane, Queensland 4000 (Bidco)

Recitals

1 Bidco is considering making a takeover bid for MCC. 2 Peabody owns all the shares in Holdco and Holdco owns all the shares in Bidco. 3 AM owns the AM Shares which it intends to transfer to AM BV2. 4 AM and Bidco have entered into the Pre-Bid Acceptance Deed under which AM has agreed to procure that AM BV2 sells the AM Shares to Bidco by accepting an offer under the takeover bid. 5 Peabody has agreed to subscribe for Holdco Shares from time to time under this agreement. AM BV2 has agreed to subscribe for Holdco Shares from time to time under this agreement. The subscription consideration will be paid to Holdco during the Offer Period and the Holdco Shares will be issued following the end of the Offer Period. Such proceeds may only be used by Holdco to fund Bidco paying: - MCC shareholders for acceptances under its takeover bid for MCC; - MCC shareholders for their MCC Shares pursuant to the exercise of Bidco's right to compulsorily acquire any outstanding MCC Shares under the Corporations Act; and - any Duty arising in connection with its takeover bid for MCC. 6 It is the intention of all the parties (contributors and contributee) that the contribution of share capital to Holdco is not treated as a loan for Dutch corporation tax purposes. 7 Peabody, AM BV2 and Holdco and others have entered into the Shareholders' Agreement.

The parties agree

as set out in the Operative part of this agreement, in consideration of, among other things, the mutual promises contained in this agreement.

page 3

1    Definitions, interpretation and agreement components

1.1    Agreement components

This agreement includes any schedule.

1.2    Definitions

The meanings of the terms used in this agreement are set out below, unless the context otherwise appears or requires.

Term	Meaning
Acceptance Deed	the acceptance deed in the agreed form to be entered into on or about the date on which this agreement was amended between Peabody and Bidco pursuant to which Peabody agrees to sell the MCC Shares comprising the Initial Stake to Bidco in certain circumstances.
Agreed Announcement	an announcement relating to the possible Takeover Bid in the form set out in Schedule 1 to this agreement or in a form as may otherwise be agreed in writing between Peabody, AM and Bidco.
Agreed Constitution	the agreed form constitution of Holdco that is initialled for identification by Peabody, Holdco and AM.
AM BV2 Shares	the entire issued and to be issued share capital of AM BV2 and financial instruments that provide the holder with rights to part of the income or profit (before payments on such instrument) of AM BV2 or that could be converted into shares or equivalent rights in the share capital of AM BV2 and any other rights or interests AM may have in the capital of AM BV2.
AM Duty Shares	has the meaning given to it in clause 3.2(j)(2).
AM Information	has the meaning given in clause 5.4(a).
AM Group	means the group of companies comprising ArcelorMittal S.A. and each of its subsidiaries.
AM Party	AM and each of its Related Bodies Corporate.
AM Shares	48,552,062 MCC Shares, registered in the name of AM.
AM Subscription Shares	has the meaning given to it in clause 3.2(a).
AM Top-Up Shares	has the meaning given to it in clause 3.2(g)(2).
Announcement Window	has the meaning given to it in clause 2(a).
ASIC	the Australian Securities and Investments Commission.
ASX	as the context requires, ASX Limited ABN 98 008 624 691 or the securities market conducted by ASX Limited.
Associate	has the meaning set out in section 12(2) of the Corporations Act.
Bidco Duty	has the meaning in clause 3.2(j).
Bidder's Statement	the bidder's statement to be prepared by Bidco under the Corporations Act in connection with the Offer.
Business Day	a day on which banks are open for business in Brisbane, other than a Saturday, Sunday or public holiday in Brisbane and ASX is open for trading.

Competing Proposal	any proposal, agreement, arrangement or transaction, which, if entered into or completed, would mean a Third Party (either alone or together with any Associate) may: 1 directly or indirectly acquire a Relevant Interest in, or have the right to acquire, a legal, beneficial or economic interest in, or control of, any of the MCC Shares or in the share capital in any Subsidiary of MCC; 2 acquire Control of MCC or a Subsidiary of MCC; 3 otherwise (whether directly or indirectly) acquire, become the holder of, have a right to acquire or have an economic interest in all or a material part of MCC's business or assets or the business or assets of any Subsidiary of MCC; 4 otherwise acquire (whether directly or indirectly) or merge with MCC or a Subsidiary of MCC; 5 enter into any agreement, arrangement or understanding requiring MCC or any of its directors to change, withdraw or modify the directors' recommendation of the Takeover Bid; whether by way of takeover bid, scheme of arrangement, trust scheme, unitholder or securityholder approved acquisition, capital reduction or buy back, sale or purchase of shares, units, securities or assets, global assignment of assets and liabilities, incorporated or unincorporated joint venture, dual-listed company and/or trust structure (or other synthetic merger), or other transaction or arrangement. For the avoidance of doubt, the Takeover Bid is not a Competing Proposal.
Confidentiality Agreement	the confidentiality agreement between Peabody Investments Corp. and ArcelorMittal S.A. dated 16 June 2011.
Control	has the meaning given in section 50AA of the Corporations Act.
Corporations Act	the Corporations Act 2001 (Cth).
Deal	1 sell, assign, transfer, declare a trust over or otherwise dispose of; 2 agree or offer to sell, assign, transfer of otherwise dispose of; 3 enter into or agree to enter into any option which, if exercised, enables or requires the person to sell, assign, transfer, declare a trust over or otherwise dispose of; 4 enter into any derivative or synthetic agreement, deed or other arrangement under which payments may be made that are referrable (in whole or part) to the trading price, or the economic value, of the relevant shares; 5 create or agree or offer to create or permit to be created any interest or encumbrance; 6 vote or agree to vote the relevant shares in favour of a Competing Proposal; or 7 agree to do any of the above.
Deed of Guarantee	the deed of guarantee dated on or about the date of this agreement to which Peabody Energy Corporation, ArcelorMittal S.A., AM BV2 and Holdco are parties.
Duty	any stamp, transaction or registration duty or similar charge imposed by any Governmental Agency and includes any interest, fine, penalty, charge or other amount imposed in respect of any of them, but excludes any Tax.
Duty Payment Date	has the meaning in clause 3.2(k)(2).
Duty Notice	has the meaning in clause 3.2(j).
Encumbrance	an interest or power: 1 reserved in or over an interest in any asset including any retention of title; or 2 created or otherwise arising in or over any interest in any asset under a bill of sale, mortgage, charge, lien, pledge, trust or power, by way of security for the payment of a debt, any other monetary obligation or the performance of any other obligation, and includes, but is not limited to, any agreement to grant or create any of the above.
Entity	has the meaning set out in section 64A of the Corporations Act.
Equity Completion Date	has the meaning in clause 3.2(m).
Exclusivity Period	the period from and including the date of this agreement until and including the date which is the later of: 1 6 months after the date of this agreement; and 2 provided that at least one of Peabody, AM and Bidco releases the Agreed Announcement to the ASX within the Announcement Window, 6 months after the date of the Offer.
FIRB	Foreign Investment Review Board.
GFC Event	is an event or series of events which has a material adverse effect on the ability of any person to obtain acquisition debt funding from reputable financial institutions on commercially reasonable terms.

Governmental Agency	any government or any governmental, semi‑governmental, statutory or judicial entity, regulatory body, agency or authority, whether in Australia, or elsewhere, including any self‑regulatory organisation established under statute or otherwise discharging substantially public or regulatory functions (including ASIC and the Takeovers Panel), and ASX or any other stock exchange.
GST	goods and services tax or similar value added tax levied or imposed in Australia under the GST Law or otherwise on a supply.
GST Act	the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
GST Law	has the same meaning as in the GST Act.
Holdco Share	an ordinary share in the capital of Holdco.
Initial Stake	such number of MCC Shares that may be acquired on-market by Peabody after the date of the Offer.
Jointly Retained Party	has the meaning given in clause 11.3.
LIBOR	the British Bankers' Association Interest Settlement Rate for the relevant currency and for a period of 1 month displayed as at 11.00am (London time) on the relevant date on the LIBOR01 of the Reuters Screen.
MCC	Macarthur Coal Ltd (ABN 40 096 001 955).
MCC Share	a fully paid ordinary share in the capital of MCC.
New Peabody Shares	has the meaning in clause 5.7(b)(3).
Offer	each offer to acquire an MCC Share to be made in connection with the Takeover Bid.
Offer Period	the period that the Offer will be open for acceptance under the Takeover Bid.
Payment Business Day	a day: 1 on which banks are open for business in Brisbane (Australia), Paris (France) and St. Louis, Missouri (United States of America), other than a Saturday, Sunday or public holiday in Brisbane (Australia), Paris (France) and St. Louis, Missouri (United States of America); and 2 which is a 'business day' as defined in the official listing rules of ASX.
Peabody Duty Shares	has the meaning given to it in clause 3.2(j)(1).
Peabody Information	has the meaning in clause 5.3(a).
Peabody Group	means the group of companies comprising Peabody Energy Corporation and each of its subsidiaries.
Peabody Party	Peabody, each of its Related Bodies Corporate and its nominee (if any), including, for the avoidance of doubt, Holdco and Bidco.
Peabody Shares	any MCC Shares held by Bidco or any Related Body Corporate of Peabody as at the date of this agreement.
Peabody Subscription Shares	has the meaning given to it in clause 3.2(a).
Peabody Top-Up Shares	has the meaning given to it in clause 3.2(g)(1).
Pre-Bid Acceptance Deed	the pre-bid acceptance deed dated on or about the date of this agreement to which AM and Bidco are parties.
Purchase Price	has the meaning given to it in clause 8.5(a)(2).
Purchase Price Calculation Period	has the meaning given to it in clause 8.5(i).
Related Body Corporate	has the meaning given in section 50 of the Corporations Act.
Related Persons	in relation to an Entity means: 1 a Related Body Corporate of that Entity; 2 an Entity that Controls that Entity; 3 an adviser of that Entity or an adviser of a Related Body Corporate of that Entity; and 4 a director, officer or employee of any Entity referred to in items 1, 2 or 3 of this definition.
Relevant Interest	has the meaning given in sections 608 and 609 of the Corporations Act.
Settlement Date	has the meaning given to it in clause 8.5(i).
Shareholders' Agreement	the shareholders' deed between Holdco, AM, Peabody and others dated on or about the date of this agreement.
Subscription Notice	has the meaning given to it in clause 3.2(a).
Subscription Payment Date	has the meaning given to it in clause 3.2(c)(2).
Subsidiary	has the meaning given in section 9 of the Corporations Act.

Takeover Bid	a takeover bid to be made by Bidco for MCC Shares, as referred to in the Agreed Announcement.
Tax	any tax, levy, charge, impost, fee, deduction, goods and services tax, compulsory loan or withholding, that is assessed, levied, imposed or collected by any Governmental Agency and includes any interest, fine, penalty, charge, fee or any other amount imposed on, or in respect of any of the above but excludes Duty.
Termination Notice	has the meaning given to it in clause 8.1(b).
Third Party	a party other than Peabody or Bidco.
Top-Up Notice	has the meaning given to it in clause 3.2(g).
Top-Up Payment Date	has the meaning given to it in clause 3.2(h)(2).
Tranche A Shares	45,313,851 of the AM Shares.
Tranche B Shares	3,238,211 of the AM Shares.
Transfer Date	has the meaning given to it in clause 8.5(a).

1.3    Interpretation

In this agreement headings are inserted for convenience and do not affect the interpretation of this agreement and unless the contrary intention appears:

(a) a reference to this agreement or another instrument includes any variation or replacement of any of them;

(b) a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re‑enactments or replacements of any of them;

(c) the singular includes the plural and vice versa;

(d) the word 'person' includes a firm, a body corporate, an unincorporated association or an authority;

(e) a reference to a person includes a reference to the person's executors, administrators, successors, substitutes (including persons taking by novation) and assigns;

(f) if a period of time is specified and dates from a given day or the day of an act or event, it is to be calculated exclusive of that day;

(g) a reference to a day is to be interpreted as the period of time commencing at midnight and ending 24 hours later;

(h) if an act prescribed under this agreement to be done by a party on or by a given day is done after 5.00pm on that day, it is taken to be done on the next day;

(i) if an event must occur on a stipulated day that is not a Business Day then the stipulated day will be taken to be the next Business Day;

(j) a reference to time is a reference to Brisbane time;

(k) a reference to any thing (including any amount) is a reference to the whole and each part of it and a reference to a group of persons is a reference to any one or more of them;

(l) a reference to a part, clause, party, attachment, exhibit or schedule is a reference to a part and clause of, and a party, attachment, exhibit and schedule to, this agreement and a reference to this agreement includes any attachment, exhibit and schedule;

(m) a reference to $ or A$ is to Australian currency unless denominated otherwise;

(n) a term defined in the Corporations Act shall have the same meaning in this agreement; and

(o) any reference to, or which relates to, the date of this agreement (or similar) is to 29 July 2011.

1.4    Inclusive expressions

Specifying anything in this agreement after the words 'including', 'includes' or 'for example' or similar expressions does not limit what else is included unless there is express wording to the contrary.

2    The Takeover Bid

(a) Peabody, AM and Bidco each irrevocably and unconditionally authorise each other to release the Agreed Announcement to the ASX at any time during the period commencing on the date of this agreement and ending on the date which is 20 Business Days after the date of the agreement (the Announcement Window).

(b) If any party releases the Agreed Announcement to the ASX during the Announcement Window, each other party agrees, subject to the terms of this agreement, to abide by the terms of the Agreed Announcement and to proceed with the implementation of the Takeover Bid.

(c) Holdco and Bidco must not, without the prior written consent of Peabody and AM, enter into any contract relating to the Offer or the financing of the Offer (including, for the avoidance of doubt, any bid implementation agreement) with MCC.

(d) Nothing in this agreement constitutes, or is intended to constitute, a proposal to make a takeover bid at any stage before the Agreed Announcement is released (if ever) to the ASX.

3    Takeover Bid funding arrangements

3.1    Initial subscription by Peabody and AM BV2

As soon as practicable after the date of this agreement and, in any event, before the first day of the Offer Period:

(a)    AM BV2 shall:

(1) subscribe for 2 Holdco Shares;

(2) deliver to Holdco an application for 2 Holdco Shares duly completed and executed by AM BV2;

(3) pay to Holdco $2 in immediately available funds, being the subscription price for 2 Holdco Shares; and

(4) agree to be bound by the constitution of Holdco upon the issuance of the 2 Holdco Shares;

(b)    Peabody shall:

1. subscribe for 1 Holdco Share;

2. deliver to Holdco an application for 1 Holdco Share, duly completed and executed by Peabody; and

3. pay to Holdco $1 in immediately available funds, being the subscription price for 1 Holdco Share;

4. agree to be bound by the constitution of Holdco upon the issuance of the 1 Holdco Share;

(c)     subject to AM BV2 complying with its obligations under clause 3.1(a), Holdco shall:

1. issue 2 Holdco Shares and deliver to AM BV2 a share certificate or holding statement in respect of 2 Holdco Shares; and

2. enter AM BV2's name in Holdco's register of members as the registered holder of 2 Holdco Shares;

(d)     subject to Peabody complying with its obligations under clause 3.1(b), Holdco shall:

1. issue 1 Holdco Share and deliver to Peabody a share certificate or holding statement in respect of 1 Holdco Share; and

2. enter Peabody's name in Holdco's register of members as the registered holder of that 1 Holdco Share.

3.2 Further subscriptions by Peabody and AM BV2

(a)     Subject to all of the defeating conditions of the Offer being fulfilled or freed, Holdco may require:

1. Peabody to subscribe for Holdco Shares (the Peabody Subscription Shares); and

2. AM BV2 to subscribe for Holdco Shares (the AM Subscription Shares),

by giving to Peabody and AM BV2 a subscription notice (Subscription Notice).

(b) Holdco shall only use the cash proceeds that it receives from Peabody and AM BV2 under this clause 3 for the sole purposes of:

1. funding Bidco's acquisition of MCC Shares during the Offer Period through a combination of debt and equity;

2. if Bidco becomes entitled to and exercises its right to compulsorily acquire any outstanding MCC Shares under Chapter 6A of the Corporations Act, funding Bidco's acquisition of MCC Shares pursuant to such compulsory acquisition; and

3. funding Bidco's payment obligations in respect of any Duty arising in connection with Bidco's acquisition of MCC Shares,

and Holdco agrees to ensure that, at all necessary times, it has given cash to Bidco, in immediately available funds, so as to ensure that Bidco has sufficient cash available to it to meet its funding obligations as referred to in paragraphs (1), (2) and (3) above. Holdco and Bidco agree that:

4. 75% of such funding shall be in the form of an interest-free loan which loan will be repayable on demand by Bidco on not less than 30 Business Days' notice in writing provided that such notice cannot be given until after the date which is 6 weeks after the end of the Offer Period (or, in either case, on such earlier date(s) as may be agreed between Holdco and Bidco); and

5. 25% of such funding shall be in the form of equity, which shall require Bidco to issue to Holdco fully paid ordinary shares in Bidco (or such other equity securities as Bidco and

Holdco may agree),

provided always that Holdco and Bidco may, with the prior written consent of the other parties, change the relevant percentage split referred to in paragraphs (4) and (5) above. Despite the foregoing, Holdco may commence charging interest on the loan referred to in paragraph (4) above (at a rate not exceeding LIBOR, unless Bidco and Holdco otherwise agree) on not less than 30 Business Day' notice to Bidco, provided that no interest may be charged until after the completion of the compulsory acquisition of all outstanding MCC Shares under Chapter 6A of the Corporations Act.

(c) Each Subscription Notice given by Holdco under clause 3.2(a) must specify:

1. the number of:

(A) Peabody Subscription Shares that Peabody must subscribe for in accordance with the following formula:

• in respect of the first Subscription Notice, (N_B + N_P) x 0.6; and

• in respect of the second and each subsequent Subscription Notice, N_B x 0.6; and

(B) AM Subscription Shares that AM BV2 must subscribe for in accordance with the following formula:

• in respect of the first Subscription Notice, (N_B + N_P) x 0.4; and

• in respect of the second and each subsequent Subscription Notice, N_B x 0.4;

2. the date (Subscription Payment Date) on which:

a. Peabody must pay for the Peabody Subscription Shares; and

b. AM BV2 must pay for the AM Subscription Shares,

provided that such date shall be no earlier than the second Payment Business Day after the date on which the Subscription Notice was given and, in the case of the first Subscription Notice, such date shall be no earlier than the date on which the consideration for the AM Shares is due and payable to AM BV2 under the Offer; and

3. the number of MCC Shares that Bidco will pay for using the proceeds that are to be received by Holdco from Peabody for the Peabody Subscription Shares and from AM BV2 for the AM Subscription Shares.

(d)     Peabody must pay to Holdco (or as directed by Holdco), on the Subscription Payment Date, in immediately available funds, an amount in respect of the Peabody Subscription Shares equal to:

1. in respect of the first Subscription Notice, (the Initial Cash Amount x 0.6) less (the Peabody Credit x 0.4); and

2. in respect of the second and each subsequent Subscription Notice, N_B x OC x 0.6.

(e) AM BV2 must pay to Holdco (or as directed by Holdco), on the Subscription Payment Date, in immediately available funds, an amount in respect of the AM Subscription Shares equal to:

(1) in respect of the first Subscription Notice, (the Initial Cash Amount x 0.4) plus (the Peabody Credit x 0.4); and

(2) in respect of the second and each subsequent Subscription Notice, N_B x OC x 0.4.

(f) For purposes of this clause 3:

(1) Initial Cash Amount means (N_B x OC);

(2) N_B is the number of MCC Shares that Bidco is proposing to pay for using the proceeds that are to be received by Holdco for those Peabody Subscription Shares and AM Subscription Shares;

(3) N_P is the number of MCC Shares held by Bidco immediately before the start of the Offer Period (or which Bidco will hold within 2 days after the first day of the Offer Period);

(4) N_T is the number of MCC Shares that Bidco has proposed to pay for under all Subscription Notices at the time a Top-Up Notice is given;

(5) OC is the amount of the Offer consideration payable by Bidco per MCC Share at the time the relevant Subscription Notice or Top-Up Notice is given;

(6) OC_Lis the amount of the Offer consideration payable by Bidco per MCC Share at the time the previous Subscription Notice or Top-Up Notice (whichever is later) is given; and

(7) Peabody Credit means the aggregate price paid or payable by Peabody or Bidco to third parties for the New Peabody Shares, but excludes the Initial Stake.

(g) If, after the time a Subscription Notice is given, Bidco increases the amount of the Offer consideration, Holdco shall give Peabody and AM BV2 notice of this fact (Top-Up Notice) and must require:

(1) Peabody to subscribe for Holdco Shares (the Peabody Top-Up Shares); and

(2) AM BV2 to subscribe for Holdco Shares (the AM Top-Up Shares).

(h) Each Top-Up Notice given by Holdco under clause 3.2(g) must specify:

(1) the number of:

(A) Peabody Top-Up Shares that Peabody must subscribe for in accordance with the following formula:

[(OC - OC_L) x N_T]/OCx 0.6; and

(B) AM Top-Up Shares that AM BV2 must subscribe for in accordance with the following formula:

[(OC - OC_L) x N_T]/OCx 0.4,

in each such case, where OC and OC_L are treated as numbers rather than dollar amounts;

(2) the date (Top-UpPaymentDate) on which:

(A) Peabody must pay for the Peabody Top-Up Shares; and

(B) AM BV2 must pay for the AM Top-Up Shares,

provided that such date shall be no earlier than the second Payment Business Day after the date on which the Top-Up Notice was given and, in the case of the first Top-Up Notice to AM BV2, such date shall be no earlier than the date on which the consideration for the AM Shares is due and payable to AM BV2 under the Offer.

(i) On the Top-Up Payment Date:

(1) Peabody must pay to Holdco (or as directed by Holdco), in immediately available funds, an amount in respect of the Peabody Top-Up Shares equal to (OC - OC_L) x N_T x 0.6; and

(2) AM BV2 must pay to Holdco (or as directed by Holdco), in immediately available funds, an amount in respect of the AM Top-Up Shares equal to (OC - OC_L) x N_T x 0.4.

(j) If Bidco incurs any liability to pay any amount in respect of Duty in connection with the acquisition of MCC Shares (such amount being, Bidco Duty), Holdco shall give Peabody and AM BV2 notice of this fact (Duty Notice) and must require:

(1) Peabody to subscribe for Holdco Shares (the Peabody Duty Shares); and

(2) AM BV2 to subscribe for Holdco Shares (the AM Duty Shares).

(k) Each Duty Notice given by Holdco under clause 3.2(j) must specify:

(1) the number of:

(A) Peabody Duty Shares that Peabody must subscribe for in accordance with the following formula:

(Bidco Duty/OC) x 0.6; and

(B) AM Duty Shares that AM BV2 must subscribe for in accordance with the following formula:

(Bidco Duty/OC) x 0.4,

in each such case, where OC is treated as a number rather than a dollar amount;

(2) the date (Duty Payment Date) on which:

(A) Peabody must pay for the Peabody Duty Shares; and

(B) AM BV2 must pay for the AM Duty Shares,

provided that such date shall be no earlier than the second Payment Business Day after the date on which the Duty Notice was given.

(l) On the Duty Payment Date:

(1) Peabody must pay to Holdco (or as directed by Holdco), in immediately available funds, an amount in respect of the Peabody Duty Shares equal to (the amount of the Bidco Duty) x 0.6; and

(2) AM BV2 must pay to Holdco (or as directed by Holdco), in immediately available funds, an amount in respect of the AM Duty Shares equal to (the amount of the Bidco Duty) x 0.4.

(m) The relevant Holdco Shares to be issued under this clause 3 will be issued on the later of:

(1) the first Business Day after the end of the Offer Period; and

(2) the Subscription Payment Date, the Top-Up Payment Date or the Duty Payment Date (as the case may be),

(each such date, an Equity Completion Date).

(n) In performing their obligations pursuant to this clause 3, the parties will deal with each other reasonably and in good faith so as to accommodate any reasonable request from each other to modify settlement arrangements or the sequence of required steps to reduce the cost or administrative inconvenience that would otherwise arise for that party.

(o) The parties agree that:

(1) a Subscription Notice, a Top-Up Notice or a Duty Notice may be given to Peabody and AM BV2 under clause 3.2 during, or after the end of, the Offer Period;

(2) even if AM BV2 gives Peabody and Holdco a Termination Notice:

(A) Bidco will be entitled to continue to give a Subscription Notice, a Top-Up Notice and/or a Duty Notice to AM BV2 up to and including on the Settlement Date; and

(B) AM BV2 will be required to pay to Holdco all amounts due and payable by it under any Subscription Notice, Top-Up Notice or Duty Notice given to it up to and including on the Settlement Date;

(3) any issue or proposed issue of Holdco Shares under this clause 3 will not trigger the operation of the provisions in the Shareholders' Agreement relating to the issue of Holdco Shares;

(4) Holdco can direct Peabody or AM BV2 to pay the subscription monies to Bidco or a third party for the sole purpose of that third party paying MCC shareholders for the acquisition by Bidco of their MCC Shares.

1.3.3 Set-off

(a) Holdco directs AM BV2 to pay directly to Bidco any amount due for payment by AM BV2 to Holdco under clause 3.2(e) and 3.2(i)(2).

(b) AM BV2 and Bidco hereby agree that (unless AM BV2, Holdco and Bidco otherwise agree in writing) Bidco and AM BV2 shall set-off any amount due for payment by Bidco to AM BV2 under the terms of the Offer as a result of the acquisition of the AM Shares by Bidco against any amount due for payment by AM BV2 to Bidco as a result of the direction referred to in clause 3.3(a).

(c) Holdco directs Peabody to pay directly to Bidco any amount due for payment by Peabody to Holdco under clause 3.2(d) and 3.2(i)(1).

(d) Peabody and Bidco hereby agree that (unless Peabody, Holdco and Bidco otherwise agree in writing) Bidco and Peabody shall set-off any amount due for payment by Bidco to Peabody under the terms of the Offer as a result of the acquisition of the Initial Stake by Bidco against any amount due for payment by Peabody to Bidco as a result of the direction referred to in clause 3.3(c).

2. 3.4 Fractions

Any fractional entitlement to a Holdco Share under this clause 3 shall be rounded down to the nearest whole number of Holdco Shares.

3. 3.5 Constitution

(a) On each issue of Peabody Subscription Shares, Peabody Top-Up Shares or Peabody Duty Shares, Peabody agrees to be bound by the constitution of Holdco.

(b) On each issue of AM Subscription Shares, AM Top-Up Shares or AM Duty Shares, AM BV2 agrees to be bound by the constitution of Holdco.

4. 3.6 Rights and ranking

All Holdco Shares issued to Peabody as referred to in clause 3.1(d), all Peabody Subscription Shares, Peabody Top-Up Shares and Peabody Duty Shares issued to Peabody, all Holdco Shares issued to AM BV2 as referred to in clause 3.1(c), all AM Subscription Shares, AM Top-Up Shares and AM Duty Shares issued to AM BV2 shall:

(a) be issued as fully paid;

(b) be issued free of all Encumbrances; and

(c) rank equally in all respects with the other fully paid ordinary shares on issue in the capital of the

Holdco as at the date of issue.

5. 3.7 Holdco's obligations

On the relevant Equity Completion Date, Holdco must:

(a) issue the relevant Peabody Subscription Shares, Peabody Top-Up Shares or Peabody Duty Shares to Peabody;

(b) issue the relevant AM Subscription Shares. AM Top-Up Shares or AM Duty Shares to AM BV2;

(c) issue to Peabody share certificates or holding statements in respect of the relevant Peabody Subscription Shares, Peabody Top-Up Shares or Peabody Duty Shares;

(d) issue to AM BV2 share certificates or holding statements in respect of the relevant AM Subscription Shares, AM Top-Up Shares or AM Duty Shares;

(e) enter Peabody's name in Holdco's register of members as the registered holder of the relevant Peabody Subscription Shares, Peabody Top-Up Shares or Peabody Duty Shares; and

(f) enter AM BV2's name in Holdco's register of members as the registered holder of the relevant AM Subscription Shares, AM Top-Up Shares or AM Duty Shares.

1 4. Conduct of the Offer

1. 4.1 Substantial holder notifications

The parties will co-operate with each other to make the disclosures required by, and within the time limits prescribed by, Part 6C.1 of the Corporations Act.

2. 4.2 Conduct of the Offer

(a) The parties will work together to implement the Offer and to formulate the negotiation strategy regarding the Offer.

(b) Bidco and Holdco will ensure representatives of Peabody and AM will have the opportunity to:

(1) participate in material meetings with MCC and MCC's major shareholders; and

(2) access any due diligence information provided by MCC,

in each case, subject to appropriate confidentiality arrangements being in place.

(c) Each party will provide regular updates to the other parties on any material developments in relation to:

(1) any discussions and negotiations with MCC and MCC's major shareholders; and

(2) the progress of the Offer generally.

(d) Except to the extent otherwise provided for, or otherwise contemplated in, this agreement, the parties will be jointly responsible for the conduct of the Takeover Bid and for making all material decisions in relation to the Offer.

3. 4.3 Reserved decisions in respect of the Offer

(a) Bidco must not, without the prior written consent of Peabody and AM:

(1) free the Offer from the minimum acceptance condition to the Offer referred to in the Agreed Announcement (including by making a statement that the minimum acceptance condition will be freed if Bidco achieves a different percentage Relevant Interest by a particular date), unless and until the aggregate of the MCC Shares:

(A) in which Bidco has a Relevant Interest; and

(B) for which the acceptance collection agent under any institutional acceptance facility relating to the Offer has received acceptance instructions in respect of the Offer,

represents at least 50.01% of the MCC Shares (on a fully diluted basis). For the avoidance of doubt, for the purposes of the foregoing, Bidco shall be treated as having a Relevant Interest in the Tranche A Shares and the Tranche B Shares;

(2) free the Offer from the material adverse change condition to the Offer referred to in the Agreed Announcement if that condition has been breached or it is reasonably foreseeable that the condition will be breached before the time when Bidco proposes to free the Offer from all conditions;

(3) free the Offer from the 'prescribed occurrence' condition to the Offer referred to in the Agreed Announcement if that condition has been breached or it is reasonably foreseeable that the condition will be breached before the time when Bidco proposes to free the Offer from all conditions;

(4) free the Offer from the FIRB condition referred to in the Agreed Announcement;

(5) free the Offer from the other regulatory approvals condition referred to in the Agreed

Announcement;

(6) consent to any variation of, or waive any right of Bidco (other than a right to waive bid conditions) under, any contract relating to the Offer (including, for the avoidance of doubt, any bid implementation agreement) between Bidco and MCC; or

(7) extend the Offer Period so that the Offer Period is greater than 6 months.

(b) However, nothing in clause 4.3(a) limits the ability of Bidco to vary the Offer by extending the Offer Period up to an aggregate duration of 6 months (without limiting clause 4.3(a)(7)) or to free the Offer of the defeating conditions referred to in clauses 4.3(a)(1), 4.3(a)(2), 4.3(a)(3), 4.3(a)(4) and 4.3(a)(5) unless expressly limited by those clauses. All other Offer variations or Offer condition waivers require the prior written consent of Peabody and AM, who agree to consider a request for consent in good faith and neither of them shall withhold consent for an ulterior purpose, including if one of their purposes or intentions for doing so is to frustrate or delay the Takeover Bid. If Bidco requests approval for a matter listed in clause 4.3(a), Peabody and AM must each use its best endeavours to respond to the request as soon as reasonably practicable and in any event within 2 Business Days after the date on which the relevant request is received or otherwise within any reasonable timeframe set by Bidco.

(c) For the purposes of this clause 4.3:

(1) Peabody agrees that Richard A. Navarre shall be authorised to bind Peabody; and

(2) AM agrees that Carole Whittall shall be authorised to bind AM,

in relation to any request from Bidco referred to in clause 4.3(b).

4. 4.4 Public announcements

(a) Bidco will prepare all public announcements relating to the Offer, except for the Agreed Announcement.

(b) Except to the extent required by law or the rules of any relevant stock exchange, Bidco shall not make any public announcements relating to the Offer, except for:

(1) the Agreed Announcement; and

(2) any procedural announcements relating to notifications required under the Corporations Act, including notifications under section 630, section 633 (without prejudice to clause 5.1(b)), section 643 (without prejudice to clause 5.6), section 650D (without prejudice to clause 4.3(a)), section 650F (without prejudice to clause 4.3(a)), section 652B and Chapter 6A (each a Procedural Announcement),

without the prior written consent of Peabody and AM. If Bidco proposes to make any public announcement relating to the Offer because it is required to do so by law or the rules of any relevant stock exchange (except for the Agreed Announcement or a Procedural Announcement), it shall provide Peabody and AM with a reasonable opportunity to review and comment on any such announcement, having regard to the urgency of its release, and give reasonable consideration to any comments made by Peabody and AM on any such announcement.

(c) Except to the extent required by law or the rules of any relevant stock exchange, Peabody shall not, and Peabody shall procure that none of its Related Bodies Corporate shall, make any public announcements relating to the Offer (except for the Agreed Announcement or a Procedural Announcement) without the prior written consent of AM and Bidco. If Peabody or a Related Body Corporate of Peabody proposes to make any public announcement relating to the Offer because it is required to do so by law or the rules of any relevant stock exchange, Peabody shall provide Bidco and AM with a reasonable opportunity to review and comment on any such announcement, having regard to the urgency of its release, and give reasonable consideration to any comments made by AM and Bidco on any such announcement.

(d) Except to the extent required by law or the rules of any relevant stock exchange, AM shall not, and AM shall procure that none of its Related Bodies Corporate shall, make any public announcements relating to the Offer (except for the Agreed Announcement) without the prior written consent of Peabody and Bidco. If AM or a Related Body Corporate of AM proposes to make any public announcement relating to the Offer because it is required to do so by law or the rules of any relevant stock exchange, AM shall provide Bidco and Peabody with a reasonable opportunity to review and comment on any such announcement, having regard to the urgency of its release, and give reasonable consideration to any comments made by Peabody and Bidco on any such announcement.

5. 4.5 Dealings with Governmental Agencies

(a) (FIRB) Bidco will, as soon as reasonably practicable after the date of this agreement (if it has

not already done so before the date of this agreement), file an application with FIRB:

(1) on behalf of itself, the Peabody group of companies and the AM group of companies seeking to fulfil the FIRB condition to the Offer referred to in the Agreed Announcement; and

(2) on behalf of itself and the Peabody Group seeking to fulfil the FIRB condition referred to in the Pre-Bid Acceptance Deed.

Peabody, AM and Holdco agree to co-operate with, and provide all reasonable assistance and information to, Bidco to enable Bidco to complete and file that application.

(b) (Other consents and approvals) Each party:

(1) will use its reasonable endeavours to obtain any other consents or approvals required from any Governmental Agencies in connection with this agreement or the Takeover Bid;

(2) will provide all reasonable assistance to the other parties (as required) in connection with obtaining any such consents or approvals;

(3) will not, and will ensure its Related Bodies Corporate and Associates do not, do anything intended to prevent or delay, or that would be reasonably likely to have the effect of preventing or delaying, any such consents or approvals being given to any party; and

(4) will consult with each other party in good faith as to any applications or submissions to be made to Governmental Agencies and give reasonable consideration to all comments made on those applications or submissions.

(c) (No undertakings) Nothing in this clause 4.5 requires any party to give any undertakings to any Governmental Agency.

6. 4.6 Compulsory acquisition

(a) If Bidco acquires the right to compulsorily acquire any outstanding MCC Shares under Chapter 6A of the Corporations Act, Bidco must exercise that right.

(b) Bidco must keep Peabody and AM reasonably informed of the progress of, and all material actions and developments in relation to, the compulsory acquisition process.

2 5 Bidder's Statement

1. 5.1Preparation

(a) As required by the Corporations Act, Bidco must prepare, lodge and serve the Bidder's Statement.

(b) Bidco will:

(1) prepare the Bidder's Statement in consultation with Peabody and AM;

(2) provide Peabody and AM with a reasonable opportunity to review and comment on drafts of the Bidder's Statement; and

(3) give reasonable consideration to all comments made by Peabody and AM on drafts of the Bidder's Statement.

2. 5.2 Compliance

Each party must take all reasonable steps to ensure that the Bidder's Statement is not misleading or deceptive in any material respect (whether by omission or otherwise) and complies with the requirements of all applicable laws and regulations including:

(a) the Corporations Act;

(b) the ASX Listing Rules;

(c) ASIC Regulatory Guides; and

(d) Takeovers Panel Guidance Notes.

3. 5.3 Peabody Information

(a) Peabody must provide to Bidco all information relating to Peabody and its Related Bodies Corporate which is required to be included in the Bidder's Statement (Peabody Information), including a description of itself, its arrangements for satisfying its funding obligations under clause 3 of this agreement and its intentions in relation to MCC.

(b) Bidco must not lodge the Bidder's Statement with ASIC unless and until Bidco receives from Peabody a duly completed and signed consent to be named in the Bidder's Statement in accordance with section 636(3) of the Corporations Act in connection with:

(1) the Peabody Information; and

(2) Bidco's intentions with respect to MCC (noting that Peabody, AM and Bidco will jointly

agree the intentions to be set out in the Bidder's Statement).

Peabody shall not unreasonably withhold or delay the giving of such consent.

4. 5.4 AM Information

(a) AM must provide to Bidco all information relating to AM and its Related Bodies Corporate which is required to be included in the Bidder's Statement (AM Information), including a description of itself, the arrangements for satisfying the funding obligations of AM BV2 under clause 3 of this agreement and its intentions in relation to MCC.

(b) Bidco must not lodge the Bidder's Statement with ASIC unless and until Bidco receives from AM a duly completed and signed consent to be named in the Bidder's Statement in accordance with section 636(3) of the Corporations Act in connection with:

(1) the AM Information; and

(2) Bidco's intentions with respect to MCC (noting that Peabody, AM and Bidco will jointly agree the intentions to be set out in the Bidder's Statement).

AM shall not unreasonably withhold or delay the giving of such consent.

5. 5.5 Statements in the Bidder's Statement

(a) Peabody acknowledges that the Bidder's Statement will include a statement to the effect that Peabody takes responsibility for the Peabody Information and that neither Holdco, Bidco, AM nor any member of the AM Group is responsible for the Peabody Information contained in the Bidder's Statement.

(b) To the extent permitted by law, Peabody indemnifies Holdco, Bidco and AM from and against any and all claims, actions, damages, losses, liabilities, costs, expenses or payments of whatever nature and however arising, which Holdco, AM or Bidco may suffer or incur by reason of or in relation to the Peabody Information contained in the Bidder's Statement.

(c) AM acknowledges that the Bidder's Statement will include a statement to the effect that AM takes responsibility for the AM Information and that neither Holdco, Bidco, Peabody nor any member of the Peabody Group is responsible for the AM Information contained in the Bidder's Statement.

(d) To the extent permitted by law, AM indemnifies Holdco, Bidco and Peabody from and against any and all claims, actions, damages, losses, liabilities, costs, expenses or payments of whatever nature and however arising, which Holdco, Peabody or Bidco may suffer or incur by reason of or in relation to the AM Information contained in the Bidder's Statement.

6. 5.6 Updating information

(a) AM and Peabody must each take all reasonable steps to ensure that the Bidder's Statement be updated by all such further or new information which may arise after the Bidder's Statement has been issued which is necessary to ensure that it is not misleading or deceptive in any material respect (whether by omission or otherwise), including by providing details of such information to Bidco as soon as possible.

(b) Bidco must provide Peabody and AM with a reasonable opportunity to review and comment on drafts of any supplementary bidder's statement and must give reasonable consideration to all comments made by Peabody and AM on drafts of any supplementary bidder's statement.

7. 5.7 Standstill

(a) Subject to clause 5.7(b), Peabody and AM must not, and must ensure that their respective Related Bodies Corporate and Associates (other than Holdco and Bidco) (alone or with others) do not:

(1) acquire a Relevant Interest in any MCC Shares;

(2) provide, or agree to provide, any consideration for MCC Shares under any purchase or agreement;

(3) enter into any derivative or synthetic agreement, deed or other arrangement under which payments may be made that are referable (in whole or part) to the trading price, or the economic value, of MCC Shares; or

(4) aid, abet, counsel, assist, facilitate or induce any other person in doing, or publicly announce that it will do, any of the things mentioned in this clause 5.7(a).

(b) Nothing in clause 5.7(a) prevents:

(1) any party (or any of their respective Related Bodies Corporate or Associates) from taking any steps to implement the Offer;

(2) any party (or any of their respective Related Bodies Corporate or Associates) acquiring a Relevant Interest in MCC Shares as a result of:

(A) acceptances of the Offer;

(B) the terms of this agreement; or

(C) the terms of the Pre-Bid Acceptance Deed; or

(3) Bidco or Peabody (or any of their respective Related Bodies Corporate) acquiring a Relevant Interest in MCC Shares, for consideration per MCC Share which does not exceed the consideration per MCC Share set out in the Agreed Announcement, prior to the commencement of the Offer Period (including by way of on-market acquisitions, option agreements or pre-bid acceptance agreements) (any such shares, the New Peabody Shares), provided that, pursuant to the terms of the acquisition, Bidco is entitled (whether or not subject to the fulfilment of any conditions) to become registered as the sole legal and full beneficial owner of the relevant MCC Shares on or before the date the first Subscription Notice is given under clause 3.2(a).

(c) Despite any other provision in this agreement, AM consents to the acquisition by Peabody of the Initial Stake, provided that:

(1) Peabody does not pay more than $16.00 for any of the MCC Shares that comprise the Initial Stake;

(2) Peabody and Bidco enter into the Acceptance Deed; and

(3) the number of MCC Shares that comprise the Initial Stake, when aggregated with the other MCC Shares that Bidco has a Relevant Interest in at the time the Initial Stake is acquired, is less than 20% of the total number of MCC Shares then on issue.

3 6 Exclusivity arrangements

1. 6.1 Prohibition

(a) During the Exclusivity Period, the parties must not, and must ensure that none of their respective Related Persons, directly or indirectly:

(1) (no shop) solicit, invite, encourage or initiate (including by the provision of non-public information) any inquiry, expression of interest, offer, proposal or discussion by any person in relation to, or which would reasonably be expected to encourage or lead to the making of, an actual, proposed or potential Competing Proposal or communicate to any person an intention to do anything referred to in this clause 6.1(a)(1); or

(2) (no talk)

(A) participate in or continue any negotiations or discussions with respect to any inquiry, expression of interest, offer, proposal or discussion by any person to make or which would reasonably be expected to encourage or lead to the making of an actual, proposed or potential Competing Proposal or participate in or continue any negotiations or discussions with respect to any actual, proposed or potential Competing Proposal;

(B) negotiate, accept or enter into, or offer or agree to negotiate, accept or enter into, any agreement, arrangement or understanding regarding an actual, proposed or potential Competing Proposal;

(C) disclose any non-public information about the business or affairs of MCC or any Subsidiary of MCC to a Third Party (other than a Governmental Agency) with a view to obtaining or which would reasonably be expected to encourage or lead to receipt of an actual, proposed or potential Competing Proposal; or

(D) communicate to any person an intention to do anything referred to in this clause 6.1(a)(2).

(b) (No participation in consortiums etc) Without limiting clause 6.1(a), during the Exclusivity Period:

(1) the parties must not, and must ensure that none of their respective Related Bodies Corporate (alone or with others), directly or indirectly, participate in a consortium, joint bidding structure or other structure which is similar to the structure contemplated by this agreement in connection with an actual, proposed or potential Competing Proposal or agree to do anything in the foregoing;

(2) AM must not, and must ensure that none of its Related Bodies Corporate (alone or with others), Deal or agree to Deal in any of the AM Shares, other than:

(A) if the result of the Dealing is merely that AM BV2 holds the AM Shares in which case AM must ensure that AM BV2 does not Deal in any of the AM Shares;

(B) entering into the Pre-Bid Acceptance Deed; and

(C) AM BV2 accepting the Offer; and

(3) AM will vote the AM Shares against, or will ensure that the AM Shares are voted against, any Competing Proposal.

(c) (FIRB) Despite any other provision of this agreement, clause 6.1(b) is of no force or effect in relation to the Tranche B Shares only (and not, for the avoidance of doubt, in relation to the Tranche A Shares) unless and until one of the following matters has occurred:

(1) Holdco or Bidco has received a written notice under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA), by or on behalf of the Treasurer of the Commonwealth of Australia stating that the Commonwealth Government does not object to the transactions contemplated by the Pre-Bid Acceptance Deed, either unconditionally or on terms that are acceptable to Holdco;

(2) the Treasurer of the Commonwealth of Australia becomes precluded from making an order in relation to the transactions contemplated by the Pre-Bid Acceptance Deed under the FATA; or

(3) if an interim order is made under the FATA in respect of the transactions contemplated by the Pre-Bid Acceptance Deed, the subsequent period for making a final order prohibiting the transactions contemplated by it elapses without a final order being made.

(d) For the avoidance of doubt, it is agreed that AM BV2 is, and shall be treated in this agreement as, a Related Body Corporate of AM.

2. 6.2 Cease existing discussions

During the Exclusivity Period, the parties will cease and will not recommence any discussions or negotiations existing before the entry into this agreement relating to any actual, proposed or potential Competing Proposal.

3. 6.3 Notification of approaches

(a) During the Exclusivity Period, each party must as soon as possible notify the other parties in writing if it, or any of its Related Persons, becomes aware of any direct or indirect:

(1) approach or attempt to initiate any negotiations or discussions, or intention to make such an approach or attempt to initiate any negotiations or discussions, in respect of any expression of interest, offer, proposal or discussion in relation to an actual Competing Proposal or a proposed or potential Competing Proposal; or

(2) proposal made to it or any of its Related Persons, in connection with, or in respect of any exploration or completion of, an actual Competing Proposal or a proposed or potential Competing Proposal.

(b) A notification given under clause 6.3(a) must include details of:

(1) the identity of the relevant person making or proposing the relevant actual, proposed or potential Competing Proposal and the nature and circumstances of the relevant approach or attempt (including details of what was said and by whom);

(2) all material terms and conditions of the actual, proposed or potential Competing Proposal;

(3) the type of Competing Proposal involved; and

(4) the form and aggregate amount of consideration proposed to be offered (including in the case of any securities that will form all or part of the consideration, whether the securities are proposed to be listed on any stock exchange).

(c) Except as required by law or the rules of any relevant stock exchange, AM must not make, and must ensure that none of its Related Bodies Corporate make, any announcements in relation to an actual, proposed or potential Competing Proposal without the prior written consent of Peabody and Bidco. If AM or any Related Body Corporate proposes to make any public announcement relating to an actual, proposed or potential Competing Proposal because it is required to do so by law or the rules of any relevant stock exchange, it shall provide Bidco and Peabody with a reasonable opportunity to review and comment on any such announcement, having regard to the urgency of its release, and give reasonable consideration to any comments made by Peabody and Bidco on any such announcement.

4 7 Director arrangements

1. 7.1 Notifications

At least 5 Business Days before the last day of the Offer Period, AM must notify Holdco and Bidco of the names of up to 2 persons it wishes to be appointed as directors of Holdco and Bidco from the first day after the end of the

Offer Period and deliver to Holdco and Bidco a consent to act and notification of interests signed by each such person.

2. 7.2 Board resolution

Holdco and Bidco must ensure that a meeting of:

(a) the directors of Bidco is convened and the appointment of each person notified under clause 7.1 as a director of Bidco is approved; and

(b) the directors of Holdco is convened and the appointment of each person notified under clause 7.1 as a director of Holdco is approved,

provided that a consent to act and notification of interests signed by each such person has been delivered to Holdco and Bidco.

3. 7.3 Holdco constitution

Peabody must procure that, on the first day after the end of the Offer Period, Holdco's constitution is the Agreed Constitution.

4. 7.4 Observer rights

(a) Subject to clause 7.4(d), from the date of this agreement until the end of the Offer Period, AM and Peabody shall each have the right to have an observer present at Holdco and Bidco board meetings.

(b) AM and Peabody shall notify each other party in writing of any person that it wishes to have appointed as its observer during the period referred to in clause 7.4(a).

(c) Holdco and Bidco shall ensure that any observer nominated by either AM or Peabody shall have reasonable notice of any Holdco or Bidco board meetings.

(d) Any observer nominated by either AM or Peabody shall not be entitled to:

(1) be present at any board meeting, or during part of any board meeting, if that person would not have been entitled to be so present if that person was a Holdco or Bidco director, including on the grounds of a conflict of interest; or

(2) receive any information if to do so would or would reasonably be likely to result in the waiver of legal professional privilege.

5 8 Termination

1. 8.1 Termination

Subject to clause 8.2, this agreement will terminate automatically and with immediate effect if:

(a) no party releases (or causes the release of) the Agreed Announcement to ASX during the Announcement Window;

(b) AM or AM BV2 tenders the AM Shares into the Offer and AM advises Peabody and Holdco by written notice given to Peabody and Holdco before the expiration of the Offer Period that AM wishes to terminate this agreement (Termination Notice);

(c) not all of the defeating conditions to the Offer have either been freed or fulfilled by the end of the Offer Period; or

(d) Bidco is entitled to withdraw unaccepted Offers under the Takeover Bid and withdraws those unaccepted Offers in accordance with section 652A of the Corporations Act.

2. 8.2 Effect of termination

If this agreement is terminated under this clause 8 then:

(a) each party is released from its obligations to further perform its obligations under this agreement, except those expressed to survive termination;

(b) each party retains the rights it has against the othersin respect of any breach of this agreement occurring before termination; and

(c) the rights and obligations of each party under each of the following clauses and schedules will continue independently from the other obligations of the parties and survive termination of this agreement:

(1) clause 1 (Definitions, interpretation and agreement components);

(2) if this agreement is terminated under clause 8.1(b), clause 3 (Takeover Bid funding arrangements);

(3) clause 6 (Exclusivity arrangements), provided that, if this agreement is terminated by AM pursuant to clause 8.1(b), Peabody, Holdco, Bidco and their respective Related Persons shall cease to be bound by clause 6;

(4) clause 8 (Termination);

(5) if this agreement is terminated under clause 8.1(b), clause 9.1 (Mutual warranties) but only to the extent that the warranties in clause 9.1 are given by AM and AM BV2 and clause 9.2 (Warranties by AM);

(6) clause 10 (Confidentiality);

(7) clause 11 (Duties, costs and expenses), except for clause 11.4 if this agreement is terminated by AM pursuant to clause 8.1(b);

(8) clause 12 (GST);

(9) clause 13 (General); and

(10) Schedule 2 (Transfer Steps).

3. 8.3 Duties imposed as a result of termination

(a) AM agrees to pay Peabody an amount equal to 50% of any Duties in any jurisdiction that may be suffered or incurred by a Peabody Party directly or indirectly as a result of or in connection with the termination of this agreement under clause 8.1 and the transactions and matters contemplated by clause 8.4 and 8.5. Such payment shall be made within 5 Payment Business Days of Peabody providing AM with evidence of such Duty becoming payable or having been paid. Peabody holds the benefit of this clause on trust for the benefit of each Peabody Party.

(b) Peabody agrees to pay AM an amount equal to 50% of any Duties in any jurisdiction that may be suffered or incurred by an AM Party directly or indirectly as a result of or in connection with the termination of this agreement under clause 8.1 and the transactions and matters contemplated by clause 8.4 and 8.5. Such payment shall be made within 5 Payment Business Days of AM providing Peabody with evidence of such Duty becoming payable or having been paid. AM holds the benefit of this clause on trust for the benefit of each AM Party.

4. 8.4 Automatic termination

(a) If this agreement is terminated under clause 8.1(a), 8.1(c) or 8.1(d), at 11.00am on the day that is 2 Payment Business Days after the date of termination at the Sydney offices of Freehills or at such other time or place agreed in writing by AM BV2, Peabody and Holdco (the Automatic Termination Completion Date):

(1) AM BV2 must sell to Peabody (or its nominee), and Peabody must purchase (or must procure that its nominee shall purchase), the Holdco Shares issued to AM BV2 referred to in clause 3.1 clear and free of all Encumbrances and other third party rights or interests of any nature (whether legal or otherwise);

(2) AM BV2 must deliver to Peabody (or its nominee) the share certificates or holding statements, and executed transfers in favour of Peabody (or its nominee), for the Holdco Shares issued to AM BV2 referred to in clause 3.1; and

(3) subject to AM BV2 complying with its obligations under clause 8.4(a)(2), Peabody must pay (or must procure that its nominee shall pay) $2 to AM BV2 (or as directed by AM BV2) in immediately available funds, being the purchase price for the Holdco Shares issued to AM BV2 as referred to in clause 3.1.

(b) If this agreement is terminated under clause 8.1(a), 8.1(c) or 8.1(d), AM BV2 will be deemed to have represented and warranted in favour of Peabody on the Automatic Termination Completion Date that it transfers to Peabody (or its nominee) legal and beneficial title to the Holdco Shares issued to AM BV2 referred to in clause 3.1, free of any Encumbrances or third party rights or interests of any nature (whether legal or otherwise) and with all rights, including dividend rights, attached or accruing to them on and from the date of this agreement. AM BV2 gives no other express or implied warranties other than set out in this clause 8.4(b). All warranties implied by statute, general law or custom are excluded except to the extent that exclusion is prohibited by law.

5. 8.5 Termination by AM

(a) If AM causes this agreement to be terminated under clause 8.1(b), at 11.00am on the third Payment Business Day after the Settlement Date or on an earlier date nominated in writing by Peabody to AM (Transfer Date), at the Sydney offices of Freehills or at such other time or place agreed in writing by AM and Peabody:

(1) AM must sell to Peabody, and Peabody must purchase for the Purchase Price, the AM BV2 Shares clear and free clear of all Encumbrances and other third party interests of any nature (whether legal or otherwise);

(2) subject to AM complying with its obligations in Schedule 2, Peabody must pay to AM as the Purchase Price for the AM BV2 Shares, in immediately available funds, an

amount equal to the sum of:

(A) the aggregate of all amounts received by Holdco from AM BV2 from the date of this agreement until the end of the Purchase Price Calculation Period pursuant to AM BV2's obligations under clause 3.2 (Funding Amounts);

(B) an amount equal to all interest paid or payable by AM on the Funding Amounts in respect of the Purchase Price Calculation Period; and

(C) any utilisation fee paid or payable by AM in respect of the Funding Amounts, but excluding, for the avoidance of doubt, all arrangement and facility fees and other costs and expenses paid or payable by AM in respect of the Funding Amounts,

(the Purchase Price).

(b) AM must sell the AM BV2 Shares to Peabody together with all rights:

(1) attached to them as at the date of this agreement; and

(2) that accrue between the date of this agreement and the Transfer Date.

(c) On or before the Transfer Date, AM and Peabody must carry out the steps referable to each of them in Schedule 2.

(d) Title to and risk in the AM BV2 Shares will pass to Peabody on the Transfer Date when AM and Peabody have performed the obligations under Schedule 2.

(e) If AM causes this agreement to be terminated under clause 8.1(b), AM BV2 irrevocably directs Bidco to pay to AM (or as AM directs), in immediately available funds, all amounts payable to AM BV2 under the Offer.

(f) Peabody may direct AM to transfer the AM BV2 Shares to an entity it nominates in writing at least 3 Business Days before the Transfer Date. In that event, references to 'Peabody' in this clause 8.5 shall be deemed to be references to the entity so nominated (except for the references contained in clauses 8.5(a)(2) and 8.5(g)).

(g) If AM causes this agreement to be terminated under clause 8.1(b), AM shall promptly indemnify Peabody (and each of its Related Bodies Corporate and Peabody's nominee (if any)), Bidco, Holdco and AM BV2 from and against:

(1) (Prior Duties) except as provided for in clause 8.3, any and all Duties in any jurisdiction imposed on AM BV2, or in respect of which AM BV2 became liable, in any such case on or before the Transfer Date, or which otherwise directly or indirectly relate to matters, events or circumstances that occurred or arose on or before the Transfer Date, including any and all Duties arising as a direct or indirect result of the transfer of the AM Shares from AM to AM BV2. For the avoidance of doubt, AM will not be liable under this paragraph (1) for any Duties in any jurisdiction which result from or are connected with the termination of this agreement under clause 8.1 and the transactions and matters contemplated by this clause 8.5;

(2) (Taxes relating to the period before termination) any and all Taxes in any jurisdiction imposed on AM BV2, or in respect of which AM BV2 became liable, in any such case on or before the Transfer Date, or which otherwise directly or indirectly relate to matters, events or circumstances that occurred or arose on or before the Transfer Date, including any and all Taxes arising as a direct or indirect result of (i) the transfer of the AM Shares from AM to AM BV2 or (ii) the transfer of the AM Shares to Bidco as a result of an acceptance of the Offer; and

(3) (Other losses) any and all claims, actions, damages, losses, liabilities, costs, expenses or payments of whatever nature and however arising and in whichever jurisdiction, which Peabody or a Related Body Corporate or Peabody's nominee (if any) may suffer or incur as a direct or indirect result of any of the representations and warranties in clause 9.1 and 9.2 being untrue.

Peabody holds the benefit of this clause on trust for the benefit of each of its Related Bodies Corporate and its nominee (if any).

(h) Following the payment of the Purchase Price, Peabody shall have no further liability to AM in connection with the termination of this agreement under clause 8.1(b), except to the extent provided for in clause 9.2(a).

(i) For the purposes of this agreement:

(1) Settlement Date means the later of:

(A) the date which is 90 days after the date on which the Termination Notice is

given to Peabody and Holdco; or

(B) if on or after the date on which the Termination Notice is given to Peabody and Holdco but before the date referred to in clause 8.5(i)(1)(A), a GFC Event occurs, the date which is 120 days after the date on which the Termination Notice is given to Peabody and Holdco; and

(2) Purchase Price Calculation Period means the period commencing on the date on which the Termination Notice is given to Peabody and Holdco and ending on the earlier of:

(A) the Settlement Date; and

(B) the date which is 3 Payment Business Days before any earlier date nominated by Peabody pursuant to the introductory paragraph of this clause 8.5(a).

(j) AM agrees to procure that from the time this agreement is entered into until the later of the end of the Offer Period or, AM causes this agreement to be terminated under clause 8.1(b), the Transfer Date (each inclusive):

(1) AM BV2 does not commence trading or have any function or operations other than the holding of Holdco Shares;

(2) AM BV2 does not acquire any assets (excluding cash), except for the Holdco Shares issued or to be issued to it under the terms of this agreement or incur any liabilities or engage the services of any employees; and

(3) AM BV2 does not enter into any agreement, arrangement or understanding, except for this agreement and the Shareholders' Deed.

6 9 Warranties

1. 9.1 Mutual warranties

Each party represents and warrants to each other party as at the date of this agreement and on each day until the end of the Offer Period (each inclusive) that:

(a) (validly existing) it is a validly existing corporation registered under the laws of its place of incorporation;

(b) (authority) the execution and delivery of this agreement has been properly authorised by all necessary corporate action by it;

(c) (power) it has full corporate power and lawful authority to execute, deliver and perform this agreement and to consummate and perform or cause to be performed its obligations under this agreement in accordance with its terms;

(d) (binding obligations) subject to laws generally affecting creditors' rights and the principles of equity, this agreement constitutes legal, valid and binding obligations on it; and

(e) (no default) this agreement does not conflict with or result in the breach of or a default under any provision of its constitution or any writ, order or injunction, judgment, law, rule or regulation to which it is party or subject or by which it is bound.

2. 9.2 Warranties by AM

AM represents and warrants in favour of Peabody, Holdco and Bidco as at the date of this agreement and on each day until the end of the Offer Period or, if a Termination Notice has been given, until the Transfer Date (in each case, each inclusive) that:

(a) (ownership) it is the legal and full beneficial owner of the AM Shares (subject to the proposed transfer of its AM Shares to AM BV2, the terms of this agreement and the Offer after AM BV2 accepts the Offer) and neither it, nor any Related Body Corporate nor any Associate (other than a party to this agreement) has a Relevant Interest in any other MCC Shares;

(b) (Encumbrances) except for AM BV2's Relevant Interest in the AM Shares, the AM Shares are:

(1) free of all Encumbrances and other third party rights or interests of any nature (whether legal or otherwise) (subject to the terms of the Offer after it accepts the Offer);

(2) free from restrictions on transfer of any nature (whether legal or otherwise); and

(3) fully paid and no money is owing to MCC in respect of the AM Shares;

(c) (compliance with laws) other than as contemplated under this agreement or by any of the conditions in the Agreed Announcement, no approvals are required to be obtained by AM or any of its Related Bodies Corporate under any law, rule or regulation to perform and observe its obligations under this agreement;

(d) (MCC Shares) as at the date of this agreement, neither it nor any of its Related Bodies Corporate nor any of its Associates (other than a party to this agreement):

(1) has a Relevant Interest in any MCC Shares (other than the AM Shares) and that the AM Shares are the only MCC Shares in which it and its Related Bodies Corporate and its Associates (other than a party to this agreement) have a Relevant Interest;

(2) is a party to any derivative or synthetic agreement, deed or other arrangement under which payments may be made that are referable (in whole or part) to the trading price, or the economic value, of MCC Shares; or

(3) has provided, or agreed to provide, any consideration for MCC Shares under any purchase or agreement during the 4 month period ending on the date of this agreement;

(e) (provision ofinformation) subject to any obligations of confidence or other restrictions imposed by contract, law, regulation or order of any Governmental Agency, AM has not, so far as AM's members of the AM deal team are aware, before the entry into this agreement, deliberately withheld from Peabody, Holdco or Bidco any information relating to MCC that would reasonably be expected to materially affect the decision of Peabody, Holdco or Bidco to invest in MCC, other than information that is the subject of legal professional privilege and other than information the disclosure of which would prejudice AM's legitimate commercial business interests (including board papers and subjective internal assessments of value) and which no reasonable commercial business person would expect AM to disclose to Peabody;

(f) (existing shares)

(1) AM is the legal and beneficial owner of the AM BV2 Shares;

(2) the AM BV2 Shares comprise all of the equity interests in AM BV2, have been validly issued, are fully paid and no money is owing in respect of them;

(3) other than the terms of the AM BV2 Shares, no agreement, arrangement, or understanding has been entered into or made to issue further equity interests in AM BV2 and no instruments or other rights exist which may convert into, or result in the issuance of, any equity interests in AM BV2;

(4) only Peabody is entitled to acquire any equity interest in AM BV2, and such entitlement is on the terms and conditions of this agreement;

(5) AM owns all the equity interests in the capital of AM BV2, and no one other than Peabody will have a right to acquire any shares in the capital of AM BV2; and

(6) on the Transfer Date, Peabody will acquire the full legal and beneficial ownership of the AM BV2 Shares free and clear of all Encumbrances and other third party interests of any nature (whether legal or otherwise), subject to registration of Peabody in the register of members of AM BV2;

(g) (no trading) AM BV2 had not commenced trading and has, and has had, no function or operations other than the holding of Holdco Shares;

(h) (assets and liabilities) AM BV2 has no assets, except for cash and the Holdco Shares issued or to be issued to it under the terms of this agreement and AM BV2 has no liabilities or employees. The Holdco Shares issued or to be issued to AM BV2 under the terms of this agreement will held by AM BV2 free and clear of all Encumbrances and other third party rights or interests of any nature (whether legal or otherwise) and AM BV2 will be the legal and beneficial owner of the Holdco Shares issued or to be issued to AM BV2 under the terms of this agreement; and

(i) (agreements) AM BV2 has not entered into any agreement, arrangement or understanding, except for this agreement and the Shareholders' Deed.

3. 9.3 Warranties by Peabody

Peabody represents and warrants in favour of AM as at the date of this agreement and on each day until the end of the Offer Period (each inclusive) that:

(a) (Encumbrances) the Holdco Shares that are issued to AM BV2 under this agreement will:

(1) be free of all Encumbrances and other third party rights or interests of any nature (whether legal or otherwise);

(2) rank equally in all respects with the other Holdco Shares; and

(3) be issued as fully paid;

(b) (solvency) Holdco is solvent and able to pay its debts as and when they fall due (other than as a result of any default by AM of its obligations pursuant to clause 3);

(c) (Peabody Shares) either it or Bidco is the legal and beneficial owner of the Peabody Shares; and

(d) (provision ofinformation) subject to any obligations of confidence or other restrictions

imposed by contract, law, regulation or order of any Governmental Agency, Peabody has not, so far as Peabody's members of the Peabody deal team are aware, before the entry into this agreement, deliberately withheld from AM any information relating to MCC that would reasonably be expected to materially affect the decision of AM to reinvest in MCC, other than information that is the subject of legal professional privilege and other than information the disclosure of which would prejudice Peabody's legitimate commercial business interests (including board papers and subjective internal assessments of value) and which no reasonable commercial business person would expect Peabody to disclose to AM.

4. 9.4 Warranties by Peabody, Holdco and Bidco

Peabody, Holdco and Bidco each represent and warrant in favour of AM as at the date of this agreement and on each day until the end of the Offer Period (each inclusive) that:

(a) (compliance with laws) other than as contemplated under this agreement or in the Agreed Announcement, no approvals are required to be obtained by Peabody, Holdco or Bidco or by any Related Body Corporate of any of them under any law, rule or regulation to perform and observe their obligations under this agreement;

(b) (MCC Shares) as at the date of this agreement, none of them nor any Related Body Corporate nor any Associates of any of them (other than a party to this agreement):

(1) has a Relevant Interest in any MCC Shares (other than the AM Shares, the Peabody Shares and any New Peabody Shares);

(2) is a party to any derivative or synthetic agreement, deed or other arrangement under which payments may be made that are referable (in whole or part) to the trading price, or the economic value, of MCC Shares; or

(3) has provided, or agreed to provide, any consideration for MCC Shares (other than the AM Shares, the Peabody Shares and any New Peabody Shares) under any purchase or agreement during the 4 month period ending on the date of this agreement;

(c) (existing shares)

(1) at the date of this agreement, Peabody owns all the Holdco Shares;

(2) at the date of this agreement, the entire issued share capital of Holdco comprises 2 Holdco Shares;

(3) only Peabody and AM BV2 will, before the end of the Offer Period, be entitled to acquire Holdco Shares, and such entitlement will be on the terms and conditions of this agreement only; and

(4) Holdco owns all the shares in the capital of Bidco, and no one other than Holdco will have a right to acquire any shares in the capital of Bidco before the end of the Offer Period; and

(d) (no trading) as at the date of this agreement, neither Holdco nor Bidco had commenced trading and neither had any assets or liabilities.

5. 9.5 Reliance on representations and warranties

(a) Each party acknowledges that no party (nor any person acting on its behalf) has made any representation, warranty or other inducement to it to enter into this agreement, except for representations, warranties or inducements expressly set out in this agreement.

(b) Each party acknowledges and confirms that it does not enter into this agreement in reliance on any representation, warranty or other inducement by or on behalf of any other party, except for any representation, warranty or inducement expressly set out in this agreement.

6. 9.6 Notification

Each party will promptly advise the other parties in writing if it becomes aware of any fact, matter or circumstance that constitutes or may constitute a breach of any of the representations and warranties given by it under this agreement.

7. 9.7 Independent warranties

Each of the representations and warranties in this agreement is to be construed independently of the others and is not limited by reference to any other representation or warranty.

7 10 Confidentiality

(a) Each party acknowledges and agrees that it continues to be bound by the Confidentiality Agreement in respect of all information received by it from the other party before or after the date of this agreement.

(b) The rights and obligations of the parties under the Confidentiality Agreement survive termination

of this agreement.

8 11 Duties, costs and expenses

1. 11.1 Duties

Holdco must pay all Duty in respect of the execution, delivery and performance of this agreement, unless otherwise provided for in this agreement.

2. 11.2 Parties to pay own other costs

(a) Except as set out in clause 11.1 and 11.3, and unless otherwise provided for in this agreement, each party must pay its own costs and expenses in respect of the negotiation, preparation, execution, delivery and registration of this agreement and any other agreement or document entered into or signed under this agreement or in connection with the Offer.

(b) Any action to be taken by any party in performing its obligations under this agreement must be taken at its own cost and expense unless otherwise provided in this agreement.

3. 11.3 Common advisory costs

(a) Peabody will pay directly 100% of, and AM will reimburse Peabody 40% of, any legal, accounting, tax, financial, facilitation and other advisory fees and disbursements of common advisors or service providers (each a Jointly Retained Party) to Peabody, AM, Holdco and Bidco in connection with the transactions contemplated by this agreement, including the Offer, whose appointment as a Jointly Retained Party is, and the terms of that appointment are, agreed in writing between Peabody and AM.

(b) AM will reimburse Peabody for 40% of the fees and disbursements of the Jointly Retained Parties within 2 Payment Business Days of Peabody providing AM with evidence of such fees and disbursements being paid.

4. 11.4 Break fees and other payments

(a) If MCC pays Holdco or Bidco any break fee (or similar consideration) in connection with the Offer:

(1) 60% of the amount of that break fee must be paid to Peabody in immediately available funds within 2 Payment Business Days of Holdco or Bidco receiving the break fee; and

(2) 40% of the amount of that break fee must be paid to AM in immediately available funds within 2 Payment Business Days of Peabody, Holdco or Bidco receiving the break fee.

(b) If Holdco or Bidco receives any payments (other than any break fee or similar consideration which is captured by clause 11.4(a)), damages or reimbursements from MCC which relate to the Offer:

(1) 60% of the amount of that payment, damages or reimbursement must be paid to Peabody in immediately available funds within 2 Payment Business Days of Holdco or Bidco receiving the payment, damages or reimbursement; and

(2) 40% of the amount of that payment, damages or reimbursement must be paid to AM in immediately available funds within 2 Payment Business Days of Holdco or Bidco receiving the payment, damages or reimbursement.

(c) If Peabody receives any of the payments contemplated pursuant to clause 11.4(a) or clause 11.4(b) directly from MCC, then Peabody must within 2 Payment Business Days pay 40% of those to AM.

(d) If AM receives any of the payments contemplated pursuant to clause 11.4(a) or clause 11.4(b) directly from MCC, then AM must within 2 Payment Business Days pay 60% of those to Peabody.

9 12 GST

1. 12.1 Definitions

Words used in this clause 12 that have a defined meaning in the GST Law have the same meaning as in the GST Law unless the context indicates otherwise.

2. 12.2 GST

(a) Unless expressly included, the consideration for any supply under or in connection with this agreement does not include GST.

(b) To the extent that any supply made under or in connection with this agreement is a taxable supply (other than any supply made under another agreement that contains a specific provision dealing with GST), the recipient must pay, in addition to the consideration provided under this agreement for that supply (unless it expressly includes GST) an amount (additional amount) equal to the amount of that consideration (or its GST exclusive market value) multiplied by the

rate at which GST is imposed in respect of the supply. The recipient must pay the additional amount at the same time as the consideration to which it is referable.

(c) Whenever an adjustment event occurs in relation to any taxable supply to which clause 12.2(b) applies:

(1) the supplier must determine the amount of the GST component of the consideration payable; and

(2) if the GST component of that consideration differs from the amount previously paid, the amount of the difference must be paid by, refunded to or credited to the recipient, as applicable.

3. 12.3 Tax invoices

The supplier must issue a tax invoice to the recipient of a supply to which clause 12.2 applies no later than 10days following payment of the GST inclusive consideration for that supply under that clause.

4. 12.4 Reimbursements

If either party is entitled under this agreement to be reimbursed or indemnified by the other party for a cost or expense incurred in connection with this agreement, the reimbursement or indemnity payment must not include any GST component of the cost or expense to the extent that the cost or expense is the consideration for a creditable acquisition made by the party being reimbursed or indemnified, or by its representative member.

10 13 General

1. 13.1 Notices

(a) Any notice or other communication (including any request, demand, consent or approval) to or by a party to this agreement must be in legible writing and in English addressed as shown below (or as specified to the sender by any party by notice):

Party	Address	Attention	Facsimile
Peabody	Level 13, BOQ Centre, 259 Queen Street, Brisbane QLD 4000	The Company Secretary with a copy to Freehills: Attention: Tony Damian / Andrew Rich Address: Level 32, MLC Centre, 19 Martin Place, Sydney NSW 2000 Australia Fax: +61 2 9322 4000	+61 7 3225 5555
Holdco	Level 13, BOQ Centre, 259 Queen Street, Brisbane QLD 4000	The Company Secretary with a copy to Freehills: Attention: Tony Damian / Andrew Rich Address: Level 32, MLC Centre, 19 Martin Place, Sydney NSW 2000 Australia Fax: +61 2 9322 4000	+61 7 3225 5555

Bidco	Level 13, BOQ Centre, 259 Queen Street, Brisbane QLD 4000	The Company Secretary with a copy to Freehills: Attention: Tony Damian / Andrew Rich Address: Level 32, MLC Centre, 19 Martin Place, Sydney NSW 2000 Australia Fax: +61 2 9322 4000	+61 7 3225 5555
AM	Eemhavenweg 70, 3089 KH Rotterdam, Netherlands	Carole Whittall with a copy to the London office of AM: Attention: Carole Whittall Address: 7th Floor Berkeley Square House, Berkeley Square, London W1J 6AD with a further copy to Mallesons Stephen Jaques: Attention: David Friedlander / Paul Schroder Address: Level 61, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000 Fax: +61 2 9296 3999	+44 20 7629 5351
AM BV2	Eemhavenweg 70, 3089 KH Rotterdam, Netherlands	Carole Whittall with a copy the London office of AM BV2: Attention: Carole Whittall Address: 7th Floor Berkeley Square House, Berkeley Square, London W1J 6AD with a further copy to Mallesons Stephen Jaques: Attention: David Friedlander / Paul Schroder Address: Level 61, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000 Fax: +61 2 9296 3999	+44 20 7629 5351

If the sender is a company, the notice or communication must be signed by an officer or under the common seal of the sender.

(b) A notice or communication given in accordance with clause 13.1(a) can be relied on by the addressee and the addressee is not liable to any other person for any consequences of that reliance if the addressee believes it to be genuine, correct and authorised by the sender.

(c) Any notice or other communication to or by a party to this agreement is regarded as being given by the sender and received by the addressee:

(1) if by delivery in person, when delivered to the addressee;

(2) if by post within Australia, 4 Business Days from and including the date of postage;

(3) if by post to or from a place outside Australia, 7 Business Days from and including the date of postage;

(4) if by facsimile transmission, when a facsimile confirmation receipt is received indicating successful delivery,

but if the delivery or receipt is on a day that is not a Business Day or is after 5.00pm (addressee's time) it is regarded as received at 9.00am on the following Business Day.

(d) A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under clause 13.1(c) and informs the sender that it is not legible.

(e) In this clause 13.1, reference to an addressee includes a reference to an addressee's officers, agents or employees.

2. 13.2 Governing law and jurisdiction

(a) This agreement is governed by the laws of New South Wales.

(b) Each party irrevocably submits to the non-exclusivejurisdiction of the courts of New South Wales.

3. 13.3 Service of process

(a) Without preventing any other mode of service, any document in an action (including any writ of summons or other originating process or any third or other party notice) may be served on any party by being delivered to or left for that party at its address for service of notices under clause 13.1.

(b) AM irrevocably appoints Mallesons Stephen Jaques (attention: David Friedlander / Paul Schroder) of Level 61, Governor Phillip Tower, 1 Farrer Place, Sydney New South Wales 2000, as its agent for the service of process in Australia in relation to any matter arising out of this agreement. If Mallesons Stephen Jaques ceases to be able to act as such or have an address in Australia, AM agrees to appoint a new process agent in Australia and delver to the other parties within 2 Business Days a copy of a written acceptance of appointment by the process agent, upon receipt of which the new appointment becomes effective for the purpose of this agreement. AM must inform the other parties in writing of any change in the address of its process agent within 2 Business Days of the change.

(c) AM BV2 irrevocably appoints Mallesons Stephen Jaques (attention: David Friedlander / Paul Schroder) of Level 61, Governor Phillip Tower, 1 Farrer Place, Sydney New South Wales 2000, as its agent for the service of process in Australia in relation to any matter arising out of this agreement. If Mallesons Stephen Jaques ceases to be able to act as such or have an address in Australia, AM BV2 agrees to appoint a new process agent in Australia and delver to the other parties within 2 Business Days a copy of a written acceptance of appointment by the process agent, upon receipt of which the new appointment becomes effective for the purpose of this agreement. AM BV2 must inform the other parties in writing of any change in the address of its process agent within 2 Business Days of the change.

(d) Peabody irrevocably appoints Freehills (attention: Tony Damian / Andrew Rich) of Level 32, MLC Centre, 19 Martin Place, Sydney New South Wales 2000, as its agent for the service of process in Australia in relation to any matter arising out of this agreement. If Freehills ceases to be able to act as such or have an address in Australia, Peabody agrees to appoint a new process agent in Australia and delver to the other parties within 2 Business Days a copy of a written acceptance of appointment by the process agent, upon receipt of which the new appointment becomes effective for the purpose of this agreement. Peabody must inform the other parties in writing of any change in the address of its process agent within 2 Business Days of the change.

4. 13.4 Waivers and variation

(a) A provision of, or a right, discretion or authority created under, this agreement may not be:

(1) waived except in writing signed by the party granting the waiver; and

(2) varied except in writing signed by the parties,

except to the extent this agreement expressly provides otherwise.

(b) A failure or delay in exercise, or partial exercise, of a power, right, authority, discretion or remedy arising from a breach of, or default under this agreement does not result in a waiver of that right, power, authority, discretion or remedy.

5. 13.5 Assignment

A party may not assign its rights or delegate its obligations under this agreement without the written consent of each other party.

6. 13.6 Further assurances

Subject to clause 10, each party must do all things and execute all further documents reasonably necessary to give full effect to this agreement and the transactions contemplated by it.

7. 13.7 Approvals and consent

If the doing of any act, matter or thing under this agreement is dependent on the approval or consent of a party, that party may give conditionally or unconditionally or withhold its approval or consent in its absolute discretion, unless this agreement expressly provides otherwise.

8. 13.8 Remedies cumulative

Except as provided in this agreement and permitted by law, the rights, powers and remedies provided in this agreement are cumulative with and not exclusive to the rights, powers or remedies provided by law independently of this agreement.

9. 13.9 Counterparts

This agreement may be executed in any number of counterparts which together will constitute one instrument. A party may execute this agreement by signing any counterpart.

10. 13.10 Prohibition and enforceability

Any provision of, or the application of any provision of, in this agreement that is void, illegal or unenforceable in any jurisdiction is to be read down for the purpose of that jurisdiction, if possible, so as to be valid and enforceable, and otherwise shall be severed to the extent of the invalidity, illegality or unenforceability, without affecting the remaining provisions of this agreement or affecting the validity or enforceability of that provision in any other jurisdiction.

11. 13.11 No merger

The rights and obligations of the parties under this agreement do not merge on completion of any transaction contemplated by this agreement.

12. 13.12 Entire agreement

This agreement, the Shareholders' Agreement, the Pre-Bid Acceptance Deed and the Deed of Guarantee embody the entire agreement between the parties and supersede any prior negotiation, conduct, arrangement, understanding or agreement, express or implied, with respect to the subject matter of this agreement other than the Confidentiality Agreement.

13. 13.13 Contra proferentem excluded

No term or condition of this agreementwill be construed adversely to a party solely on the ground that the party was responsible for the preparation of this agreement or that provision.

14. 13.14 Specific performance

(a) AM and AM BV2 each acknowledge that monetary damages alone would not be adequate compensation:

(1) to Holdco for a breach by AM or AM BV2 of their obligations to complete the sale of the AM Shares in accordance with clause 8.5; and

(2) to Peabody for a breach by AM or AM BV2 of their obligations to complete the sale of the AM BV2 Shares in accordance with clause 8.5,

under this agreement and that accordingly specific performance of those obligations is an appropriate remedy.

(b) Peabody acknowledges that monetary damages alone would not be adequate compensation to AM for a breach by Peabody of its obligations to complete the purchase of the AM Shares in accordance with clause 8.5 under this agreement and that accordingly specific performance of those obligations is an appropriate remedy.

15. 13.15 Attorneys

If this agreement is executed by attorneys, each of the attorneys executing this agreement states that the attorney has no notice of the revocation of the power of attorney appointing that attorney.

Schedules

Table of contents

Schedule 1

Agreed Announcement42

Transfer steps44

Schedule 1

Agreed Announcement

Takeover bid for Macarthur Coal Limited

Peabody Energy Corporation (Peabody) (NYSE: BTU) and ArcelorMittal S.A. (ArcelorMittal) (NYSE: MT) today announce that they intend jointly to make an off-market takeover bid for all of the shares in Macarthur Coal Limited (Macarthur) (ASX: MCC) at a price of A$15.50 per share (inclusive of any dividends declared or paid after the date of this announcement).

The conditions of the proposed takeover bid are set out in the attached Annexure.

The takeover bid will be made by a special purpose company (Bidco), which is indirectly owned as to 60% by Peabody and as to 40% by ArcelorMittal.

Bidco currently has a relevant interest in approximately 16.1% of the shares in Macarthur as a result of entering into a pre-bid acceptance deed with ArcelorMittal.

Further details in relation to the joint takeover bid will be released to the market in due course.

Peabody has engaged UBS and Bank of America Merrill Lynch as its financial advisers and Freehills as its Australian legal adviser in relation to the takeover. ArcelorMittal has engaged RBC as its financial adviser and Mallesons Stephen Jaques as its Australian legal adviser in relation to the takeover.

[•] 2011

*****************

Annexure - Bid conditions

[To be attached. The parties agree that the conditions to this announcement are those conditions that have been agreed in writing between them.]

Schedule 2

Transfer steps

1 Pre-transfer steps

(a) At least 2 Business Days before the Transfer Date, Peabody must notify AM of the address to which the registered office of AM BV2 is to be changed following completion of the sale of the AM BV2 Shares.

(b) On or before the Transfer Date:

(1) AM must approve and resolve, subject to completion of the sale of the AM BV2 Shares occurring, the resignations of the existing directors and officers of AM BV2; and

(2) AM must ensure that the directors of AM BV2 approve and resolve, subject to completion of the sale of the AM BV2 Shares occurring):

(A) the change of the registered office of AM BV2 to an address nominated in writing by Peabody; and

(B) the revocation of all existing mandates for the operation of bank accounts by AM BV2 and the replacement of those mandates with the mandates approved in writing by Peabody.

(a) Before the Transfer Date:

(1) AM and AM BV2 will deliver to a Dutch civil law notary executed powers of attorney authorising the notary to execute a deed of transfer relating to the transfer of the AM BV2 Shares to Peabody (or its nominee); and

(2) Peabody will deliver to the same Dutch civil law notary executed powers of attorney authorising the notary to execute the deed of transfer.

2     AM's obligations on the Transfer Date

On the Transfer Date:

(a) AM and AM BV2 shall instruct the Dutch civil law notary to execute the deed of transfer of the AM BV2 Shares and shall take all such further actions and execute all such further documents as shall be necessary to fully effect the transfer of the AM BV2 Shares by AM to Peabody (or its nominee); and

(b) AM must give Peabody (or its nominee):

(1) all documents necessary to fully effect the transfer of the AM BV2 Shares to Peabody (or its nominee);

(2) signed resignations of each director and officer of AM BV2;

(3) the corporate documents, all prescribed registers, all statutory, minute and other business records of AM BV2;

(4) all ledgers, journals and books of account of AM BV2;

(5) all cheque books of each AM BV2 and a list of all bank accounts maintained by AM BV2;

(6) all documents of title in the possession of AM BV2 relating to the ownership of AM BV2's Holdco Shares; and

(7) all other books, records, accounts and other documents of AM BV2.

3     Peabody's obligations on the Transfer Date

Upon compliance by AM with the provisions of paragraph 2 of this Schedule 2, on the Transfer Date, Peabody shall:

a. pay the Purchase Price;

b. instruct the Dutch civil law notary to execute the deed of transfer of the AM BV2 Shares and shall take all such further actions and execute all such further documents as shall be necessary to fully effect the transfer of the AM BV2 Shares by AM to Peabody (or its nominee);

c. appoint new directors of AM BV2 immediately after execution of the deed of transfer of the AM

BV2 Shares.

EX-10.4

Deed of Amendment

13 September 2011

Between the parties Peabody Energy Corporation of701 Market Street, St Louis Missouri, United States of America, 63101 ArcelorMittal S.A. of19 avenue de la Liberté L-2930 Luxembourg City, Luxembourg Peabody Acquisition Co. No. 2 Pty Ltd ACN 146 797 417of Level 13, BOQ Centre, 259 Queen Street, Brisbane, Queensland 4000 ArcelorMittal Netherlands B.V. of Eemhavenweg 70, 3089 KH Rotterdam, Netherlands ArcelorMittal Mining Australasia B.V. of Eemhavenweg 70, 3089 KH Rotterdam, Netherlands PEAMCoal Holdings Pty Ltd (ACN 152 004 398) of Level 13, BOQ Centre, 259 Queen Street, Brisbane, QLD 4000 (formerly Peabody Acquisition Co. No. 3 Pty Ltd)

1 We, the parties, refer to the Deed of Guarantee between us dated 29 July 2011 (the Deed of Guarantee).

2 The Deed of Guarantee is amended and restated to read as set out in the Schedule (with the amendments marked for ease of identification).

3 This Deed takes effect, and we agree to be bound by the Deed of Guarantee (as amended by this Deed), from the date of this Deed.

4 Except as specifically amended by this Deed, all terms and conditions of the Deed of Guarantee remain in full force and effect. With effect from the date of this Deed, the Deed of Guarantee (as amended by this Deed), is to be read as a single integrated document incorporating the amendments effected by this Deed.

5 This Deed is governed by the laws of New South Wales. We irrevocably submit to the non-exclusive jurisdiction of the courts of New South Wales and courts competent to hear appeals from those courts.

6 This Deed may be executed in any number counterparts. All counterparts, taken together, constitute one instrument. We may execute this Deed by signing any counterpart.

Executed and delivered as a deed

	Signed, sealed and delivered by Peabody Energy Corporation by its Authorized Officer
sign here	/s/ Robert L. Reilly
	Authorized Officer
print name	Robert L. Reilly
	in the presence of
sign here	/s/ Allen Capdeboscq
	Witness
print name	Allen Capdeboscq

	Signed, sealed and delivered by ArcelorMittal S.A. by its attorney
sign here	/s/ Sudhir Maheshwari	/s/ Peter Kukielski
	Attorney
print name	Sudhir Maheshwari	Peter Kukielski
	in the presence of
sign here	/s/ Guillaume Vercaemer
	Witness
print name	Guillaume Vercaemer

	Signed, sealed and delivered by ArcelorMittal Mining Australasia B.V. by its attorney
sign here	/s/ Gregory Golding
	Attorney
print name	Gregory Golding
	in the presence of
sign here	/s/ Paul Schroder
	Witness
print name	Paul Schroder

	Signed, sealed and delivered by ArcelorMittal Netherlands B.V. by its attorney
sign here	/s/ Gregory Golding
	Attorney
print name	Gregory Golding
	in the presence of
sign here	/s/ Paul Schroder
	Witness
print name	Paul Schroder

	Signed, sealed and delivered by Peabody Acquisition Co. No. 2 Pty Ltd in accordance with section 127 of the Corporations Act 2001 (Cth) by
sign here	/s/ Murray Paul Hundleby
	Company Secretary
print name	Murray Paul Hundleby
sign here	/s/ Julian Derek Thornton
	Director
print name	Julian Derek Thornton

	Signed, sealed and delivered by PEAMCoal Holdings Pty Ltd in accordance with section 127 of the Corporations Act 2001 (Cth) by
sign here	/s/ Murray Paul Hundleby
	Company Secretary
print name	Murray Paul Hundleby
sign here	/s/ Julian Derek Thornton
	Director
print name	Julian Derek Thornton

Schedule

Amended and Restated Deed of Guarantee

	Deed
Deed of Guarantee
Peabody Energy Corporation ArcelorMittal S.A. ArcelorMittal Netherlands B.V. ArcelorMittal Mining Australasia B.V. Peabody Acquisition Co. No. 3 Pty Ltd Peabody Acquisition Co. No 2 Pty Ltd

Deed of Guarantee

Date 29 July 2011 (as amended and restated on 13 September 2011)

Between the parties
Peabody	Peabody Energy Corporation of 701 Market Street, St. Louis, Missouri, United States of America, 63101 (Peabody)
Peabody Shareholder	Peabody Acquisition Co. No. 2 Pty Ltd ACN 146 797 417 of Level 13, BOQ Centre, 259 Queen Street, Brisbane, Queensland 4000 (Peabody Shareholder)
ArcelorMittal	ArcelorMittal S.A. of 19 avenue de la Liberté, L-2930 Luxembourg City, Luxembourg (ArcelorMittal)
AM	ArcelorMittal Netherlands B.V. of Eemhavenweg 70, 3089 KH Rotterdam, Netherlands (AM)
AM BV2	ArcelorMittal Mining Australasia B.V. of Eemhavenweg 70, 3089 KH Rotterdam, Netherlands (AM BV2)
Holdco	Peabody Acquisition Co. No. 3 Pty Ltd ACN 152 004 398 of Level 13, BOQ Centre, 259 Queen Street, Brisbane, Queensland 4000 (Holdco)

Recitals

1 Holdco, a subsidiary of Peabody Shareholder and an indirect subsidiary of Peabody, owns all the shares in Bidco. 2 Bidco may propose to make an off-market takeover bid for all of the shares on issue in Macarthur Coal Limited (Macarthur) (the Takeover Bid). 3 Holdco, Bidco, AM, AM BV2 and Peabody Shareholder are parties to the Co-operation and Contribution Agreement pursuant to which Peabody Shareholder and AM BV2 will provide funding to Holdco, in the ratio of 60:40, in exchange for a proportionate number of shares in Holdco. Holdco is to fund Bidco for the sole purposes of: - paying for the Macarthur shares acquired by Bidco as a result of the Takeover Bid; and - paying any Duty arising in connection with the Takeover Bid. 4 Holdco, Bidco, AM, AM BV2 and Peabody Shareholder are also parties to the Shareholders' Deed which regulate their respective rights in Holdco. 5 Peabody has, at the request of AM, agreed to grant a guarantee and indemnity in favour of AM in relation to various obligations of Peabody Shareholder under the Co-operation and Contribution Agreement and Peabody Shareholder's payment obligation upon AM's exit from Holdco under the Shareholders' Deed on the terms of this deed. 6 ArcelorMittal has, at the request of Holdco, agreed to grant a guarantee and indemnity in favour of Holdco in relation to various obligations of AM and AM BV2 under the Co-operation and Contribution Agreement and the Shareholders' Deed on the terms of this deed.

This deed witnesses as follows:

1 1 Definitions and interpretation and agreement components

1. 1.1 Deed components

This deed includes any schedule.

2. 1.2 Definitions

The meanings of the terms used in this deed are set out below, unless the context otherwise appears or requires.

Term	Meaning
Acceptance Deed	the acceptance deed in the agreed form to be entered into on or about the date on which this deed was amended between Peabody Shareholder and Bidco.
Bidco	Peabody Acquisition Co. No. 4 Pty Ltd (ACN 152 004 772).
Business Day	a day on which banks are open for business in Brisbane (Australia), Paris (France) and St. Louis, Missouri (United States of America) other than a Saturday, Sunday or public holiday in Brisbane (Australia), Paris (France) and St. Louis, Missouri (United States of America) and which is a 'business day' as defined in the official listing rules of ASX.
Duty	any stamp, transaction or registration duty or similar charge imposed by any Governmental Agency and includes any interest, fine, penalty, charge or other amount imposed in respect of any of them, but excludes any Tax.
Claim	any claim, demand, legal proceeding or cause of action including any claim, demand, legal proceeding or cause of action: 1 based in contract (including breach of any warranty); 2 based in tort (including misrepresentation or negligence); 3 under common law or equity; or 4 under statute (including the Competition and Consumer Act 2010 (Cth), or like provisions in any state or territory legislation), in any way relating to this deed or the transactions contemplated by it.
Co-Investment Deed	the co-investment deed in the agreed form to be entered into on or about the date on which this deed was amended between Peabody Shareholder and AM BV2.
Control	has the meaning given in section 50AA of the Corporations Act.
Co-operation and Contribution Agreement	the Co-operation and Contribution Agreement entered into on or about the date of this deed by Peabody Shareholder, AM, AM BV2, Holdco and Bidco (including, for the avoidance of doubt, any amendment to, or amendment and restatement of the Contribution and Co-operation Agreement).
Corporations Act	the Corporations Act 2001 (Cth).
Governmental Agency	any government or governmental, administrative, monetary, fiscal or judicial body, department, commission, authority, tribunal, agency or entity in any part of the world.
GST	goods and services tax or similar value added tax levied or imposed in Australia under the GST Law or otherwise on a supply.
GST Act	the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
GST Law	has the same meaning as in the GST Act.
Loss	losses, liabilities, damages, costs, charges and expenses and includes Taxes, Duties and tax costs.
Pre-Bid Acceptance Deed	the pre-bid acceptance deed entered into on or about the date of this deed by AM and Bidco.
Shareholders' Deed	the Shareholders' Deed to be entered into on or about the date of this deed by Peabody Shareholder, AM, AM BV2, Holdco and Bidco.
Tax	any tax, levy, charge, impost, fee, deduction, goods and services tax, compulsory loan or withholding, that is assessed, levied, imposed or collected by any Governmental Agency and includes any interest, fine, penalty, charge, fee or any other amount imposed on, or in respect of any of the above but excludes Duty.

3. 1.3 Interpretation

In this deed headings and words in bold are inserted for convenience and do not affect the interpretation of this deed and unless the contrary intention appears:

(a) a reference to this deed or another instrument includes any variation or replacement of any of them;

(b) a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re‑enactments or replacements of any of them;

(c) the singular includes the plural and vice versa;

(d) the word 'person' includes a firm, a body corporate, an unincorporated association or an authority;

(e) a reference to a person includes a reference to the person's executors, administrators, successors, substitutes (including persons taking by novation) and assigns;

(f) if a period of time is specified and dates from a given day or the day of an act or event, it is to be calculated exclusive of that day;

(g) a reference to a day is to be interpreted as the period of time commencing at midnight and ending 24 hours later;

(h) if an act prescribed under this deed to be done by a party on or by a given day is done after 5.00pm on that day, it is taken to be done on the next day;

(i) if an event must occur on a stipulated day that is not a Business Day then the stipulated day will be taken to be the next Business Day;

(j) a reference to time is a reference to time in Brisbane, Australia;

(k) a reference to any thing (including any amount) is a reference to the whole and each part of it and a reference to a group of persons is a reference to any one or more of them;

(l) a reference to a part, clause, party, attachment, exhibit or schedule is a reference to a part and clause of, and a party, attachment, exhibit and schedule to, this deed and a reference to this deed includes any attachment, exhibit and schedule;

(m) a reference to $ is to Australian currency unless denominated otherwise;

(n) a term defined in the Corporations Act shall have the same meaning in this deed; and

(o) any reference to, or which relates to, the date of this deed (or similar) is to 29 July 2011.

4. 1.4 Inclusive expressions

Specifying anything in this deed after the words 'including', 'includes' or 'for example' or similar expressions does not limit what else is included unless there is express wording to the contrary.

2 2 Guarantees and indemnities

1. 2.1 Peabody guarantee and indemnity

(a) Peabody unconditionally and irrevocably guarantees to AM and AM BV2 the due and punctual performance of:

(1) Peabody Shareholder's obligations under the Co-operation and Contribution Agreement;

(2) Peabody Shareholder's obligations under the Shareholders' Deed;

(3) Peabody Shareholder's obligations under the Acceptance Deed; and

(4) Peabody Shareholder's obligations under the Co-Investment Deed,

(collectively, the PeabodyRelevant Obligations).

(b) If Peabody Shareholder does not comply with any of the Peabody Relevant Obligations on time and in accordance with the Co-operation and Contribution Agreement, the Shareholders' Deed, the Acceptance Deed or the Co-Investment Deed (as applicable), then Peabody agrees to comply with those obligations on demand from AM and AM BV2 (as applicable). A demand may be made whether or not AM or AM BV2 has first made demand on Peabody Shareholder.

(c) As a separate and additional liability, Peabody indemnifies AM and AM BV2 against all Loss, actions, proceedings and judgments of any nature, incurred by, brought, made or recovered against AM or AM BV2 arising from:

(1) any default or delay in the due and punctual performance by Peabody Shareholder of the Peabody Relevant Obligations; or

(2) an obligation Peabody Shareholder would otherwise have under the Peabody Relevant Obligations that is found to be void, voidable or unenforceable; or

(3) an obligation Peabody would otherwise have under clauses 2.1(a) or 2.1(b) that is found to be void, voidable or unenforceable.

Peabody agrees to pay amounts due under this clause 2.1(c) on demand from AM or AM BV2. AM and AM BV2 do not need to incur expense or make payment before enforcing this right of indemnity.

2. 2.2 ArcelorMittal guarantee and indemnity

(a) ArcelorMittal unconditionally and irrevocably guarantees to Peabody Shareholder and Holdco, the due and punctual performance of all of AM's and AM BV2's obligations (as applicable) under the Co-operation and Contribution Agreement, under the Shareholders' Deed, under the Pre-Bid Acceptance Deed and under the Co-Investment Deed (collectively the, AM Relevant Obligations).

(b) If AM or AM BV2 does not comply with any of the AM Relevant Obligations on time and in accordance with the Co-operation and Contribution Agreement, the Shareholders' Deed, the Pre-Bid Acceptance Deed or the Co-Investment Deed (as applicable), then ArcelorMittal agrees to comply with those obligations on demand from Peabody Shareholder or Holdco, as the case may be. A demand may be made whether or not Peabody Shareholder or Holdco has first made demand on AM or AM BV2.

(c) As a separate and additional liability, ArcelorMittal indemnifies Peabody Shareholder and Holdco against all Loss, actions, proceedings and judgments of any nature, incurred by, brought, made or recovered against Peabody Shareholder or Holdco arising from:

(1) any default or delay in the due and punctual performance of the AM Relevant Obligations;

(2) an obligation AM or AM BV2 would otherwise have under the AM Relevant Obligations that is found to be void, voidable or unenforceable; or

(3) an obligation ArcelorMittal would otherwise have under clauses 2.2(a) or 2.2(b) that is found to be void, voidable or unenforceable.

ArcelorMittal agrees to pay amounts due under this clause 2.1(c) on demand from Peabody Shareholder or Holdco. Peabody Shareholder and Holdco do not need to incur expense or make payment before enforcing this right of indemnity.

3 3 Extent of guarantees and indemnities

(a) The liability of Peabody and the rights given to AM and AM BV2 under this deed are not affected by any act or omission or any other thing which might otherwise affect them under law or otherwise. For example, those rights and liabilities are not affected by any act or omission:

(1) varying or replacing in any way and for any reason any agreement or arrangement under which the obligations guaranteed under clause 2.1(a) are expressed to be owing; or

(2) releasing Peabody Shareholder or giving Peabody Shareholder a concession (such as more time to pay).

(b) The liability of ArcelorMittal and the rights given to Peabody Shareholder and Holdco under this deed are not affected by any act or omission or any other thing which might otherwise affect them under law or otherwise. For example, those rights and liabilities are not affected by any act or omission:

(1) varying or replacing in any way and for any reason any agreement or arrangement under which the obligations guaranteed under clause 2.2(a) are expressed to be owing; or

(2) releasing AM, AM BV2 or both or giving AM, AM BV2 or both a concession (such as more time to pay).

4 4Duration

1. 4.1 Continuing guarantees and indemnities

Subject to clause 4.2, this deed remains in full force and effect for so long as:

(a) Peabody Shareholder has any liability or obligation to AM or AM BV2 under the Peabody Relevant Obligations; or

(b) AM or AM BV2 has any liability or obligation to Peabody Shareholder or Holdco under the AM Relevant Obligations,

until all of those liabilities or obligations have been fully discharged.

2. 4.2 Term of guarantees and indemnities

(a) Notwithstanding anything else in this deed:

(1) subject to the remainder of this clause 4.2(a), the liability of Peabody and the rights given to AM and AM BV2 under this deed shall only remain in full force and effect for so long as Peabody Shareholder is Controlled by Peabody and shall thereafter terminate and cease to be of any further force or effect;

(2) if Peabody ceases to Control the Peabody Shareholder during the Sale Right Period (as defined in the Shareholders' Deed) in circumstances where the provisions of clause 4.2(a)(3) do not apply, the liability of Peabody and the rights given to AM and AM BV2 under this deed, with respect to the payment obligations in clauses 21.1(d) and 21.1(f) of the Shareholders' Deed only, shall remain in full force and effect until:

(A) if a Sale Right Notice (as defined in the Shareholders' Deed) has not been delivered before the end of the Sale Right Period, the end of the Sale Right Period; or

(B) if a Sale Right Notice (as defined in the Shareholders' Deed) has been delivered before the end of the Sale Right Period which has not completed by the end of the Sale Right Period, the Sale Right Shares Closing Date (as defined in the Shareholders' Deed),

and shall thereafter terminate and cease to be of any further force or effect; and

(3) if Peabody ceases to Control the Peabody Shareholder (as defined in the Shareholders' Deed) as a result of a Peabody Sale (as defined in the Shareholders' Deed) and AM is provided with a guarantee in relation to the obligations under clauses 21.1(d) and 21.1(f) of the Shareholders' Deed on terms that are substantially equivalent to the guarantee given by Peabody in this deed from a person that has a credit rating (as rated by Standard & Poors or Moody's) that is not lower than Peabody's, then the liability of Peabody and the rights given to AM and AM BV2 under this deed will terminate and will cease to be of any further force or effect.

(b) Notwithstanding anything else in this deed, the liability of ArcelorMittal and the rights given to Peabody Shareholder and Holdco under this deed shall only remain in full force and effect for so long as AM and AM BV2 are Controlled by ArcelorMittal and shall thereafter terminate and cease to be of any further force or effect.

(c) This clause 4.2 does not affect any rights that have accrued to a party before its rights under this deed terminated and ceased to be of any further force or effect.

5 5 No withholdings

(a) All payments that become due under this deed, must be made free and clear and without deduction of all present and future withholdings (including taxes, duties, levies, imposts, deductions and charges of Australia or any other jurisdiction).

(b) If Peabody is compelled by law to deduct any withholding, then in addition to any payment due under this deed, it must pay to AM or AM BV2 such amount as is necessary to ensure that the net amount received by AM or AM BV2 after withholding equals the amount AM or AM BV2 would otherwise been entitled to if not for the withholding.

(c) If ArcelorMittal is compelled by law to deduct any withholding, then in addition to any payment due under this deed, it must pay to Peabody Shareholder or Holdco such amount as is necessary to ensure that the net amount received by Peabody Shareholder or Holdco after withholding equals the amount Holdco would otherwise been entitled to if not for the withholding.

6 6 Currency

All moneys that become liable to be paid under this deed must be paid in the currency in which they are payable under the Shareholders' Deed and the Co-operation and Contribution Agreement, as applicable, and free of any commissions and expenses relating to foreign currency conversion or any other charges or expenses.

7 7 Suspension of rights

1. 7.1 Peabody's rights are suspended

As long as any obligation is required, or may be required, to be complied with in connection with this deed, Peabody may not, without AM's consent:

(a) reduce its liability under this deed by claiming that it, Peabody Shareholder, Holdco or any other person has a right of set-off or counterclaim against AM or AM BV2;

(b) claim, or exercise any right to claim, to be entitled (whether by way of subrogation or otherwise) to the benefit of another guarantee, indemnity, mortgage, charge or other encumbrance:

(1) in connection with the Co-operation and Contribution Agreement, the Shareholders' Deed or any other amount payable under this deed; or

(2) in favour of a person other than AM in connection with any obligations of, or any other amounts payable, by Peabody Shareholder or Holdco to, or for the account of, that other person; or

(c) claim an amount in the liquidation, administration or insolvency of Peabody Shareholder or Holdco or of another guarantor of any of the Peabody Shareholder or Holdco's obligations.

2. 7.2 ArcelorMittal's rights are suspended

As long as any obligation is required, or may be required, to be complied with in connection with this deed, ArcelorMittal may not, without Holdco's consent:

(a) except as provided for in clause 3.3(b) of the Co-operation and Contribution Agreement, reduce its liability under this deed by claiming that it or AM or AM BV2 or any other person has a right of set-off or counterclaim against Peabody Shareholder or Holdco;

(b) claim, or exercise any right to claim, to be entitled (whether by way of subrogation or otherwise) to the benefit of another guarantee, indemnity, mortgage, charge or other encumbrance:

(1) in connection with the Co-operation and Contribution Agreement, the Shareholders' Deed or any other amount payable under this deed; or

(2) in favour of a person other than Peabody Shareholder or Holdco in connection with any obligations of, or any other amounts payable, by AM or AM BV2 to, or for the account of, that other person; or

(c) claim an amount in the liquidation, administration or insolvency of AM or AM BV2 or of another guarantor of any of AM's or AM BV2's obligations.

8 8 Guarantor's liability

(a) Peabody's liability in respect of any Claim shall not exceed Peabody Shareholder's liability in respect of that Claim.

(b) ArcelorMittal's liability in respect of any Claim shall not exceed AM's liability or AM BV2's liability (as the case may be) in respect of that Claim.

9 9 Duties, costs and expenses

1. 9.1 Duties

The parties must pay equally all Duty in respect of the execution, delivery and performance of this deed, unless otherwise provided for in this deed.

2. 9.2 Parties to pay own other costs

(a) Except as set out in clause 9.1 and unless otherwise provided for in this deed, each party must pay its own costs and expenses in respect of the negotiation, preparation, execution, delivery and registration of this deed and any other deed or document entered into or signed under this deed.

(b) Any action to be taken by any party in performing its obligations under this deed must be taken at its own cost and expense unless otherwise provided in this deed.

10 10 GST

1. 10.1 Definitions

Words used in this clause 10 that have a defined meaning in the GST Law have the same meaning as in the GST Law unless the context indicates otherwise.

2. 10.2 GST

(a) Unless expressly included, the consideration for any supply under or in connection with this deed does not include GST.

(b) To the extent that any supply made under or in connection with this deed is a taxable supply (other than any supply made under another deed that contains a specific provision dealing with GST), the recipient must pay, in addition to the consideration provided under this deed for that supply (unless it expressly includes GST) an amount (additional amount) equal to the amount of that consideration (or its GST exclusive market value) multiplied by the rate at which GST is imposed in respect of the supply. The recipient must pay the additional amount at the same time as the consideration to which it is referable.

(c) Whenever an adjustment event occurs in relation to any taxable supply to which clause 10.2(b) applies:

(1) the supplier must determine the amount of the GST component of the consideration payable; and

(2) if the GST component of that consideration differs from the amount previously paid, the amount of the difference must be paid by, refunded to or credited to the recipient, as applicable.

3. 10.3 Tax invoices

The supplier must issue a tax invoice to the recipient of a supply to which clause 10.2 applies no later than 10days following payment of the GST inclusive consideration for that supply under that clause.

4. 10.4 Reimbursements

If either party is entitled under this deed to be reimbursed or indemnified by the other party for a cost or expense incurred in connection with this deed, the reimbursement or indemnity payment must not include any GST component of the cost or expense to the extent that the cost or expense is the consideration for a creditable acquisition made by the party being reimbursed or indemnified, or by its representative member.

11 11 General

1. 11.1 Notices

(a) Any notice or other communication (including any request, demand, consent or approval) to or by a party to this deed must be in legible writing and in English addressed as shown below (or as specified to the sender by any party by notice):

Party	Address	Attention	Facsimile
Peabody	701 Market Street, St. Louis, Missouri 63101 United States of America	Chief Legal Officer	+1 314 342 3419
ArcelorMittal	19 avenue de la Liberté, L-2930 Luxembourg City, Luxembourg	Carole Whittall with a copy to the London office of AM: Attention: Carole Whittall 7th Floor Berkeley Square House, Berkeley Square London W1J 6AD United Kingdom	+44 20 7629 5351
Peabody Shareholder	Level 13, BOQ Centre, 259 Queen Street, Brisbane, Queensland 4000 Australia	The Company Secretary	+61 7 3225 5555
Holdco	Level 13, BOQ Centre, 259 Queen Street, Brisbane, Queensland 4000 Australia	The Company Secretary	+61 7 3225 5555
AM	Eemhavenweg 70, 3089 KH Rotterdam Netherlands	Carole Whittall with a copy to the London office of AM: Attention: Carole Whittall Address: 7th Floor Berkeley Square House, Berkeley Square, London W1J 6AD	+44 20 7629 5351
AM BV2	Eemhavenweg 70, 3089 KH Rotterdam Netherlands	Carole Whittall with a copy to the London office of AM: Attention: Carole Whittall Address: 7th Floor Berkeley Square House, Berkeley Square, London W1J 6AD	+44 20 7629 5351

If the sender is a company, the notice or communication must be signed by an officer or under the common seal of the sender.

(b) A notice or communication given in accordance with clause 11.1(a) can be relied on by the addressee and the addressee is not liable to any other person for any consequences of that reliance if the addressee believes it to be genuine, correct and authorised by the sender.

(c) Any notice or other communication to or by a party to this deed is regarded as being given by the sender and received by the addressee:

(1) if by delivery in person, when delivered to the addressee;

(2) if by registered mail (with acknowledgement of receipt) within Australia, 4 Business Days from and including the date of postage;

(3) if by registered mail (with acknowledgement of receipt) to or from a place outside Australia, 7 Business Days from and including the date of postage;

(4) if by facsimile transmission, when a facsimile confirmation receipt is received indicating successful delivery,

but if the delivery or receipt is on a day that is not a Business Day or is after 5.00pm (addressee's time) it is regarded as received at 9.00am on the following Business Day.

(d) A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under clause 11.1(a) and informs the sender that it is not legible.

(e) In this clause 11.1, reference to an addressee includes a reference to an addressee's officers, agents or employees.

2. 11.2 Governing law and jurisdiction

(a) This deed is governed by the laws of New South Wales.

(b) Each party irrevocably submits to the non-exclusive jurisdiction of the courts of New South Wales.

3. 11.3 Service of process

(a) Without preventing any other mode of service, any document in an action (including any writ of summons or other originating process or any third or other party notice) may be served on any party by being delivered to or left for that party at its address for service of notices under clause 11.1.

(b) ArcelorMittal irrevocably appoints Mallesons Stephen Jaques (attention: David Friedlander / Paul Schroder) of Level 61, Governor Phillip Tower, 1 Farrer Place, Sydney New South Wales 2000, as its agent for the service of process in Australia in relation to any matter arising out of this deed. If Mallesons Stephen Jaques ceases to be able to act as such or have an address in Australia, ArcelorMittal agrees to appoint a new process agent in Australia and deliver to the other parties within 2 Business Days a copy of a written acceptance of appointment by the process agent, upon receipt of which the new appointment becomes effective for the purpose of this deed. ArcelorMittal must inform the other parties in writing of any change in the address of its process agent within 2 Business Days of the change.

(c) Peabody irrevocably appoints Freehills (attention: Tony Damian / Andrew Rich) of Level 32, MLC Centre, 19 Martin Place, Sydney New South Wales 2000, as its agent for the service of process in Australia in relation to any matter arising out of this deed. If Freehills ceases to be able to act as such or have an address in Australia, Peabody agrees to appoint a new process agent in Australia and deliver to the other parties within 2 Business Days a copy of a written acceptance of appointment by the process agent, upon receipt of which the new appointment becomes effective for the purpose of this deed. Peabody must inform the other parties in writing of any change in the address of its process agent within 2 Business Days of the change.

4. 11.4 Waivers and variation

(a) A provision of, or a right, discretion or authority created under, this deed may not be:

(1) waived except in writing signed by the party granting the waiver; and

(2) varied except in writing signed by the parties,

except to the extent this deed expressly provides otherwise.

(b) A failure or delay in exercise, or partial exercise, of a power, right, authority, discretion or remedy arising from a breach of, or default under this deed does not result in a waiver of that right, power, authority, discretion or remedy.

5. 11.5 Assignment

(a) Neither AM nor AM BV2 may assign the benefit of this deed without the written consent of Peabody.

(b) Neither Peabody Shareholder nor Holdco may assign the benefit of this deed without the written consent of ArcelorMittal.

(c) Peabody may not transfer or delegate its obligations under this deed without the written consent of AM and AM BV2.

(d) ArcelorMittal may not transfer or delegate its obligations under this deed without the written consent of Peabody Shareholder and Holdco.

6. 11.6 Further assurances

Each party must do all things and execute all further documents reasonably necessary to give full effect to this deed and the transactions contemplated by it.

7. 11.7 Approvals and consent

If the doing of any act, matter or thing under this deed is dependent on the approval or consent of a party, that party may give conditionally or unconditionally or withhold its approval or consent in its absolute discretion, unless this deed expressly provides otherwise.

8. 11.8 Remedies cumulative

Except as provided in this deed and permitted by law, the rights, powers and remedies provided in this deed are cumulative with and not exclusive to the rights, powers or remedies provided by law independently of this deed.

9. 11.9 Counterparts

This deed may be executed in any number of counterparts which together will constitute one instrument. A party may execute this deed by signing any counterpart.

10. 11.10 Prohibition and enforceability

Any provision of, or the application of any provision of, in this deed that is void, illegal or unenforceable in any jurisdiction is to be read down for the purpose of that jurisdiction, if possible, so as to be valid and enforceable, and otherwise shall be severed to the extent of the invalidity, illegality or unenforceability, without affecting the remaining provisions of this deed or affecting the validity or enforceability of that provision in any other jurisdiction.

11. 11.11 No merger

The rights and obligations of the parties under this deed do not merge on or adversely affect, and is not adversely affected by, any of the following:

(a) completion of any transaction contemplated by this deed;

(b) any other guarantee, indemnity, mortgage, charge or other encumbrance, or other right or remedy to which a party is entitled; or

(c) a judgment which a party obtains against another party or any other person in connection with this deed.

A party may still exercise its rights under this deed as well as under the judgment, mortgage, charge or other encumbrance or the right or remedy described above.

12. 11.12 Entire agreement

This deed embodies the entire agreement between the parties and supersede any prior negotiation, conduct, arrangement, understanding or agreement, express or implied, with respect to the subject matter of this deed.

13. 11.13 Contra proferentem excluded

No term or condition of this deedwill be construed adversely to a party solely on the ground that the party was responsible for the preparation of this deed or that provision.

14. 11.14 Attorneys

If this deed is executed by attorneys, each of the attorneys executing this deed states that the attorney has no notice of the revocation of the power of attorney appointing that attorney.

EX-10.6

Exhibit 10.6

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BANK OF AMERICA, N.A. One Bryant Park New York, New York 10036	UBS SECURITIES LLC 299 Park Avenue New York, New York 10171 UBS LOAN FINANCE LLC 677 Washington Boulevard Stamford, Connecticut 06901
MORGAN STANLEY SENIOR FUNDING, INC. 1585 Broadway New York, New York 10036	CITIGROUP GLOBAL MARKETS INC. Citibank, N.A. 390 Greenwich Street, New York, New York 10013
HSBC BANK USA, N.A. HSBC SECURITIES (USA) INC. 452 Fifth Avenue New York, New York 10018	THE ROYAL BANK OF SCOTLAND PLC RBS SECURITIES INC. 600 Washington Boulevard Stamford, CT 06901

September 12, 2011

Peabody Energy Corporation

701 Market Street

St. Louis, MO 63101

Attention:Michael C. Crews

Executive Vice President and Chief Financial Officer

Project Truman

Amended and Restated Bridge Facility Commitment Letter

Ladies and Gentlemen:

We have been advised that Peabody Energy Corporation (the “Company” or “you”) intends to acquire, via Bidco (as defined below), at least 50.01% of the shares of Macarthur Coal Limited (the “Target”) either pursuant to offers made under a takeover bid or pursuant to a scheme of arrangement (the “Tender”) and, in connection therewith, the Commitment Parties (as defined below) are pleased to act in the capacities set forth below for an up to US$2.0 billion senior bridge facility (the “Bridge Facility”, and senior unsecured loans thereunder, the “Bridge Loans”), where you will be the borrower, and the proceeds of which may be used, in lieu of or in combination with Capital Markets Proceeds (as defined below) (which Capital Markets Proceeds shall reduce the commitments hereunder pro rata on a dollar-for-dollar basis), borrowings under any of your existing bank credit facilities (as amended, modified, supplemented or refinanced) and cash on hand, to finance, in part, a takeover bid by Bidco (as defined below) for at least 50.01% of the shares in the Target, or a scheme of arrangement pursuant to which at least 50.01% of the shares in the Target are proposed to be acquired by Bidco (the “Acquisition”). As we understand the transaction, the acquisition of the shares of the Target will be effected by an existing subsidiary of the Company, being either PEAMCoal Holdings Pty Ltd ACN 152 004 398 or another existing subsidiary reasonably satisfactory to the Lead Arrangers (such subsidiary, “BidcoParent”; together with, PMCoal Pty Ltd ACN 152 004 772 or any wholly owned subsidiary of it, which it may fund using debt or equity, and through which it will acquire such shares, “Bidco”), at least 50.01% of whose equity will, following the close of the Tender, be directly or indirectly owned by the Company or a subsidiary of the Company and up to 40% of whose equity will, following the close of the Tender, be directly or indirectly owned by ArcelorMittal S.A. or a subsidiary of ArcelorMittal S.A. (“Arcelor”). It is noted that it is possible that (1) 100% of the equity of

BidcoParent may, following the close of the Tender, be directly or indirectly owned by the Company or a subsidiary of the Company (with Arcelor having no involvement in BidcoParent going forward); and (2) following the close of the Tender, the shareholders of BidcoParent may comprise one or more members of the corporate group of companies consisting of the Company and/or its subsidiaries, ArcelorMittal S.A. and/or its subsidiaries, CITIC Group and/or its subsidiaries and/or POSCO Group and/or its subsidiaries. Bidco, if a Subsidiary (as defined in the Existing Credit Agreement (as defined in the Summary of Terms)), shall be a Restricted Subsidiary (as defined in the Existing Credit Agreement) and shall not be designated as an Unrestricted Subsidiary (as defined in the Existing Credit Agreement) under the Bridge Facility.

We understand that you will enter into certain financing arrangements in order to finance the Acquisition in part and that you will either:

1.borrow amounts under existing credit facilities (as amended, modified, supplemented or refinanced) and issue and sell or incur up to US$2.0 billion aggregate principal amount or gross proceeds, as applicable, of (x) non-convertible debt securities (the “Senior Notes”), (y) equity securities or equity-linked securities (the “Equity Securities” and, together with any Senior Notes, the “Securities”), in each case, in a public offering or private placement or (z) term loans pursuant to a syndicated credit facility (the “Term Loans” and, together with any Securities, the “Additional Financing”), or

2.if the full aggregate principal amount or gross proceeds, as applicable, of Additional Financing referred to in clause (1) above are not received from the issuance or borrowing of any Additional Financing, in each case, on or prior to the date on which Bidco is first required to provide consideration for the purchase of shares in the Target (the “Consideration Date”), borrow up to the difference between (x) US$2.0 billion and (y) the aggregate principal amount or gross proceeds referred to in clause (1) that are received from the issuance or borrowing of any Additional Financing on or prior to the Consideration Date, of Bridge Loans under the Bridge Facility having substantially the terms set forth in the Summary of Terms and Conditions attached as Exhibit A hereto (the “Summary of Terms”). If you borrow under the Bridge Facility, you intend to (x) issue and sell in a public or private placement debt or equity securities or (y) incur Term Loans, in each case, the net cash proceeds of which will be used to repay any Bridge Loans provided thereunder (such debt or equity securities or Term Loans, together with any Additional Financing, the “Permanent Financing”).

The net cash proceeds from the Bridge Loans, together with other cash or sources of cash available to the Company and Bidco will provide funds to (i) consummate the Acquisition and (ii) pay the fees and expenses incurred in connection with the consummation of the Transaction (as described below).

Bank of America, N.A. (“Bank of America”) is pleased to offer its several (and not joint) commitment to lend 20.18000% of the Bridge Facility, UBS Loan Finance LLC (“UBS”) is pleased to offer its several (and not joint) commitment to lend 20.18000% of the Bridge Facility, Morgan Stanley Senior Funding, Inc. (“MSSF”) is pleased to offer its several (and not joint) commitment to lend 20.18000% of the Bridge Facility, Citi (as defined below) is pleased to offer its several (and not joint) commitment to lend 13.15333% of the Bridge Facility, HSBC Bank USA, N.A. (“HSBC Bank”) is pleased to offer its several (and not joint) commitment to lend 13.15333% of the Bridge Facility and The Royal Bank of Scotland plc (“RBS”) is pleased to offer its several (and not joint) commitment to lend 13.15333% of the Bridge Facility (Bank of America, UBS, MSSF, Citi, HSBC Bank and RBS, in such capacities, collectively, the “Initial Lenders”), in each case, upon and subject to the terms and conditions set forth in this letter (together with the Summary of Terms, this “Commitment Letter”) and in the Summary of Terms. Each of Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”), UBS Securities LLC (“UBSS”), MSSF, Citigroup Global Markets, Inc. (“CGMI”, and together with Citibank, N.A. (“Citibank”), Citicorp USA, Inc., Citicorp North America, Inc. and/or any of their affiliates as Citibank shall determine to be appropriate to provide the services contemplated herein, “Citi”),HSBC Securities (USA) Inc. (“HSBC”) and RBS Securities Inc. (“RBS Securities”) is pleased to advise you of its willingness, in connection with the foregoing commitment, to act as a joint lead arranger and a joint book manager (in such capacities, collectively, the “Lead Arrangers”; the Lead Arrangers together with the Initial Lenders and the Administrative Agent, the “Commitment Parties”; includes “we”,“us” and “our”) for the Bridge Facility and to usecommercially reasonable efforts to form a syndicate of financial institutions (including the Initial Lenders) (collectively, the “Lenders”) in consultation with you for the Bridge Facility, subject to such Lenders being reasonably acceptable to you. Bank of

America is pleased to advise you of its willingness to act as sole administrative agent (in such capacity, the “Administrative Agent”) for the Bridge Facility. The Acquisition, the Tender, the entering into and funding of the Bridge Facility and all related transactions are hereinafter collectively referred to as the “Transaction.”

If you accept this Commitment Letter, you will enter into the amended and restated bridge facility fee letter agreement, dated the date hereof, among the Borrower, the Initial Lenders and the Lead Arrangers (the “Fee Letter”) and any other fee letter in respect of the Bridge Facility between you and one or more of us dated the date hereof.

Bank of America will act as sole Administrative Agent for the Bridge Facility. (a) In no event shall the percentage of economics received by any of Bank of America, UBS or MSSF be less than 20% of the aggregate economics in respect of the Bridge Facility, (b) in no event shall the percentage of economics received by any of Citi, HSBC or RBS be less than 11% of the aggregate economics in respect of the Bridge Facility and (c) in no event shall the percentage of economics received by any other financial institution with respect to the Bridge Facility exceed the percentage of commitments made by it with respect to such Bridge Facility. It is understood and agreed that Bank of America and MLPFS shall have “left” placement, and each of the other Lead Arrangers shall have placement below or to the right of Bank of America and MLPFS, with UBS and UBSS on the immediate right of Bank of America and MLPFS, with MSSF on the immediate right of UBS and UBSS, and with other placements to be below or to the right of MSSF as agreed among us, in any and all marketing materials and other documentation used in connection with the Bridge Facility and the syndication thereof. Bank of America and MLPFS shall have the exclusive rights and responsibilities customarily associated with such “left” placement, and each of the Commitment Parties shall receive league table credit in connection with each of the capacities in which it is acting pursuant hereto. You may appoint additional titled agents (without any economics) for the Bridge Facility from among the Initial Lenders and the Lead Arrangers. Except as provided in the immediately preceding sentence, no agents, co-agents or arrangers will be appointed and no other titles or economics will be awarded without the prior written consent of the Lead Arrangers and in consultation with you. MLPFS, UBSS and MSSF shall be active joint lead arrangers and joint book managers for the Bridge Facility and Citi, HSBC and RBS Securities shall be passive joint lead arrangers and joint book managers for the Bridge Facility.

The several commitments ofeach Initial Lender hereunder and the several undertaking of each Lead Arranger to provide the services described herein are subject only to the negotiation, execution and delivery of definitive documentation for the Bridge Facility (the “Loan Documents”) consistent with the Commitment Letter, including the Summary of Terms and subject to the Certain Funds Provisions set forth below; provided that the conditions to the effectiveness of the Loan Documents and to the funding of the Bridge Loans are limited to the conditions expressly described in this paragraph and the conditions (including the wording of the conditions (it being understood and agreed that the Specified Representations for purposes of any condition to borrowing shall be in the form specified in Addendum II to the Summary of Terms)) under “Conditions Precedent to Effective Date” with respect to effectiveness of the Loan Documents and “Conditions Precedent to Closing” with respect to funding, in each case, as set forth in the Summary of Terms.

Notwithstanding anything in this Commitment Letter, the Fee Letter or any other letter agreement or other undertaking concerning the financing of the Transactions to the contrary, (i) the only representations or warranties, the making and accuracy of which shall be a condition to availability of the Bridge Facility on the Closing Date shall be the Specified Representations (as defined below) made by the Company in the Loan Documents and (ii) the terms of the Loan Documents shall be in a form such that they do not impair availability of the Bridge Facility on the Closing Date if the conditions set forth in this Commitment Letter are satisfied. For purposes hereof, the “Specified Representations” means the representations and warranties relating to the Company and its subsidiaries (excluding the Target and its subsidiaries) set forth in Addendum II to the Summary of Terms. For avoidance of doubt, for purposes of this Commitment Letter and the Summary of Terms references to the subsidiaries of the Company shall not include the Target and its subsidiaries unless expressly indicated. This paragraph, and the provisions herein, shall be referred to as the “Certain Funds Provisions”.

MLPFS, UBSS and MSSF intend to commence syndication of the Bridge Facility promptly after the Tender is publicly announced; provided that notwithstanding MLPFS's, UBSS's and MSSF's right to syndicate the Bridge Facility and receive commitments with respect thereto, (i) except to the extent that such assignees shall become parties to this Commitment Letter, the Initial Lenders shall not be relieved, released or novated from their obligations hereunder

(including their obligation to fund the Bridge Facility on the Closing Date) in connection with any syndication, assignment or participation of the Bridge Facility, including its commitments in respect thereof, until after the Closing Date has occurred, (ii) no assignment or novation shall become effective with respect to all or any portion of the Initial Lenders' commitments in respect of the Bridge Facility until the initial funding of such facility and (iii) unless you otherwise agree in writing, the Initial Lenders shall retain exclusive control over all rights and obligations with respect to their commitments in respect of the Bridge Facility, including all rights with respect to consents, modifications, supplements, waivers and amendments, until the Closing Date has occurred. You agree to actively assist MLPFS, UBSS and MSSF in achieving a syndication of the Bridge Facility that is reasonably satisfactory to MLPFS, UBSS and MSSF and you. Such assistance shall include you (a) using commercially reasonable efforts to assist in the preparation of a confidential information memorandum (the “Information Memorandum”) and other customary marketing materials to be used in connection with the syndication of the Bridge Facility (collectively with the Summary of Terms, the Information (as defined below) and the Projections (as defined below), the “Information Materials”) and to deliver the Information Memorandum within 10 (ten) business days following the written request of MLPFS, UBSS or MSSF therefor, (b) using commercially reasonable efforts to ensure that the syndication efforts of MLPFS, UBSS and MSSF benefit materially from your existing banking relationships and (c) using commercially reasonable efforts to make your senior officers and advisors reasonably available from time to time to attend and make presentations regarding the business and prospects of the Borrower and its subsidiaries (including the Target and its subsidiaries), as appropriate, at one or more meetings of prospective Lenders to be mutually agreed upon. Without limiting your obligations to assist with syndication efforts as set forth below, each Initial Lender agrees that completion of such syndication is not a condition to its commitments hereunder. This paragraph is paragraph nine of the Commitment Letter.

It is understood and agreed thatMLPFS, UBSS and MSSF will manage and control all aspects of the syndication in consultation with you, including decisions as to the selection of prospective Lenders (provided that the selection of a prospective Lender as a Lender shall be subject to your acceptance (acting reasonably)), when commitments will be accepted and the final allocations of the commitments among the Lenders. It is understood and agreed that no Lender participating in the Bridge Facility will receive compensation from you in order to obtain its commitment, except on the terms contained herein and in the Summary of Terms.It is also understood and agreed that the amount and distribution of the fees among the Lenders will be at the sole and absolute discretion of MLPFS, UBSS and MSSF.

Notwithstanding anything herein to the contrary, you agree that, from the date hereof until the date on which all outstanding Bridge Loans shall have been repaid and all unused commitments in respect of the Bridge Facility shall have been terminated, without the prior written consent of MLPFS, UBSS and MSSF (acting in their sole discretion), there shall be no offering, placement, syndication or arrangement of any debt securities or bank or other debt financing by or on behalf of the Borrower or any of its subsidiaries, the proceeds of which would be used for any direct or indirect acquisition of any capital stock or assets of any entity other than the Target (any such debt securities or bank or other debt financing, the “Other Acquisition Financing”) unless the proceeds of such Other Acquisition Financing shall be used, in part, to repay in full all amounts, if any, then owing in respect of the Bridge Facility and to terminate all commitments in respect of the Bridge Facility (such event, a “Bridge Facility Payoff”) (it being understood that, at any time after the date hereof, there shall be no restriction on the offering, placement, syndication or arrangement of any Other Acquisition Financing undertaken for the purpose of effecting a Bridge Facility Payoff).

You agree, at the request of MLPFS, UBSS and MSSF, to assist in the preparation of a version of the Confidential Information Memorandum and other marketing materials and presentations to be used in connection with the syndication of the Bridge Facility, consisting exclusively of information and documentation that is either (i) publicly available or (ii) not material with respect to the Company, the Target or their respective affiliates or any of their respective securities for purposes of foreign, United States federal and state securities laws (all such information and documentation being “Public Lender Information”). Any information and documentation that is not Public Lender Information is referred to herein as “Private Lender Information”. You acknowledge and agree that the following documents may be distributed to potential Lenders wishing to receive only Public Lender Information (unless you promptly notify us otherwise and provided that you have been given a reasonable opportunity to review such documents and comply with U.S. Securities and Exchange Commission disclosure obligations): (a) administrative materials prepared by MLPFS, UBSS and MSSF for prospective Lenders (such as a lender meeting invitation, allocations and funding and closing memoranda); (b) notifications of changes to the terms of the Bridge Facility approved by you; (c)

drafts and final definitive documentation with respect to the Bridge Facility; and (d) other materials approved by you. You also agree to, if requested, identify that portion of any other Information to be distributed to “public side” lenders (i.e. lenders that do not wish to receive material non-public information with respect to the Company, the Target or their affiliates), including by clearly and conspicuously marking such materials “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof. By marking Information Materials “PUBLIC”, you shall be deemed to have authorized the Lead Arrangers and the proposed Lenders to treat such Information as not containing any material non-public information (although it may be confidential or proprietary) with respect to the Company, the Target or their affiliates or their respective securities for the purpose of United States federal and state securities laws.

You hereby represent and warrant (which representation and warranty shall be to your knowledge to the extent it relates to the Target or its subsidiaries) that (a) all information (other than the Projections (as defined below), and information of a general economic or industry nature) which has been or is hereafter made available in writing to any Commitment Party by you or any of your representatives (including, without limitation, counsel, advisors and accountants) in connection with any aspect of the transactions contemplated hereby (the “Information”), as and when furnished, taken as a whole, is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not materially misleading and (b) all information consisting of projections and forward-looking statements that have been prepared by you, or on your behalf or by any of your representatives, and made available to the Lead Arrangers (collectively, the “Projections”) has been (or in the case of Projections made available after the date hereof, will be) based on assumptions and estimates developed by management of the Borrower in good faith and believed to be reasonable as of the date such Projections were or are made available (it being understood that the Projections are not a guarantee of future performance and that actual results during the period or periods covered by the Projections may materially differ from the projected results and that no other representation or warranty is made by you with respect to the Projections). You agree to furnish us with further reasonable and supplemental information from time to time until the date of the initial borrowing under the Bridge Facility (the “Closing Date”) so that the representation and warranty in the immediately preceding sentence will be true in all material respects on the Closing Date as if the Information and Projections were being furnished, and such representation and warranty was being made, on such date. In issuing this commitment and in arranging and syndicating the Bridge Facility, the Commitment Parties are and will be using and relying on the Information and Projections without independent verification thereof.

You acknowledge that the Commitment Parties on your behalf will make available Information Materials to the proposed syndicate of Lenders by posting the Information Materials on IntraLinks, SyndTrak or another similar electronic system. Prior to distribution of Information Materials to prospective Lenders, you shall provide us with a customary letter authorizing the dissemination thereof, and, with respect to Information Materials made available to prospective Lenders wishing to receive only Public Lender Information, confirming the absence of Private Lender Information therefrom.

By executing this Commitment Letter, you agree to reimburse each Commitment Party from time to time promptly after demand (together with a reasonably detailed invoice thereof) for all reasonable out-of-pocket fees and expenses (including, but not limited to, (a) the reasonable fees, disbursements and other charges of Shearman & Sterling LLP, as sole New York counsel to the Lead Arrangers, (b) the reasonable fees, disbursements and other charges of any regulatory counsel and a single local counsel to the Lead Arrangers in any material jurisdictions, in each case retained with your consent (such consent not to be unreasonably withheld or delayed) and (c) due diligence expenses) incurred in connection with the Bridge Facility, the syndication thereof, the preparation of the definitive documentation therefor and the other transactions contemplated hereby (including, without limitation, this Commitment Letter, the Fee Letter and any other fee letter in respect of the Bridge Facility executed by you). You acknowledge that we may receive a future benefit, including without limitation, a discount, credit or other accommodation on matters unrelated to this transaction, from any of such counsel based on the fees such counsel may receive on account of their relationship with us including, without limitation, fees paid pursuant hereto.

You agree to indemnify and hold harmlessBank of America, MLPFS, UBS, UBSS, MSSF, Citi, HSBC Bank, HSBC, RBS, RBS Securities and each of their respective affiliates and their respective officers, directors, employees, agents, advisors and other representatives (each, an “Indemnified Party”) from and against (and will reimburse each

Indemnified Party as the same are incurred for) any and all claims, damages, losses, liabilities and expenses (including, without limitation, the reasonable fees, disbursements and other charges of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (a) any matters contemplated by this Commitment Letter, the Fee Letter, any other fee letter in respect of the Bridge Facility executed by you or the Transaction or (b) the Bridge Facility or any use made or proposed to be made with the proceeds thereof, except to the extent such claim, damage, loss, liability or expense is found in a final, nonappealable judgment by a court of competent jurisdiction to have (x) resulted from such Indemnified Party's gross negligence, bad faith or willful misconduct or (y) resulted from such Indemnified Party's material breach of its obligations hereunder. In the case of any claim, investigation, litigation or proceeding (any of the foregoing, a “Proceeding”) to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by you, your equityholders or creditors or an Indemnified Party, whether or not an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. You also agree that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to you or your subsidiaries or affiliates or to your or their respective equityholders or creditors arising out of, related to or in connection with any aspect of the transactions contemplated hereby, except to the extent of direct, as opposed to special, indirect, consequential or punitive, damages determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence, bad faith or willful misconduct or a material breach of its obligations hereunder. It is further agreed that each of Bank of America, MLPFS, UBS, UBSS, MSSF, Citi, HSBC Bank, HSBC, RBS and RBS Securities shall be liable solely in respect of its own commitment to the Bridge Facility on a several, and not joint, basis with any other Lender. Notwithstanding any other provision of this Commitment Letter, no Indemnified Party shall be liable for any damages arising from the use by others of information or other materials obtained through electronic telecommunications or other information transmission systems, except to the extent that such damages resulted directly from such Indemnified Party's gross negligence or willful misconduct as determined in a final non-appealable judgment by a court of competent jurisdiction. You shall not, without the prior written consent of an Indemnified Party, effect any settlement of any pending or threatened Proceeding against such Indemnified Party in respect of which indemnity could have been sought hereunder by such Indemnified Party unless (x) such settlement includes an unconditional release of such Indemnified Party from all liability or claims that are the subject matter of such Proceeding and (y) does not include any statement as to any admission by or on behalf of such Indemnified Person.

This Commitment Letter and the Fee Letter and the contents hereof and thereof are confidential and, except for disclosure hereof or thereof on a confidential basis to you and your subsidiaries' (excluding the Target's and its subsidiaries' until the consummation of the Acquisition) officers, directors, employees, accountants, attorneys and other professional advisors retained by you or them in connection with the Bridge Facility or as otherwise required by law (and, in the case of any disclosure made as required by law, you agree to promptly inform us of such disclosure to the extent permitted by applicable law), may not be disclosed by you in whole or in part to any person or entity without our prior written consent; provided, however, it is understood and agreed that you or Bidco may disclose (i) this Commitment Letter (including the Summary of Terms), but not the Fee Letter or the contents thereof, to the Target (and its subsidiaries), Arcelor and each of their respective directors, executive officers and professional advisors on a confidential basis, (ii) this Commitment Letter (including the Summary of Terms), but not the Fee Letter or the contents thereof, to any ratings agency and (iii) this Commitment Letter (including the Summary of Terms), but not the Fee Letter or the contents thereof, after your acceptance of this Commitment Letter and the Fee Letter, in filings with the Securities and Exchange Commission and other applicable regulatory authorities and stock exchanges (including in any bidder's statement to be issued by Bidco (if the Tender proceeds by way of a takeover bid) or in the scheme booklet to be issued by Target (if the Tender proceeds by way of a scheme of arrangement). Further, Bank of America, MLPFS, UBS, UBSS, MSSF, Citi, HSBC Bank, HSBC, RBS and RBS Securities shall be permitted to use information related to the syndication and arrangement of the Bridge Facility in connection with marketing, press releases or other transactional announcements or updates provided to investor or trade publications, subject to confidentiality obligations or disclosure restrictions provided herein or otherwise reasonably requested by the Borrower provided that the content of any such press releases/transactional updates shall be reasonably acceptable to the Borrower. The Commitment Parties hereby notify you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), each of them is required to obtain, verify and record information that

identifies you, which information includes your name and address and other information that will allow such Commitment Party, as applicable, to identify you in accordance with the Act.

You acknowledge that in the ordinary course of our trading, brokerage, investment management and financing activities, each of the Commitment Parties or their affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for our own account or the accounts of our customers, in debt or equity securities or senior loans of the Company, the Target or any other company or may be providing financing or other services to parties whose interests may conflict with yours. Each Commitment Party severally agrees that it will not furnish confidential information obtained from you or the Target to any of its other customers or any other person and that it will agree to treat confidential information relating to you and your affiliates, Arcelor and its affiliates and the Target and its affiliates with the same degree of care as it treats its own confidential information; provided that nothing herein will prohibit any Commitment Party from disclosing any such information (a) upon the request or demand of any regulatory authority having jurisdiction over such Commitment Party or any of its affiliates, (b) to the extent such information is publicly available or becomes publicly available other than by reason of disclosure by such Commitment Party in breach of this paragraph, (c) to such Commitment Party's affiliates and its officers, directors, partners, employees, legal counsel, independent auditors and other experts and agents who need to know such information to the extent such persons are subject to customary confidentiality restrictions, (d) received by such Commitment Party on a non-confidential basis from a source other than the Borrower or its affiliates or the Target or its affiliates not known to such Commitment Party to be prohibited from disclosing such information by a legal, contractual or fiduciary obligation, (e) to the extent such information is independently developed by such Commitment Party, (f) for purposes of establishing a “due diligence” defense, (g) in enforcing such Commitment Party's rights with respect to this Commitment Letter or the Fee Letter in a court of competent jurisdiction, (h) pursuant to the order of any court or administrative agency or in any pending legal or administrative proceeding, or otherwise as required by applicable law or compulsory legal process (in each of which cases the relevant Commitment Party agrees to inform you promptly thereof prior to such disclosure to the extent not prohibited by law, rule or regulation) or (i) to other Lenders and prospective Lenders, participants and assignees which agree to bound by the confidentiality provisions set forth in this paragraph or provisions substantially similar to those confidentiality provisions set forth in this paragraph. Each Commitment Party further advises you that it will not make available to you confidential information that they have obtained or may obtain from any other customer. In connection with the services and transactions contemplated hereby, and only in such connection, subject to the foregoing provisions of this paragraph, you agree that each Commitment Party is permitted to access, use and share with any of its bank or non-bank affiliates, agents, advisors (legal or otherwise) or representatives any information concerning you or any of your affiliates that is reasonably related to the provision of such services and that is or may come into the possession of such Commitment Party or any of such affiliates. Notwithstanding anything to the contrary herein, the obligations of each Commitment Party under this paragraph and of the Company under the immediately preceding paragraphshall terminate on July 29, 2013.

In connection with all aspects of each transaction contemplated by this Commitment Letter, you acknowledge and agree, and acknowledge your affiliates' understanding, that: (a) (i) the arranging and other services described herein regarding the Bridge Facility are arm's-length commercial transactions between you and your affiliates, on the one hand, and each Commitment Party, on the other hand, (ii) you have consulted your own legal, accounting, environmental, regulatory and tax advisors to the extent you have deemed appropriate, and (iii) you are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions contemplated hereby; (b) (i) each Commitment Party has been, is, and will be acting solely as a principal and, except as otherwise expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for you, any of your affiliates or any other person or entity and (ii) no Commitment Party has any obligation to you or your affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein; and (c) each Commitment Party and its respective affiliates may be engaged in a broad range of transactions that involve interests that differ from yours and those of your affiliates, and no Commitment Party has any obligation to disclose any of such interests to you or your affiliates. In addition, the Company acknowledges and agrees that the Commitment Parties and their respective affiliates may have fiduciary or other relationships whereby we may exercise voting power over the securities of various persons, which securities may from time to time include securities of the Company, the Target, prospective investors in or lenders to the Company or the Target or others with interests in respect of a potential transaction. The Company specifically acknowledges and agrees that the Commitment Parties and their respective

affiliates may exercise such powers and otherwise perform their respective functions without regard to their relationships to the Company hereunder. To the fullest extent permitted by law, you hereby waive and release any claims that you may have against any Commitment Party with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by this Commitment Letter. The Commitment Parties acknowledge that MLPFS, UBSS and MSSF or their respective affiliates may act as advisors to the Company with respect to the Acquisition and agree that nothing in this paragraph shall limit in any way any obligations under any mutually agreed engagement letter relating thereto.

The provisions of the immediately preceding five paragraphs, the syndication provisions and information provisions hereof, and the provisions of the second succeeding paragraph below shall remain in full force and effect regardless of whether any definitive documentation for the Bridge Facility shall be executed and delivered, and notwithstanding the termination of this Commitment Letter or any commitment or undertaking of any Commitment Party hereunder; provided that the syndication provisions and information provisions hereof shall not survive if the commitments and undertakings of the Commitment Parties are terminated prior to the effectiveness of the Loan Documents and funding of the Bridge Facility; providedfurther that your obligations under this Commitment Letter (other than your obligations with respect to (x) confidentiality, indemnification, reimbursement, compliance with the Fee Letter and any other effective fee letter in respect of the Bridge Facility executed by you, governing law, submission to jurisdiction and waiver of jury trial and (y) syndication provisions and information provisions, which syndication provisions and information provisions shall survive until the date of the initial funding thereunder), shall automatically terminate and be superseded by the provisions of the definitive loan documentation upon the initial funding thereunder, and at such time you shall be automatically be released from all liability in connection therewith.

This Commitment Letter and the Fee Letter may be executed in counterparts which, taken together, shall constitute an original. Delivery of an executed counterpart of this Commitment Letter or the Fee Letter by telecopier or facsimile or as an e-mail attachment in pdf format shall be effective as delivery of a manually executed counterpart thereof.

This Commitment Letter (including the Summary of Terms) and the Fee Letter shall be governed by, and construed in accordance with, the laws of the State of New York. Each of you, Bank of America, MLPFS, UBS, UBSS, MSSF, Citi, HSBC Bank, HSBC, RBS and RBS Securities hereby irrevocably waives any and all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Commitment Letter (including the Summary of Terms), the Fee Letter, the transactions contemplated hereby (other than the transactions governed by any fully-executed definitive loan documentation relating to the Bridge Facility) and thereby or the actions ofany Commitment Party in the negotiation, performance or enforcement hereof. You and we hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any state or Federal court sitting in the Borough of Manhattan in the City of New York over any suit, action or proceeding arising out of or relating to the Transaction or the other transactions contemplated hereby, this Commitment Letter or the Fee Letter or the performance of services hereunder or thereunder, and this paragraph shall remain in full force and effect notwithstanding the Effective Date and the Closing Date. You and we agree that service of any process, summons, notice or document by registered mail addressed to you or us shall be effective service of process for any such suit, action or proceeding brought in any such court. You and we hereby irrevocably and unconditionally waive any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in any inconvenient forum.

This Commitment Letter, the Fee Letter and any other effective fee letter executed by you in respect of the Bridge Facility constitute the entire agreement among the parties relating to the subject matter hereof and thereof and supersede any previous agreement, written or oral, between the parties with respect to the subject matter hereof and thereof. This Commitment Letter and the Fee Letter amends, restates and supersedes and replaces in its entirety as of the date first above written, the commitment letter and the Bridge Facility Fee Letter dated July 29, 2011, and such commitment letter and Bridge Facility Fee Letter dated July 29, 2011 shall be of no further force or effect.

This Commitment Letter and all commitments and undertakings of any Commitment Party hereunder will expire at 5:00 p.m. (New York City time) on September 12, 2011, unless you execute this Commitment Letter, the Fee Letter and any other fee letter in respect of the Bridge Facility between you and one or more of us dated the date hereof and return them to us prior to that time (which may be by facsimile transmission or as an e-mail attachment in pdf

format), whereupon this Commitment Letter (including the Summary of Terms) and the Fee Letter (each of which may be signed in one or more counterparts) shall become binding agreements. Thereafter, all commitments and undertakings of each Commitment Party hereunder will expire (such date of expiration, the “Commitment Termination Date”) on the earliest of:

(a) if the Tender proceeds by way of a takeover bid, (i) the date which is 9 months after the date on which the first offer under the takeover bid is made, (ii) the completion of the compulsory acquisition of all outstanding shares in the Target under Chapter 6A of the Australian Corporations Act 2001 (Cth), (iii) the date on which the takeover bid closes with defeating conditions that have either not been “fulfilled” or in respect of which the takeover bid has not been declared “free” (as those quoted terms are used in the Australian Corporations Act 2001 (Cth)), (iv) the date which is six weeks after the end of the “offer period” (as defined in the Australian Corporations Act 2001 (Cth)) in circumstances where the offers under the takeover bid have been declared or become unconditional and (v) receipt by the Commitment Parties of written notice from the Borrower of the Borrower's election to terminate all commitments hereunder in full; and

(b) if the Tender proceeds by way of a scheme of arrangement, (i) the date which is 9 months after the date on which the scheme booklet is registered with the Australian Securities and Investments Commission (“ASIC”), (ii) completion of the acquisition of all outstanding shares in the Target pursuant to the terms of the scheme of arrangement, (iii) the date on which the scheme implementation agreement to which Bidco and Target are parties is terminated in accordance with its terms and (iv) receipt by the Commitment Parties of written notice from the Borrower of the Borrower's election to terminate all commitments hereunder in full.

You may terminate all or a portion of the commitments hereunder at any time upon written notice to the Commitment Parties.

This Commitment Letter may not be assigned by you without our prior written consent (and any purported assignment without such consent will be null and void). The Commitment Parties may not assign their respective commitments hereunder, in whole or in part, except (x) in accordance with the syndication provisions set forth in the ninth paragraph of this Commitment Letter or (y) to any of their respective affiliates (and any other purported assignment will be null and void). No Lead Arranger shall assign its rights under this Commitment Letter or the Fee Letter as a Lead Arranger in its capacity as such (other than to one of its affiliates or by operation of law) without the prior written consent of each of the parties hereto (and any purported assignment without such consent (other than to one of its affiliates or by operation of law) will be null and void).

This Commitment Letter is intended to be solely for the benefit of the parties hereto and is not intended to confer upon any person other than the parties hereto, their successors and permitted assigns hereunder and the Indemnified Parties, any benefit or any legal or equitable right, remedy or claim to any person other than the parties hereto (and any Indemnified Parties to the extent applicable).

We are pleased to have the opportunity to work with you in connection with this important financing.

Very truly yours,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

By:/s/ Jeffrey Bloomquist

Name:Jeffrey Bloomquist

Title:Managing Director

BANK OF AMERICA, N.A.

By:/s/ Jeffrey Bloomquist

Name:Jeffrey Bloomquist

Title:Managing Director

UBS LOAN FINANCE LLC

By:/s/ John C. Duggan

Name:John C. Duggan

Title:Managing Director

Leveraged Capital Markets

By:/s/ John C. Duncanson

Name:John C. Duncanson

Title:Director

UBS SECURITIES LLC

By:/s/ John C. Duggan

Name:John C. Duggan

Title:Managing Director

Leveraged Capital Markets

By:/s/ John C. Duncanson

Name:John C. Duncanson

Title:Director

MORGAN STANLEY SENIOR FUNDING, INC.

By:/s/ Justin Kotzin

Name:Justin Kotzin

Title:Authorized Signatory

CITIGROUP GLOBAL MARKETS INC.

By:/s/ Shannon Sweeney

Name:Shannon Sweeney

Title:Authorized Signatory

CITIBANK, N.A.

By:/s/ Shannon Sweeney

Name:Shannon Sweeney

Title:Vice President

HSBC SECURITIES (USA) INC.

By:/s/ Adam Hendley

Name:Adam Hendley

Title:Vice President

HSBC BANK USA, N.A.

By:/s/ Adam Hendley

Name:Adam Hendley

Title:Vice President

RBS SECURITIES INC.

By:/s/ Brian Smith

Name:Brian Smith

Title:Director

THE ROYAL BANK OF SCOTLAND PLC

By:/s/ Brian Williams

Name:Brian Williams

Title:Authorized Signatory

Accepted and agreed to

as of the date first above written:

PEABODY ENERGY CORPORATION

By:/s/ Carey J. Dubois

Name:Carey J. Dubois

Title:VP & Treasurer

EXHIBIT A

SUMMARY OF TERMS AND CONDITIONS

PEABODY ENERGY CORPORATION

US$2,000,000,000 BRIDGE FACILITY

Capitalized terms used in this Summary of Terms and Conditions and not otherwise defined are used herein as defined in the Commitment Letter to which this summary is attached.

Borrower: Peabody Energy Corporation, a Delaware corporation (the “Company” or “Borrower”).

Administrative

Agent: Bank of America, N.A. (“Bank of America”) will act as sole administrative agent (the “Administrative Agent”).

Co-Syndication

Agents: UBS Securities LLC (“UBSS”) and Morgan Stanley Senior Funding, Inc. (“MSSF”).

Co-Documentation

Agents: Citigroup Global Markets, Inc. (“CGMI”, and together with Citibank, N.A. (“Citibank”), Citicorp USA, Inc., Citicorp North America, Inc. and/or any of their affiliates as Citibank shall determine to be appropriate to provide the services contemplated herein, “Citi”), HSBC Securities (USA) Inc. (“HSBC”) and RBS Securities Inc. (“RBS Securities”).

Joint Lead Arrangers and

Joint Book Managers: Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”), UBSS, MSSF, CGMI, HSBC and RBS Securities will act as joint lead arrangers and joint book managers (in such capacities, the “Lead Arrangers”).

Lenders: A syndicate of financial institutions (includingBank of America, UBS Loan Finance LLC, Morgan Stanley Senior Funding, Inc., Citi, HSBC Bank USA, N.A. and the Royal Bank of Scotland plc) arranged by MLPFS, UBSS and MSSF, which institutions shall be reasonably acceptable to the Borrower (such consent of the Borrower not to be unreasonably withheld or delayed) (collectively, the “Lenders”).

Bridge

Facility: An aggregate principal amount of up to US$2,000,000,000 will be available in multiple drawings (each such drawing, a “Post-Closing Borrowing”, and the aggregate principal amount of each Post-Closing Borrowing, a “Post-Closing Draw Amount”) during the period from the Closing Date until the Maturity Date (as defined below) (the “Availability Period”); provided, that no more than three drawings may be made during the Availability Period and each drawing shall be in an aggregate principal amount of not less than US$500,000,000.

Purpose: The proceeds of the Bridge Facility shall be used to (a) finance in part the acquisition of a controlling interest in Macarthur Coal Limited (the “Acquisition”), (b) repay borrowings under the Existing Credit Agreement (as defined below) the proceeds of which borrowings are used solely to finance all or part of the Acquisition and (c) pay fees and expenses for the Acquisition and Bridge Facility.

Effective Date: The date of execution of definitive loan documentation and satisfaction or waiver of the “Conditions Precedent to Effective Date” set forth below (the “Effective Date”).

Closing Date: The date of satisfaction or waiver of the “Conditions Precedent to Closing” set forth below, to occur on or before April 29, 2012 (the “Closing Date”).

Interest Rates:As set forth in Addendum I.

Maturity: All amounts outstanding under the Bridge Facility shall be due and payable 364 days from the Effective Date (the “Maturity Date”).

Security: The Bridge Facility and the borrowings thereunder will be unsecured.

Guarantees: The Bridge Facility will be guaranteed by the subsidiaries of the Company that guarantee the Existing Credit Agreement (the “US Subsidiary Guarantors”). For the avoidance of doubt, there shall be no requirement for Bidco, the Target or any of their respective subsidiaries to give any guarantees.

Optional

Prepayments

and Commitment

Reductions: The Borrower may permanently reduce the commitments under or prepay the Bridge Facility in whole or in part at any time without premium or penalty, subject to reimbursement of the Lenders' breakage and redeployment costs in the case of prepayment of LIBOR borrowings on a day other than the last day of an interest period.

Mandatory

Prepayments and

Commitment

Reductions: An amount equal to 100% of all Disposition Proceeds (as defined below) and Capital Markets Proceeds (as defined below) shall be applied to prepay the loans under the Bridge Facility, except (x) in the case of any non-domestic subsidiary, to the extent such application or prepayment would result in a material adverse tax consequence as reasonably determined by the Borrower, (y) in the case of any non-wholly owned subsidiary of the Borrower that is a public company, to the extent that such proceeds are not actually received by the Borrower or a wholly-owned subsidiary of the Borrower or, if received, such application or prepayment is otherwise not required as a result of the operation of clause (x) above, or (z) in the case of any non-wholly owned subsidiary of the Borrower that is not a public company, to the extent that such proceeds are not actually received by the Borrower or a wholly-owned subsidiary of the Borrower (i) after using commercially reasonable efforts to procure receipt by the Borrower or a wholly-owned subsidiary of the Borrower or (ii) as a result of applicable law or a contractual prohibition in effect or, in either case, such application or prepayment is otherwise not required as a result of the operation of clause (x) above. Any Capital Markets Proceeds received on or prior to the Closing Date shall, together with the amount of any reduction in the cash portion of the acquisition consideration on or prior to the Closing Date, automatically and permanently reduce dollar-for-dollar the commitments of the Lenders in respect of the Bridge Facility as and when received, in each case on a pro rata basis.

“Capital Markets Proceeds” means, subject to exceptions as may be mutually agreed between the Borrower and MLPFS, UBSS and MSSF, (x) all net cash proceeds from the issuance in the capital markets of additional equity and equity-linked interests in the Borroweror any of its subsidiaries and (y) all net cash proceeds from the issuance or incurrence of debt of the Borrower or any of its subsidiaries (other than Permitted Ordinary Course Financings (as defined below) or issuances or incurrences of debt by Bidco or its subsidiaries, the proceeds of which are used in connection with the Acquisition (it being understood that the Acquisition does not include any put by ArcelorMittal S.A. or a subsidiary of ArcelorMittal S.A. of its equity in Bidco to the Company or any of its subsidiaries)), in each case that are actually received by the Borrower or any of its subsidiaries or funded into escrow pending the closing of the Acquisition.

“Disposition Proceeds” means all net cash proceeds of sales and casualty or

condemnation losses of property and assets of the Borrower and its Restricted Subsidiaries, in each case, that are actually received by the Borrower or any of its Restricted Subsidiaries (other than sales made in the ordinary course of business and any other sale having net cash proceeds less than US$50,000,000 and subject to other exceptions to be agreed, including customary reinvestment rights during the 180 days following receipt of such net cash proceeds).

“Permitted Ordinary Course Financings” means (x) any renewal, refinancing or replacement of any of the Company's or any of its subsidiaries' credit facilities existing on July 29, 2011 on substantially the same terms (other than tenor or pricing) and for substantially the same, or a lesser, aggregate principal amount as the relevant existing credit facility, (y) any working capital or other ordinary course financings (in respect of any domestic subsidiary, not to exceed $100.0 million in the aggregate at any time outstanding for all such domestic subsidiaries), lease financing or limited recourse project financings or (z) for avoidance of doubt, any credit arrangements with financial institutions that permit the Borrower or its subsidiaries to enter into ordinary course commodities, currency or interest rates trades with such financial institutions subject to the credit parameters of such arrangements.

Conditions Precedent

to Effective Date:

The effectiveness of the Bridge Facility will only be subject to satisfaction of the following conditions precedent (which shall be set forth in the definitive loan documentation in the substantially the same form as set forth in clause (a) below and otherwise in the same form as set forth below):

(a) The negotiation, execution and delivery of definitive documentation for the Bridge Facility (including, without limitation, the guarantees referred to above) reasonably satisfactory to the Lead Arrangers, the Administrative Agent and the Lenders and consistent with the Commitment Letter and this Summary of Terms (it being understood and agreed that definitive documentation in substantially the form of the Existing Credit Agreement (as defined below) with such changes thereto as are necessary to reflect the terms and conditions of the Commitment Letter and this Summary of Terms is reasonably satisfactory to the Lead Arrangers, the Administrative Agent and the Lenders). In addition, the Administrative Agent shall have received (A) a certificate of a Responsible Officer (as defined in the Existing Credit Agreement) either (1) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by the Borrower and each US Subsidiary Guarantor and the validity against such entity of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect or (2) stating that no such consents, licenses or approvals are so required; and (B)corporate resolutions of the Borrower's board of directors authorizing the Acquisition.

(b) The Administrative Agent shall have received evidence that one of the following has occurred: (1) Bidco receiving notice from, or on behalf of, the Australian Federal Treasurer to the effect that there is no objection under the Australian Government's foreign investment policy or under the Foreign Acquisition and Takeovers Act 1975 (Cth) (the “FATA”) to the acquisition by Bidco of the Target shares under the Tender and that notice is not subject to any condition; (2) the period provided under the FATA during which the Australian Treasurer may make an order under section 18 or an interim order under section 22 of the FATA prohibiting the acquisition by Bidco of the Target shares under the Tender elapsing, without such an

order being made; or (3) if an interim order prohibiting the acquisition of the Target shares by Bidco under the Tender is made by the Australian Treasurer under section 22 of the FATA, the subsequent period for making a final order prohibiting the acquisition elapsing, without such a final order being made

(c)Any accrued ticking fees of the Lenders shall have been paid, unless waived by the Administrative Agent, the Lead Arrangers or the Lenders, as applicable, to the extent required under the Fee Letter.

(d)The Administrative Agent shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations reasonably requested by the Administrative Agent.

Conditions Precedent

to Closing:

The initial extension of credit under the Bridge Facility will only be subject to satisfaction of the following conditions precedent (which shall be set forth in the definitive loan documentation in substantially the same form as set forth in clauses (i) and (iii) below and otherwise in the same form as set forth below):

(i) The Administrative Agent shall have received (A) customary opinions of counsel for the Borrower and the Guarantors as to Company and the Loan Documents in substantially the same form those delivered in connection with the Existing Credit Agreement and (B) such corporate resolutions, certificates and other customary closing documents in substantially the same form as those delivered in connection with the Existing Credit Agreement.

(ii) If the Tender proceeds by way of a takeover bid, Bidco shall have acquired a “relevant interest” (as defined in the Australian Corporations Act 2001 (Cth)) in at least 50.01% of the shares in the Target.

If the Tender proceeds by way of a scheme of arrangement, the scheme of arrangement shall have become “effective” (as that term is used in Part 5.1 of the Australian Corporations Act 2001 (Cth)) such that Bidco has acquired or will acquire a “relevant interest” (as defined in the Australian Corporations Act 2001 (Cth)) in at least 50.01% of the shares in the Target.

(iii) All accrued fees and expenses (including legal fees and expenses) and other compensation payable to the Administrative Agent, the Lead Arrangers and the Lenders, to the extent required under the Fee Letter or any other effective fee letter in respect of the Bridge Facility executed by you or invoiced at least two business days before the Closing Date, shall have been paid.

(iv) The Specified Representations shall be true and correct in all material respects on the date of such extension of credit; it being understood and agreed that the Specified Representations for purposes of any condition to borrowing shall be in the form specified in Addendum II to the Summary of Terms.

(v) All conditions set forth in the bidder's statement to be issued by Bidco (if the Tender proceeds by way of a takeover bid) or in the scheme booklet (if the Tender proceeds by way of a scheme of arrangement) shall have been (x) satisfied or (y) waived by Bidco (in the case of a takeover bid) or by Bidco

or the Target, as applicable (in the case of a scheme of arrangement).

(vi) The Effective Date shall have occurred.

Conditions Precedent

To Subsequent

borrowings: Following the Closing Date and the initial extension of credit under the Bridge Facility, any extension of credit under the Bridge Facility shall be subject to the Specified Representations being true and correct in all material respects on the date of such extension of credit.

Representations

and Warranties: Substantially the same as those in the Credit Agreement dated as of June 18, 2010 among the Borrower, Peabody Holland B.V., Bank of America N.A. and the other agents and lenders party thereto and including any amendments thereto as of July 29, 2011 (the “Existing Credit Agreement”) (with such changes thereto as may be reasonably satisfactory to the Borrower, the Administrative Agent and the Lead Arrangers).

Covenants: Substantially the same as those in the Existing Credit Agreement (with such changes thereto as may be reasonably satisfactory to the Borrower, the Administrative Agent and the Lead Arrangers) and Bidco shall use of all of the proceeds of any extension of credit under the Bridge Facility as set forth in the section hereof entitled “Purpose”. For the purpose of clarity, if Subsidiaries (as defined in the Existing Credit Agreement) of the Borrower, Bidco and its Subsidiaries, unless designated as Unrestricted Subsidiaries (as defined in the Existing Credit Agreement), shall be Restricted Subsidiaries; provided that Bidco shall not be designated as an Unrestricted Subsidiary.

Financial Covenant: Substantially the same as those in the Existing Credit Agreement.

Events of Default: Substantially the same as those in the Existing Credit Agreement with such changes thereto as may be reasonably satisfactory to the Borrower, Administrative Agent and, the Lead Arrangers.

Assignments and

Participations: Assignments: Subject to the consents described below (which consents will not be unreasonably withheld or delayed), each Lender will be permitted to make assignments to other financial institutions in a minimum amount equal to US$5 million.

Consents: The consent of the Borrower will be required unless (i) an Event of Default has occurred and is continuing or (ii) the assignment is to a Lender, an affiliate of a Lender or an Approved Fund (as such term is defined in the Existing Credit Agreement). The consent of the Administrative Agent will be required for any assignment to an entity that is not a Lender, an affiliate of such Lender or an Approved Fund in respect of such Lender.

Assignments Generally: An assignment fee in the amount of US$3,500 will be charged with respect to each assignment unless waived by the Administrative Agent in its sole discretion. Each Lender will also have the right, without consent of the Borrower or the Administrative Agent, to assign as security all or part of its rights under the loan documentation to any Federal Reserve Bank.

Participations: Lenders will be permitted to sell participations with voting rights

limited to customary matters such as changes in amount, rate and maturity date.

Waivers and

Amendments: Amendments and waivers of the provisions of the loan agreement and other definitive credit documentation will require the approval of Lenders holding loans and commitments representing more than 50% of the aggregate amount of the loans and commitments under the Bridge Facility (the “Required Lenders”), except that (a) the consent of each Lender shall be required with respect to (i) the waiver of conditions precedent (other than the condition precedent specified above in clause (ii) of “Conditions Precedent to Closing”) to the initial credit extension under the Bridge Facility, (ii) the amendment of pro rata sharing provisions and (iii) the amendment of the voting percentages of the Lenders,and (b) the consent of each Lender affected thereby shall be required with respect to (i) increases or extensions in the commitment of such Lender, (ii) reductions of principal, interest or fees, and (iii) extensions of scheduled maturities or times for payment.

Indemnification: The Borrower will indemnify and hold harmless the Administrative Agent, each Lead Arranger, each Lender and their respective affiliates and their partners, directors, officers, employees, agents and advisors from and against all losses, claims, damages, liabilities and expenses arising out of or relating to the Bridge Facility, the Borrower's use of loan proceeds or the commitments, including, but not limited to, reasonable attorneys' fees, except to the extent found by a court of competent jurisdiction to have resulted from such indemnified person's or its partner's, director's, officer's, employee's, agent's, or advisor's gross negligence, bad faith or willful misconduct or material breach of its obligations under the Loan Documents. This indemnification shall survive and continue for the benefit of all such persons or entities.

Governing Law:State of New York.

Pricing/Fees/

Expenses: As set forth in Addendum I.

ADDENDUM I

PRICING, FEES AND EXPENSES

Interest Rates: At the Borrower's option, any loan under the Bridge Facility willbear interest at a rate equal to (i) LIBOR plus the Applicable Margin, as determined in accordance with the Duration Pricing table set forth below for LIBOR Loans, or (ii) the Base Rate (to be defined as the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50% and (c) one-month LIBOR plus 1.00%) plus the Applicable Margin, as determined in accordance with the Duration Pricing table set forth below for Base Rate Loans.

The Borrower may select interest periods of one or two weeks or one, two, three or six months for LIBOR Loans. Interest shall be payable at the end of the selected interest period, but no less frequently than quarterly.

During the continuance of any payment default under the Bridge Facility the Applicable Margin on the amount of the payments resulting in such default shall increase by 2.00% per annum. Upon the request of the Required Lenders, during the continuance of an Event of Default under the Bridge Facility, the Applicable Margin on obligations owing thereunder shall increase by 2.00% per annum.

Duration

Pricing: The Applicable Margin for LIBOR Loans and the Applicable Margin for Base Rate Loans shall be, at any time, the rate per annum set forth in the table below opposite such time:

Period since the Closing Date	LIBOR Loans Applicable Margin	Base Rate Loans Applicable Margin
0-29 days	3.00%	2.00%
30-59 days	3.25%	2.25%
60-89 days	3.50%	2.50%
90-119 days	3.75%	2.75%
120-364 days	4.00%	3.00%

Duration Fees: The Borrower shall pay for the ratable benefit of the Lenders the following fees, calculated as a percentage of the aggregate amounts outstanding under the Bridge Facility, on the following dates if all advances (if any) have not been paid in full prior to such date:

90th day following the Closing Date	1.00%
180th day following the Closing Date	1.50%
270th day following the Closing Date	2.00%

Commitment Fees: The Borrower shall pay for the ratable benefit of the Lenders a commitment fee (the “Bridge Commitment Fee”) calculated at the rate of 0.40% per annum, on the average daily undrawn commitments under the Bridge Facility, payable quarterly in arrears and on the Maturity Date.

Calculation of

Interest and Fees: Other than calculations in respect of interest at the Bank of America prime rate (which shall be made on the basis of actual number of days elapsed in a 365/366 day year), all calculations of interest and fees shall be made on the basis of actual number of days elapsed in a 360 day year.

Cost and Yield

Protection: Customary for transactions and facilities of this type, including, without limitation, in respect of breakage or redeployment costs incurred in connection with prepayments, changes in capital adequacy and capital requirements or reserve requirements or their interpretation, illegality, unavailability of LIBOR deposits, reserves without proration or offset and payments free and clear of withholding or other taxes.

Expenses: The Borrower will pay all reasonable and documented costs and expenses associated with the preparation, due diligence, administration, syndication and closing of the Bridge Facility, including, without limitation, the legal fees of counsel to the Lead Arrangers, regardless of whether or not the Bridge Facility is closed. The Borrower will also pay the reasonable and documented expenses of the Administrative Agent and each Lender in connection with the enforcement of the Bridge Facility.

ADDENDUM II

SPECIFIED REPRESENTATIONS

For purposes hereof, the term “Loan Party” shall mean any Person (as defined in the Existing Credit Agreement) who is a US Loan Party (as defined in the Existing Credit Agreement) immediately prior to the Closing Date (and excluding, for avoidance of doubt, the Target and its subsidiaries). When a capitalized term used herein is defined with reference to its definition in the Existing Credit Agreement (e.g. “Person”), all uses of such term in this Addendum II shall have such meaning.

1) Due Organization and Existence of Loan Parties. Each Loan Party is duly organized or formed and validly existing.

2) Power and Authority. Each Loan Party has all requisite power and authority to execute, deliver and perform its obligations under the Loan Documents to which it is a party.

3) Due Authorization, Execution, Delivery and Enforceability of Loan Documents. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is a party have been duly authorized by all necessary corporate or other organizational action. Each Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. Each Loan Document when so delivered will constitute, a legal, valid and binding obligation of each Loan Party that is party thereto, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other Laws (as defined in the Existing Credit Agreement) relating to or affecting creditors' rights generally, general principles of equity, regardless of whether considered in a proceeding in equity or at law and an implied covenant of good faith and fair dealing.

4)No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is a party, do not and will not (a) contravene the terms of any of such Person's Organization Documents (as defined in the Existing Credit Agreement), (b) conflict with or result in any breach or contravention of (i) any Contractual Obligation (as defined in the Existing Credit Agreement) to which such Person is a party or (ii) any order, injunction, writ or decree of any Governmental Authority (as defined in the Existing Credit Agreement) to which such Person or its property is subject or (c) violate any Law binding on such Person, except in each case referred to in clause (b) or (c) to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect (as defined below).

The term “Material Adverse Effect” means a material adverse effect upon (a) the business, assets, operations, property or condition (financial or otherwise) of the Company and its Restricted Subsidiaries (as defined in the Existing Credit Agreement, and excluding for avoidance of doubt, the Target and its subsidiaries) immediately prior to the Closing Date taken as a whole or (b) the validity or enforceability of this or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

5) Margin Regulations; Investment Company Act.

(a)The Company is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB (as defined in the Existing Credit Agreement)), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the proceeds of each Bridge Loan, not more than 25% of the value of the assets (either of the Company only or of the Company and its Subsidiaries (as defined in the Existing Credit

Agreement) on a consolidated basis) subject to the provisions of Section 7.01, Section 7.04 or Section 7.05 (in each case, of the Existing Credit Agreement) or subject to any restriction contained in any agreement or instrument between the Company and any Lender or any Affiliate (as defined in the Existing Credit Agreement) of any Lender relating to Indebtedness and within the scope of Section 8.01(e) (of the Existing Credit Agreement) will be margin stock.

(b)None of the Company or any other Loan Party is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

(6) Status of Bridge Loans as Senior Debt. The Bridge Loans shall rank pari passu with any other senior Indebtedness (as defined in the Existing Credit Agreement) of the Company.

(7) Solvency. The Company and its Restricted Subsidiaries on a consolidated basis are Solvent.

The term “Solvent” and “Solvency” shall mean, with respect to any Person, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person is, as of such date, greater than the amount that will be required to pay the probable liability of such Person on its debts and other liabilities as such debts and other liabilities become absolute and matured, (c) such Person does not, and will not, have an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts and liabilities as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, subordinated, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, subordinated, disputed, undisputed, secured or unsecured.

(8)Patriot Act. No Loan Party is in violation in any material respect of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Gregory H. Boyce, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Peabody Energy Corporation (“the registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2011

/s/ Gregory H. Boyce  

Gregory H. Boyce 

Chairman and Chief Executive Officer 

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Michael C. Crews, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Peabody Energy Corporation (“the registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2011

/s/ Michael C. Crews  

Michael C. Crews 

Executive Vice President and Chief Financial Officer 

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

I, Gregory H. Boyce, Chairman and Chief Executive Officer of Peabody Energy Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 (the “Periodic Report”) which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Peabody Energy Corporation.

Dated: November 4, 2011

/s/ Gregory H. Boyce  

Gregory H. Boyce 

Chairman and Chief Executive Officer 

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

I, Michael C. Crews, Executive Vice President and Chief Financial Officer of Peabody Energy Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 (the “Periodic Report”) which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Peabody Energy Corporation.

Dated: November 4, 2011

/s/ Michael C. Crews  

Michael C. Crews 

Executive Vice President and Chief Financial Officer 

XML

Income Taxes (Details) (USD $) In Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Reconciliation of the expected statutory federal income tax provision to the Company's actual income tax provision
Expected income tax provision at federal statutory rate	$ 112.2	$ 134.9	$ 343.3	$ 296.3
Excess depletion	(13.9)	(25.8)	(39.0)	(44.4)
Foreign earnings provision differential	(34.9)	(29.8)	(84.5)	(57.1)
Foreign earnings repatriation	0	84.5	0	84.5
Remeasurement of foreign income tax accounts	(38.7)	42.7	(16.9)	28.8
State income taxes, net of U.S. federal tax benefit	4.8	2.1	10.5	7.0
General business tax credits	(4.4)	(5.6)	(12.4)	(13.1)
Changes in valuation allowance	2.5	(63.7)	7.0	(45.6)
Changes in tax reserves	6.0	2.2	10.8	(4.9)
Other, net	3.5	6.2	5.9	5.7
Total provision	$ 37.1	$ 147.7	$ 224.7	$ 257.2

XML

Condensed Consolidated Balance Sheets (USD $) In Millions	Sep. 30, 2011	Dec. 31, 2010
Current assets
Cash and cash equivalents	$ 1,401.6	$ 1,295.2
Accounts receivable, net of allowance for doubtful accounts of $23.3 at September 30, 2011 and $30.3 at December 31, 2010	591.4	558.2
Inventories	351.9	332.9
Assets from coal trading activities, net	66.0	192.5
Deferred income taxes	90.9	120.4
Other current assets	503.2	459.0
Total current assets	3,005.0	2,958.2
Property, plant, equipment and mine development
Land and coal interests	7,841.3	7,657.0
Buildings and improvements	1,087.7	1,079.8
Machinery and equipment	2,175.8	1,699.3
Less: accumulated depreciation, depletion and amortization	(3,296.7)	(3,010.0)
Property, plant, equipment and mine development, net	7,808.1	7,426.1
Investments and other assets	878.5	978.8
Total assets	11,691.6	11,363.1
Current liabilities
Current maturities of long-term debt	43.8	43.2
Liabilities from coal trading activities, net	62.6	181.7
Accounts payable and accrued expenses	1,334.9	1,288.8
Total current liabilities	1,441.3	1,513.7
Long-term debt, less current maturities	2,458.6	2,706.8
Deferred income taxes	499.6	539.8
Asset retirement obligations	537.3	501.3
Accrued postretirement benefit costs	965.6	963.9
Other noncurrent liabilities	466.7	448.3
Total liabilities	6,369.1	6,673.8
Stockholders' equity
Additional paid-in capital	2,231.3	2,182.0
Retained earnings	3,544.7	2,878.4
Accumulated other comprehensive loss	(139.1)	(67.9)
Treasury shares, at cost: 9,167,639 shares as of September 30, 2011 and 8,912,772 shares as of December 31, 2010	(350.7)	(334.6)
Peabody Energy Corporation's stockholders' equity	5,289.0	4,660.7
Noncontrolling interests	33.5	28.6
Total stockholders' equity	5,322.5	4,689.3
Total liabilities and stockholders' equity	11,691.6	11,363.1
Preferred Stock [Member]
Stockholders' equity
Preferred Stock	0	0
Series A Junior Participating Preferred Stock [Member]
Stockholders' equity
Preferred Stock	0	0
Perpetual Preferred Stock
Stockholders' equity
Preferred Stock	0	0
Series Common Stock
Stockholders' equity
Common Stock	0	0
Common Stock [Member]
Stockholders' equity
Common Stock	$ 2.8	$ 2.8

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data	Sep. 30, 2011	Dec. 31, 2010
Current assets
Allowance for doubtful accounts receivable, current	$ 23.3	$ 30.3
Stockholders' equity
Treasury Stock, shares	9,167,639	8,912,772
Preferred Stock [Member]
Stockholders' equity
Preferred Stock, par value	$ 0.01	$ 0.01
Preferred Stock, shares authorized	10,000,000	10,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Series A Junior Participating Preferred Stock [Member]
Stockholders' equity
Preferred Stock, par value	$ 0.01	$ 0.01
Preferred Stock, shares authorized	1,500,000	1,500,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Perpetual Preferred Stock Member
Stockholders' equity
Preferred Stock, shares authorized	800,000	800,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Series Common Stock Member
Stockholders' equity
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	40,000,000	40,000,000
Common Stock, shares issued	0	0
Common Stock, shares outstanding	0	0
Common Stock [Member]
Stockholders' equity
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	800,000,000	800,000,000
Common Stock, shares issued	279,986,117	279,149,028
Common Stock, shares outstanding	270,818,478	270,236,256

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Comprehensive Income (Details) (USD $) In Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
After-tax components of comprehensive income
Net income	$ 281.5	$ 236.3	$ 752.4	$ 587.2
Net increase (decrease) in fair value of cash flow hedges, net of income taxes	(197.4)	268.1	(100.6)	135.9
Net unrealized losses on available-for-sale securities, net of income taxes	(4.5)	0	(4.3)	0
Change in actuarial loss and prior service cost associated with postretirement plans and workers' compensation obligations, net of income taxes	10.2	11.2	33.7	27.2
Comprehensive income	$ 89.8	$ 515.6	$ 681.2	$ 750.3

XML

Supplemental Guarantor/Non-Guarantor Financial Information

9 Months Ended

Sep. 30, 2011

Supplemental Guarantor Non Guarantor Financial Information [Abstract]

Supplemental Guarantor/Non-Guarantor Financial Information

Supplemental Guarantor/Non-Guarantor Financial Information

In accordance with the indentures governing the 6.875% Senior Notes due March 2013 (redeemed in the third quarter of 2010), the 5.875% Senior Notes due April 2016 (redeemed in the second quarter of 2011 as discussed in Note 8), the 7.375% Senior Notes due November 2016, the 6.5% Senior Notes due September 2020 and the 7.875% Senior Notes due November 2026 (collectively the Senior Notes), certain wholly-owned U.S. subsidiaries of the Company have fully and unconditionally guaranteed the Senior Notes, on a joint and several basis. Separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented because management believes that such information is not material to the holders of the Senior Notes. The following historical financial statement information is provided for the Guarantor/Non-Guarantor Subsidiaries.

Unaudited Supplemental Condensed Consolidating Statements of Operations

	Three Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	1,229.9		$	850.0		$	(44.0	)	$	2,035.9
Costs and expenses
Operating costs and expenses	(99.3		)	922.9			679.2			(44.0		)	1,458.8
Depreciation, depletion and amortization	—			72.1			41.6			—			113.7
Asset retirement obligation expense	—			11.2			3.8			—			15.0
Selling and administrative expenses	8.0			52.5			10.7			—			71.2
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(1.8		)	0.1			—			(1.7		)
(Income) loss from equity affiliates	(252.5		)	2.7			0.5			252.5			3.2
Interest expense	61.0			13.7			1.9			(17.4		)	59.2
Interest income	(4.1		)	(5.2		)	(12.2		)	17.4			(4.1		)
Income from continuing operations before income taxes	286.9			161.8			124.4			(252.5		)	320.6
Income tax provision (benefit)	12.9			48.3			(24.1		)	—			37.1
Income from continuing operations, net of income taxes	274.0			113.5			148.5			(252.5		)	283.5
Gain (loss) from discontinued operations, net of income taxes	0.1			(2.1		)	—			—			(2.0		)
Net income	274.1			111.4			148.5			(252.5		)	281.5
Less: Net income attributable to noncontrolling interests	—			—			7.4			—			7.4
Net income attributable to common stockholders	$	274.1		$	111.4		$	141.1		$	(252.5	)	$	274.1

Unaudited Supplemental Condensed Consolidated Statements of Operations

	Three Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	1,059.9		$	1,045.3		$	(240.5	)	$	1,864.7
Costs and expenses
Operating costs and expenses	(24.8		)	763.9			744.7			(240.5		)	1,243.3
Depreciation, depletion and amortization	—			76.2			40.5			—			116.7
Asset retirement obligation expense	—			7.1			2.8			—			9.9
Selling and administrative expenses	5.5			47.3			1.3			—			54.1
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(7.1		)	0.4			—			(6.7		)
(Income) loss from equity affiliates	(248.5		)	1.3			1.4			248.5			2.7
Interest expense	61.6			13.9			3.7			(17.0		)	62.2
Interest income	(4.0		)	(5.2		)	(10.6		)	17.0			(2.8		)
Income from continuing operations before income taxes	210.2			162.5			261.1			(248.5		)	385.3
Income tax provision (benefit)	(14.8		)	55.1			107.4			—			147.7
Income from continuing operations, net of income taxes	225.0			107.4			153.7			(248.5		)	237.6
Loss from discontinued operations, net of income taxes	(0.9		)	(0.4		)	—			—			(1.3		)
Net income	224.1			107.0			153.7			(248.5		)	236.3
Less: Net income attributable to noncontrolling interests	—			—			12.2			—			12.2
Net income attributable to common stockholders	$	224.1		$	107.0		$	141.5		$	(248.5	)	$	224.1

Unaudited Supplemental Condensed Consolidating Statements of Operations

	Nine Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	3,482.5		$	2,524.5		$	(218.2	)	$	5,788.8
Costs and expenses
Operating costs and expenses	(289.3		)	2,671.2			1,956.0			(218.2		)	4,119.7
Depreciation, depletion and amortization	—			215.6			112.2			—			327.8
Asset retirement obligation expense	—			31.2			12.7			—			43.9
Selling and administrative expenses	24.9			151.0			15.5			—			191.4
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(32.3		)	0.9			—			(31.4		)
(Income) loss from equity affiliates	(664.3		)	6.4			2.6			664.3			9.0
Interest expense	162.3			40.6			7.7			(51.3		)	159.3
Interest income	(12.8		)	(15.8		)	(34.4		)	51.3			(11.7		)
Income from continuing operations before income taxes	779.2			414.6			451.3			(664.3		)	980.8
Income tax provision	43.1			109.9			71.7			—			224.7
Income from continuing operations, net of income taxes	736.1			304.7			379.6			(664.3		)	756.1
Loss from discontinued operations, net of income taxes	(0.7		)	(3.0		)	—			—			(3.7		)
Net income	735.4			301.7			379.6			(664.3		)	752.4
Less: Net income attributable to noncontrolling interests	—			—			17.0			—			17.0
Net income attributable to common stockholders	$	735.4		$	301.7		$	362.6		$	(664.3	)	$	735.4

Unaudited Supplemental Condensed Consolidating Statements of Operations

	Nine Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	3,123.9		$	2,530.5		$	(612.7	)	$	5,041.7
Costs and expenses
Operating costs and expenses	(65.7		)	2,286.2			1,918.9			(612.7		)	3,526.7
Depreciation, depletion and amortization	—			221.3			106.0			—			327.3
Asset retirement obligation expense	—			22.1			8.2			—			30.3
Selling and administrative expenses	23.0			133.8			6.8			—			163.6
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(15.6		)	0.2			—			(15.4		)
(Income) loss from equity affiliates	(639.6		)	5.0			4.4			628.1			(2.1		)
Interest expense	168.6			39.4			11.2			(49.1		)	170.1
Interest income	(11.6		)	(16.1		)	(26.8		)	49.1			(5.4		)
Income from continuing operations before income taxes	525.3			447.8			501.6			(628.1		)	846.6
Income tax provision (benefit)	(39.6		)	143.0			153.8			—			257.2
Income from continuing operations, net of income taxes	564.9			304.8			347.8			(628.1		)	589.4
Loss from discontinued operations, net of income taxes	(0.9		)	(1.3		)	—			—			(2.2		)
Net income	564.0			303.5			347.8			(628.1		)	587.2
Less: Net income attributable to noncontrolling interests	—			—			23.2			—			23.2
Net income attributable to common stockholders	$	564.0		$	303.5		$	324.6		$	(628.1	)	$	564.0

Unaudited Supplemental Condensed Consolidating Balance Sheets

	September 30, 2011
	Parent Company		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Reclassifications/ Eliminations			Consolidated
	(Dollars in millions)
Assets
Current assets
Cash and cash equivalents	$	957.9	$	1.0		$	442.7	$	—		$	1,401.6
Accounts receivable, net	4.6		53.8			533.0		—			591.4
Inventories	—		204.3			147.6		—			351.9
Assets from coal trading activities, net	—		16.1			49.9		—			66.0
Deferred income taxes	—		62.6			34.4		(6.1		)	90.9
Other current assets	281.2		77.8			144.2		—			503.2
Total current assets	1,243.7		415.6			1,351.8		(6.1		)	3,005.0
Property, plant, equipment and mine development, net	—		4,801.4			3,006.7		—			7,808.1
Deferred income taxes	3.1		—			—		(3.1		)	—
Investments and other assets	9,845.7		204.5			155.2		(9,326.9		)	878.5
Total assets	$	11,092.5	$	5,421.5		$	4,513.7	$	(9,336.1	)	$	11,691.6
Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	25.0	$	—		$	18.8	$	—		$	43.8
Payables to (receivables from) affiliates, net	2,445.3		(2,621.7		)	176.4		—			—
Liabilities from coal trading activities, net	—		8.8			53.8		—			62.6
Deferred income taxes	6.1		—			—		(6.1		)	—
Accounts payable and accrued expenses	67.5		740.6			526.8		—			1,334.9
Total current liabilities	2,543.9		(1,872.3		)	775.8		(6.1		)	1,441.3
Long-term debt, less current maturities	2,372.0		0.1			86.5		—			2,458.6
Deferred income taxes	—		193.7			309.0		(3.1		)	499.6
Notes payable to (receivables from) affiliates, net	819.1		(823.6		)	4.5		—			—
Other noncurrent liabilities	68.5		1,670.9			230.2		—			1,969.6
Total liabilities	5,803.5		(831.2		)	1,406.0		(9.2		)	6,369.1
Peabody Energy Corporation’s stockholders’ equity	5,289.0		6,252.7			3,074.2		(9,326.9		)	5,289.0
Noncontrolling interests	—		—			33.5		—			33.5
Total stockholders’ equity	5,289.0		6,252.7			3,107.7		(9,326.9		)	5,322.5
Total liabilities and stockholders’ equity	$	11,092.5	$	5,421.5		$	4,513.7	$	(9,336.1	)	$	11,691.6

Supplemental Condensed Consolidating Balance Sheets

	December 31, 2010
	Parent Company		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Reclassifications/ Eliminations			Consolidated
	(Dollars in millions)
Assets
Current assets
Cash and cash equivalents	$	903.8	$	5.2		$	386.2	$	—		$	1,295.2
Accounts receivable, net	2.1		5.5			550.6		—			558.2
Inventories	—		168.0			164.9		—			332.9
Assets from coal trading activities, net	—		23.8			168.7		—			192.5
Deferred income taxes	—		78.6			47.9		(6.1		)	120.4
Other current assets	307.9		30.7			120.4		—			459.0
Total current assets	1,213.8		311.8			1,438.7		(6.1		)	2,958.2
Property, plant, equipment and mine development, net	—		4,732.7			2,693.4		—			7,426.1
Investments and other assets	9,331.0		179.8			99.1		(8,631.1		)	978.8
Total assets	$	10,544.8	$	5,224.3		$	4,231.2	$	(8,637.2	)	$	11,363.1
Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	25.0	$	—		$	18.2	$	—		$	43.2
Payables to (receivables from) affiliates, net	2,225.3		(2,528.3		)	303.0		—			—
Liabilities from coal trading activities, net	—		29.5			152.2		—			181.7
Deferred income taxes	6.1		—			—		(6.1		)	—
Accounts payable and accrued expenses	47.4		777.2			464.2		—			1,288.8
Total current liabilities	2,303.8		(1,721.6		)	937.6		(6.1		)	1,513.7
Long-term debt, less current maturities	2,609.6		0.1			97.1		—			2,706.8
Deferred income taxes	93.2		135.4			311.2		—			539.8
Notes payable to (receivables from) affiliates, net	818.9		(825.3		)	6.4		—			—
Other noncurrent liabilities	58.6		1,652.8			202.1		—			1,913.5
Total liabilities	5,884.1		(758.6		)	1,554.4		(6.1		)	6,673.8
Peabody Energy Corporation’s stockholders’ equity	4,660.7		5,982.9			2,648.2		(8,631.1		)	4,660.7
Noncontrolling interests	—		—			28.6		—			28.6
Total stockholders’ equity	4,660.7		5,982.9			2,676.8		(8,631.1		)	4,689.3
Total liabilities and stockholders’ equity	$	10,544.8	$	5,224.3		$	4,231.2	$	(8,637.2	)	$	11,363.1

Unaudited Supplemental Condensed Consolidating Statements of Cash Flows

	Nine Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidated
	(Dollars in millions)
Cash Flows From Operating Activities
Net cash provided by continuing operations	$	144.7		$	721.5		$	327.9		$	1,194.1
Net cash used in discontinued operations	(1.6		)	(2.0		)	—			(3.6		)
Net cash provided by operating activities	143.1			719.5			327.9			1,190.5
Cash Flows From Investing Activities
Additions to property, plant, equipment and mine development	—			(218.6		)	(397.6		)	(616.2		)
Federal coal lease expenditures	—			(42.4		)	—			(42.4		)
Investment in Prairie State Energy Campus	—			(29.8		)	—			(29.8		)
Proceeds from disposal of assets	—			12.1			—			12.1
Investment in equity affiliates and joint ventures	—			(2.1		)	(37.7		)	(39.8		)
Proceeds from sales of debt and equity securities	—			—			53.3			53.3
Purchases of debt and equity securities	—			—			(44.1		)	(44.1		)
Purchases of short-term investments	(75.0		)	—			(25.0		)	(100.0		)
Maturity of short-term investments	75.0			—			25.0			100.0
Investment in shares of Macarthur Coal Limited	—			—			(45.5		)	(45.5		)
Other, net	—			(4.4		)	—			(4.4		)
Net cash used in investing activities	—			(285.2		)	(471.6		)	(756.8		)
Cash Flows From Financing Activities
Proceeds from long-term debt	—			—			1.4			1.4
Payments of long-term debt	(236.9		)	—			(11.5		)	(248.4		)
Dividends paid	(69.1		)	—			—			(69.1		)
Repurchase of employee common stock relinquished for tax withholding	(16.1		)	—			—			(16.1		)
Payment of debt issuance costs	(4.0		)	—			—			(4.0		)
Excess tax benefits related to share-based compensation	6.1			—			—			6.1
Proceeds from stock options exercised	4.5			—			—			4.5
Other, net	6.3			—			(8.0		)	(1.7		)
Transactions with affiliates, net	220.2			(438.5		)	218.3			—
Net cash provided by (used in) financing activities	(89.0		)	(438.5		)	200.2			(327.3		)
Net change in cash and cash equivalents	54.1			(4.2		)	56.5			106.4
Cash and cash equivalents at beginning of period	903.8			5.2			386.2			1,295.2
Cash and cash equivalents at end of period	$	957.9		$	1.0		$	442.7		$	1,401.6

Unaudited Supplemental Condensed Consolidating Statements of Cash Flows

	Nine Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidated
	(Dollars in millions)
Cash Flows From Operating Activities
Net cash provided by (used in) continuing operations	$	(323.0	)	$	1,002.7		$	223.8		$	903.5
Net cash used in discontinued operations	(9.5		)	(1.8		)	—			(11.3		)
Net cash provided by (used in) operating activities	(332.5		)	1,000.9			223.8			892.2
Cash Flows From Investing Activities
Additions to property, plant, equipment and mine development	—			(238.1		)	(53.2		)	(291.3		)
Investment in Prairie State Energy Campus	—			(52.5		)	—			(52.5		)
Proceeds from disposal of assets	—			8.5			1.2			9.7
Investment in equity affiliates and joint ventures	—			(15.0		)	(3.8		)	(18.8		)
Proceeds from sales of debt and equity securities	—			—			10.6			10.6
Purchases of debt and equity securities	—			—			(73.6		)	(73.6		)
Other, net	—			(7.2		)	(0.2		)	(7.4		)
Net cash used in investing activities	—			(304.3		)	(119.0		)	(423.3		)
Cash Flows From Financing Activities
Proceeds from long-term debt	1,150.0			—			—			1,150.0
Payments of long-term debt	(1,140.3		)	—			(8.2		)	(1,148.5		)
Dividends paid	(56.5		)	—			—			(56.5		)
Repurchase of employee common stock relinquished for tax withholding	(8.4		)	—			—			(8.4		)
Payment of debt issuance costs	(32.2		)	—			—			(32.2		)
Proceeds from stock options exercised	5.9			—			—			5.9
Other, net	5.8			—			(6.3		)	(0.5		)
Transactions with affiliates, net	521.1			(696.7		)	175.6			—
Net cash provided by (used in) financing activities	445.4			(696.7		)	161.1			(90.2		)
Net change in cash and cash equivalents	112.9			(0.1		)	265.9			378.7
Cash and cash equivalents at beginning of period	368.4			0.2			620.2			988.8
Cash and cash equivalents at end of period	$	481.3		$	0.1		$	886.1		$	1,367.5

XML

Document and Entity Information Document	9 Months Ended
	Sep. 30, 2011	Oct. 28, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	PEABODY ENERGY CORP
Entity Central Index Key	0001064728
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		270,874,294

XML

Coal Trading (Details 1) (Coal Trading [Member], USD $) In Millions, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010		Dec. 31, 2010
Fair value coal trading net assets (liabilities) measured on recurring basis
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value	$ 109.5				$ 109.5				$ 174.2
Changes in the Company's recurring Level 3 net financial assets (liabilities)
Beginning of period	9.9		13.8		18.6		17.0
Total gains or losses (realized/unrealized):
Included in earnings	(1.4)		2.1		10.7		(0.6)
Included in other comprehensive income	0		0.2		0		0.3
Settlements	(1.3)		(0.7)		(3.1)		(1.4)
Transfers out	1.0		0.8		(18.0)		0.9
End of period	8.2		16.2		8.2		16.2
Changes in unrealized gains (losses) relating to Level 3 net financial assets held both at the beginning and the end of the period
Changes in unrealized gains (losses)	(1.1)	[1]	1.2	[1]	8.7	[1]	3.5	[1]
Schedule of future realization of trading portfolio
2011	33.00%				33.00%
2012	46.00%				46.00%
2013	9.00%				9.00%
2014	8.00%				8.00%
2015	4.00%				4.00%
Percentage of trading portfolio expiration, total	100.00%				100.00%
Coal Trading (Textuals) [Abstract]
Margin posted with counterparties and exchanges	73.4				73.4				148.2
Margin held from counterparties and exchanges									0.1
Letters of credit held in lieu of margin posted by the counterparties									5.0
Cash flow hedges of anticipated future sales of coal (net liability)	109.5				109.5				174.2
Expected amount of losses to be realized over the next 12 months in accumulated other comprehensive income	76
Estimated time of transfer (in months)	12 months
Potential collateralization that may be requested by counterparties related to material adverse event	48				48				160
Margin posted to counterparties related to material adverse event	1.0				1.0				5.8
Additional potential collateral requirements for a credit downgrade	2.0				2.0				0
Margin posted to counterparties related to credit downgrade	0				0
Margin posted with a counterparty due to timing and market fluctuations									5.0
Variation margin posted	72.4				72.4				137.4
Initial margin posted	58.9				58.9				39.5
Margin in excess of the exchange-required variation and initial margin	13.0				13.0				4.4
Approximate percentage of margin posted related to cash flow hedges	94.00%				94.00%
Losses reclassified to earnings as forecasted transactions no longer probable					9.1
Fair Value, Measurements, Recurring [Member] | Level 1[Member]
Fair value coal trading net assets (liabilities) measured on recurring basis
Commodity swaps and options	15.1				15.1				10.7
Physical commodity purchase/sale contracts	0				0				0
Total net financial assets (liabilities)	15.1				15.1				10.7
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Fair value coal trading net assets (liabilities) measured on recurring basis
Commodity swaps and options	3.9				3.9				(76.2)
Physical commodity purchase/sale contracts	(23.8)				(23.8)				57.7
Total net financial assets (liabilities)	(19.9)				(19.9)				(18.5)
Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Fair value coal trading net assets (liabilities) measured on recurring basis
Commodity swaps and options	0				0				0
Physical commodity purchase/sale contracts	8.2				8.2				18.6
Total net financial assets (liabilities)	8.2				8.2				18.6
Fair Value, Measurements, Recurring [Member]
Fair value coal trading net assets (liabilities) measured on recurring basis
Commodity swaps and options	19.0				19.0				(65.5)
Physical commodity purchase/sale contracts	(15.6)				(15.6)				76.3
Total net financial assets (liabilities)	$ 3.4				$ 3.4				$ 10.8

[1] Within the unaudited condensed consolidated statements of operations for the periods presented, unrealized gains and losses from Level 3 items are combined with unrealized gains and losses on positions classified in Level 1 or 2, as well as other positions that have been realized during the applicable periods.

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Investments (Tables)

9 Months Ended

Sep. 30, 2011

Investments, Debt and Equity Securities [Abstract]

Investments in available-for-sale securities

Investments in available-for-sale securities at September 30, 2011 were as follows:

Available-for-sale securities	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Dollars in millions)
Current:
Federal government securities	$	5.2	$	—	$	—	$	5.2
U.S. corporate bonds	4.6		—		—		4.6
Noncurrent:
Marketable equity securities	55.5		—		6.9		48.6
Federal government securities	11.4		0.2		—		11.6
U.S. corporate bonds	9.4		0.1		—		9.5
Total	$	86.1	$	0.3	$	6.9	$	79.5

Investments in available-for-sale securities at December 31, 2010 were as follows:

Available-for-sale securities	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			(Dollars in millions)
Current:
Federal government securities	$	0.5	$	—	$	—	$	0.5
U.S. corporate bonds	1.9		—		—		1.9
Noncurrent:
Federal government securities	9.2		—		—		9.2
U.S. corporate bonds	6.3		—		—		6.3
Total	$	17.9	$	—	$	—	$	17.9

Contractual maturities for available for sale investment in debt securities

Contractual maturities for available-for-sale investments in debt securities at September 30, 2011 were as shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Contractual maturities for available-for-sale securities	Cost		Fair Value
	(Dollars in millions)
Due in one year or less	$	9.8	$	9.8
Due in one to five years	20.8		21.1
Total	$	30.6	$	30.9

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Coal Trading (Details) (USD $) In Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010	Sep. 30, 2011		Sep. 30, 2010	Dec. 31, 2010
Fair value of financial asset (liability) positions measured on a recurring basis
Assets from coal trading activities, Net Basis	$ 66.0			$ 66.0			$ 192.5
Liabilities from coal trading activities, Net Basis	(62.6)			(62.6)			(181.7)
Coal Trading [Member] | Commodity swaps and options [Member]
Trading revenue
Trading revenue	(0.6)		38.9	(26.6)		29.5
Coal Trading [Member] | Physical commodity purchase / sale contracts [Member]
Trading revenue
Trading revenue	29.6		23.2	60.9		141.5
Coal Trading [Member]
Trading revenue
Trading revenue	29.0		62.1	34.3		171.0
Fair value of financial asset (liability) positions measured on a recurring basis
Assets from coal trading activities, Gross Basis	590.5			590.5			1,706.2
Assets from coal trading activities, Net Basis	66.0			66.0			192.5
Liabilities from coal trading activities, Gross Basis	(660.5)			(660.5)			(1,843.5)
Liabilities from coal trading activities, Net Basis	(62.6)			(62.6)			(181.7)
Subtotal, Gross Basis	(70.0)			(70.0)			(137.3)
Subtotal, Net Basis	3.4			3.4			10.8
Net margin posted, Gross Basis	(73.4)	[1]		(73.4)	[1]		(148.1)	[1]
Net margin posted, Net Basis	0	[1]		0	[1]		0	[1]
Net value of coal trading positions, Gross Basis	3.4			3.4			10.8
Net value of coal trading positions, Net Basis	$ 3.4			$ 3.4			$ 10.8

[1] Represents margin posted with counterparties and exchanges of $73.4 million at September 30, 2011; and margin posted with counterparties and exchanges of $148.2 million, net of margin held of $0.1 million, at December 31, 2010. In addition, at December 31, 2010, the Company held letters of credit of $5.0 million from counterparties in lieu of margin posted. Of the margin posted at September 30, 2011, approximately 94% related to cash flow hedges.

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Derivatives and Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Disclosures [Abstract]

Derivatives and Fair Value Measurements

Derivatives and Fair Value Measurements

Risk Management — Non-Coal Trading Activities

The Company is exposed to various types of risk in the normal course of business, including price risk on commodities utilized in the Company's operations, interest rate risk on long-term debt, and foreign currency exchange rate risk for non-U.S. dollar expenditures. In most cases, commodity price risk (excluding coal trading activities) related to the sale of coal is mitigated through the use of long-term, fixed-price contracts rather than through the use of financial instruments. For the price risk exposure on other commodities, as well as for the interest rate risk and foreign currency exchange rate risk, the Company utilizes financial derivative instruments to manage the risks related to these fluctuations. All of these risks are actively monitored in an effort to ensure compliance with the risk management policies of the Company.

Interest Rate Swaps. The Company is exposed to interest rate risk on its fixed rate and variable rate long-term debt. From time to time, the Company manages the interest rate risk associated with the fair value of its fixed rate borrowings using fixed-to-floating interest rate swaps to effectively convert a portion of the underlying cash flows on the debt into variable rate cash flows. The Company designates these swaps as fair value hedges, with the objective of hedging against changes in the fair value of the fixed rate debt that results from market interest rate changes. From time to time, the interest rate risk associated with the Company’s variable rate borrowings is managed using floating-to-fixed interest rate swaps. The Company designates these swaps as cash flow hedges, with the objective of reducing the variability of cash flows associated with market interest rate changes. As of September 30, 2011, the Company had no interest rate swaps in place.

Foreign Currency Hedges. The Company is exposed to foreign currency exchange rate risk, primarily on Australian dollar expenditures made in its Australian Mining segment. This risk is managed by entering into forward contracts and options that the Company designates as cash flow hedges, with the objective of reducing the variability of cash flows associated with forecasted foreign currency expenditures.

Diesel Fuel and Explosives Hedges. The Company is exposed to commodity price risk associated with diesel fuel and explosives in the U.S. and Australia. This risk is managed through the use of cost pass-through contracts and derivatives, primarily swaps. The Company generally designates the swap contracts as cash flow hedges, with the objective of reducing the variability of cash flows associated with forecasted diesel fuel and explosives purchases. In Australia, the explosives costs and a portion of the diesel fuel costs are not hedged as they are usually included in the fees paid to the Company’s contract miners.

Notional Amounts and Fair Value. The following summarizes the Company’s foreign currency and commodity positions at September 30, 2011:

	Notional Amount by Year of Maturity
	Total		2011		2012		2013		2014		2015		2016 and thereafter
Foreign Currency
A$:US$ hedge contracts (A$ millions)	$	3,977.9	$	391.3	$	1,605.5	$	1,210.6	$	770.5	$	—	$	—
GBP£:US$ hedge contracts (GBP millions)	£	6.5	£	—	£	6.5	£	—	£	—	£	—	£	—
Commodity Contracts
Diesel fuel hedge contracts (million gallons)	188.9		21.4		83.9		57.9		25.7		—		—
U.S. explosives hedge contracts (million MMBtu)	8.8		1.1		3.9		2.6		1.2		—		—

	Account Classification by
	Cash Flow Hedge		Fair Value Hedge		Economic Hedge		Fair Value Asset (Liability)
							(Dollars in millions)
Foreign Currency
A$:US$ hedge contracts (A$ millions)	$	3,977.9	$	—	$	—	$	412.5
GBP£:US$ hedge contracts (GBP millions)	£	6.5	£	—	£	—	$	(0.6	)
Commodity Contracts
Diesel fuel hedge contracts (million gallons)	188.9		—		—		$	38.0
U.S. explosives hedge contracts (million MMBtu)	8.8		—		—		$	(4.9	)

Hedge Ineffectiveness. The Company assesses, both at inception and at least quarterly thereafter, whether the derivatives used in hedging activities are highly effective at offsetting the changes in the anticipated cash flows of the hedged item. The effective portion of the change in the fair value is recorded in “Accumulated other comprehensive loss” until the hedged transaction impacts reported earnings, at which time any gain or loss is reclassified to the consolidated statements of operations. To the extent that the periodic changes in the fair value of the derivatives exceed the changes in the hedged item, the ineffective portion of the periodic non-cash changes are recorded in the consolidated statements of operations in the period of the change. If the hedge ceases to qualify for hedge accounting, the Company prospectively recognizes the mark-to-market movements in the consolidated statements of operations in the period of the change.

A measure of ineffectiveness is inherent in hedging future diesel fuel purchases with derivative positions based on crude oil and refined petroleum products as a result of location and product differences.

The Company’s derivative positions for the hedging of future explosives purchases are based on natural gas, which is the primary price component of explosives. However, a small measure of ineffectiveness exists as the contractual purchase price includes manufacturing fees that are subject to periodic adjustments. In addition, other fees, such as transportation surcharges, can result in ineffectiveness, but have historically changed infrequently and comprise a small portion of the total explosives cost.

The Company’s derivative positions for the hedging of forecasted foreign currency expenditures contain a small measure of ineffectiveness due to timing differences between the hedge settlement and the purchase transaction, which could differ by less than a day and up to a maximum of 30 days.

The tables below show the classification and amounts of pre-tax gains and losses related to the Company’s non-trading hedges during the three and nine months ended September 30, 2011 and 2010:

		Three Months Ended September 30, 2011
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives		Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)		Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Diesel fuel cash flow hedge contracts	Operating costs and expenses	$	—	$	(47.9	)	$	8.4	$	(1.0	)
Explosives cash flow hedge contracts	Operating costs and expenses	—		(3.3		)	0.1		(0.2		)
Foreign currency cash flow hedge contracts:
— Operating costs	Operating costs and expenses	—		(269.1		)	92.2		—
— Capital expenditures	Depreciation, depletion and amortization	—		(0.5		)	—		—
Total		$	—	$	(320.8	)	$	100.7	$	(1.2	)

		Three Months Ended September 30, 2010
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives		Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)			Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Diesel fuel cash flow hedge contracts	Operating costs and expenses	$	—	$	22.3		$	(10.9	)	$	0.7
Explosives cash flow hedge contracts	Operating costs and expenses	—		(1.1		)	(2.5		)	—
Foreign currency cash flow hedge contracts	Operating costs and expenses	—		434.7			38.5			—
Total		$	—	$	455.9		$	25.1		$	0.7

		Nine Months Ended September 30, 2011
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives		Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)		Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Diesel fuel cash flow hedge contracts	Operating costs and expenses	$	—	$	25.0		$	28.4	$	1.1
Explosives cash flow hedge contracts	Operating costs and expenses	—		(4.1		)	—		(0.7		)
Foreign currency cash flow hedge contracts:
— Operating costs	Operating costs and expenses	—		33.8			261.1		—
— Capital expenditures	Depreciation, depletion and amortization	—		(0.7		)	—		—
Total		$	—	$	54.0		$	289.5	$	0.4

		Nine Months Ended September 30, 2010
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives(1)			Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)			Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Interest rate swaps cash flow hedge contracts	Interest expense	$	(8.5	)	$	0.8		$	(0.5	)	$	—
Diesel fuel cash flow hedge contracts	Operating costs and expenses	—			(7.5		)	(27.3		)	—
Explosives cash flow hedge contracts	Operating costs and expenses	—			(4.7		)	(7.4		)	—
Foreign currency cash flow hedge contracts	Operating costs and expenses	—			355.3			104.4			—
Total		$	(8.5	)	$	343.9		$	69.2		$	—

⁽¹⁾  Amounts relate to swaps that were de-designated and terminated in conjunction with the refinancing of the Company’s previous credit facility.

Based on the net fair value of the Company’s non-coal trading positions held in “Accumulated other comprehensive loss” at September 30, 2011, unrealized gains to be reclassified from comprehensive income to earnings over the next 12 months associated with the Company’s foreign currency and diesel fuel hedge programs are expected to be approximately $230 million and $36 million, respectively. The unrealized losses to be realized under the explosives hedge program are expected to be approximately $3 million. As these unrealized gains are associated with derivative instruments that represent hedges of forecasted transactions, the amounts reclassified to earnings will partially offset the realized transactions, while the unrealized losses will add incremental expense to the condensed consolidated statements of operations.

The classification and amount of derivatives presented on a gross basis as of September 30, 2011 and December 31, 2010 are as follows:

	Fair Value as of September 30, 2011
Financial Instrument	Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
	(Dollars in millions)
Diesel fuel cash flow hedge contracts	$	37.1	$	14.3	$	1.1	$	12.3
Explosives cash flow hedge contracts	—		—		3.1		1.8
Foreign currency cash flow hedge contracts	243.2		203.2		13.0		21.5
Total	$	280.3	$	217.5	$	17.2	$	35.6

	Fair Value as of December 31, 2010
Financial Instrument	Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
	(Dollars in millions)
Diesel fuel cash flow hedge contracts	$	25.3	$	26.9	$	11.9	$	—
Explosives cash flow hedge contracts	0.5		0.1		0.1		0.6
Foreign currency cash flow hedge contracts	273.5		366.6		—		—
Total	$	299.3	$	393.6	$	12.0	$	0.6

After netting by counterparty where permitted, the fair values of the respective derivatives are reflected in “Other current assets,” “Investments and other assets,” “Accounts payable and accrued expenses” and “Other noncurrent liabilities” in the condensed consolidated balance sheets.

See Note 6 for information related to the Company’s coal trading activities.

Fair Value Measurements

The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. These levels include: Level 1, inputs are quoted prices in active markets for the identical assets or liabilities; Level 2, inputs other than quoted prices included in Level 1 that are directly or indirectly observable through market-corroborated inputs; and Level 3, inputs are unobservable, or observable but cannot be market-corroborated, requiring the Company to make assumptions about pricing by market participants.

Financial Instruments Measured on a Recurring Basis. The following tables set forth the hierarchy of the Company’s net financial asset (liability) positions for which fair value is measured on a recurring basis:

	September 30, 2011
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Investment in debt and equity securities	$	79.5	$	—		$	—	$	79.5
Commodity swaps and options — diesel fuel	—		38.0			—		38.0
Commodity swaps and options — explosives	—		(4.9		)	—		(4.9		)
Foreign currency hedge contracts	—		411.9			—		411.9
Total net financial assets	$	79.5	$	445.0		$	—	$	524.5

	December 31, 2010
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Investment in debt securities	$	17.9	$	—		$	—	$	17.9
Commodity swaps and options — diesel fuel	—		40.3			—		40.3
Commodity swaps and options — explosives	—		(0.1		)	—		(0.1		)
Foreign currency hedge contracts	—		640.1			—		640.1
Total net financial assets	$	17.9	$	680.3		$	—	$	698.2

For Level 1 and 2 financial assets and liabilities, the Company utilizes both direct and indirect observable price quotes, including interest rate yield curves, exchange indices, broker quotes, published indices and other market quotes. Below is a summary of the Company’s valuation techniques for Level 1 and 2 financial assets and liabilities:

• Investment in debt and equity securities: valued based on quoted prices in active markets (Level 1).

• Commodity swaps and options — diesel fuel and explosives: generally based on a valuation that is corroborated by the use of market-based pricing (Level 2).

• Foreign currency hedge contracts: valued utilizing inputs obtained in quoted public markets (Level 2).

The Company did not have any transfers between levels during the three or nine months ended September 30, 2011 or 2010 for its non-coal trading positions. The Company’s policy is to value all transfers between levels using the beginning of period valuation.

Other Financial Instruments. The following methods and assumptions were used by the Company in estimating fair values for other financial instruments as of September 30, 2011 and December 31, 2010:

• Cash and cash equivalents, accounts receivable, including those within the Company’s accounts receivable securitization program, and accounts payable and accrued expenses have carrying values which approximate fair value due to the short maturity or the liquid nature of these instruments.

• The Company’s investments in debt and equity securities related to the Company’s pro-rata share of funding in NCIG are included in “Investments and other assets” in the condensed consolidated balance sheets. The debt securities are recorded at cost, which approximates fair value.

• Long-term debt fair value estimates are based on observed prices for securities with an active trading market when available, and otherwise on estimated borrowing rates to discount the cash flows to their present value. The carrying amounts of the 7.875% Senior Notes due 2026 and the Convertible Junior Subordinated Debentures due 2066 (the Debentures) are net of the respective unamortized note discounts.

The carrying amounts and estimated fair values of the Company’s debt are summarized as follows:

	September 30, 2011				December 31, 2010
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(Dollars in millions)
Long-term debt	$	2,502.4	$	2,645.3	$	2,750.0	$	2,960.0

Nonperformance and Credit Risk

The fair value of the Company’s non-coal trading derivative assets and liabilities reflects adjustments for nonperformance and credit risk. The Company manages its counterparty risk through established credit standards, diversification of counterparties, utilizing investment grade commercial banks and continuous monitoring of counterparty creditworthiness. To reduce its credit exposure for these hedging activities, the Company seeks to enter into netting agreements with counterparties that permit the Company to offset asset and liability positions with such counterparties.

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Inventories (Tables)

9 Months Ended

Sep. 30, 2011

Inventory Disclosure [Abstract]

Inventories

Inventories consisted of the following:

	September 30, 2011		December 31, 2010
	(Dollars in millions)
Materials and supplies	$	109.8	$	97.1
Raw coal	54.4		55.4
Saleable coal	187.7		180.4
Total	$	351.9	$	332.9

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Derivatives and Fair Value Measurements (Details 1) (USD $) In Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income on derivative (effective portion)	$ (320.8)	$ 455.9	$ 54.0	$ 343.9
Gain (loss) reclassified from other comprehensive income into income (effective portion)	100.7	25.1	289.5	69.2
Gain (loss) reclassified from other comprehensive income into income (ineffective portion)	(1.2)	0.7	0.4	0
Foreign Currency Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized gains (losses) to be reclassified from comprehensive income to earnings over the next 12 months			230
Cash flow hedges [Member] | Interest rate swaps [Member] | Interest expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income on derivative (effective portion)				0.8
Gain (loss) reclassified from other comprehensive income into income (effective portion)				(0.5)
Gain (loss) reclassified from other comprehensive income into income (ineffective portion)				0
Cash flow hedges [Member] | Interest rate swaps [Member] | Interest expense [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income on non-designated derivatives				(8.5)	[1]
Diesel fuel hedge contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized gains (losses) to be reclassified from comprehensive income to earnings over the next 12 months			36
Diesel fuel hedge contracts [Member] | Cash flow hedges [Member] | Operating costs and expenses [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income on derivative (effective portion)	(47.9)	22.3	25.0	(7.5)
Gain (loss) reclassified from other comprehensive income into income (effective portion)	8.4	(10.9)	28.4	(27.3)
Gain (loss) reclassified from other comprehensive income into income (ineffective portion)	(1.0)	0.7	1.1	0
Diesel fuel hedge contracts [Member] | Cash flow hedges [Member] | Operating costs and expenses [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income on non-designated derivatives	0	0	0	0	[1]
Cash flow hedges [Member] | Explosives cash flow hedge contracts [Member] | Operating costs and expenses [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income on derivative (effective portion)	(3.3)	(1.1)	(4.1)	(4.7)
Gain (loss) reclassified from other comprehensive income into income (effective portion)	0.1	(2.5)	0	(7.4)
Gain (loss) reclassified from other comprehensive income into income (ineffective portion)	(0.2)	0	(0.7)	0
Cash flow hedges [Member] | Explosives cash flow hedge contracts [Member] | Operating costs and expenses [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income on non-designated derivatives	0	0	0	0	[1]
U.S. explosives hedge contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized gains (losses) to be reclassified from comprehensive income to earnings over the next 12 months			(3)
Foreign currency cash flow hedge contracts [Member] | Operating costs and expenses [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income on derivative (effective portion)	(269.1)	434.7	33.8	355.3
Gain (loss) reclassified from other comprehensive income into income (effective portion)	92.2	38.5	261.1	104.4
Gain (loss) reclassified from other comprehensive income into income (ineffective portion)	0	0	0	0
Foreign currency cash flow hedge contracts [Member] | Operating costs and expenses [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income on non-designated derivatives	0	0	0	0	[1]
Foreign currency cash flow hedge contracts [Member] | Depreciation, depletion and amortization [Member] | Capital expenditure [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income on derivative (effective portion)	(0.5)		(0.7)
Gain (loss) reclassified from other comprehensive income into income (effective portion)	0		0
Gain (loss) reclassified from other comprehensive income into income (ineffective portion)	0		0
Foreign currency cash flow hedge contracts [Member] | Depreciation, depletion and amortization [Member] | Capital expenditure [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income on non-designated derivatives	0		0
Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income on non-designated derivatives	$ 0	$ 0	$ 0	$ (8.5)	[1]

[1] Amounts relate to swaps that were de-designated and terminated in conjunction with the refinancing of the Company’s previous credit facility.

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Investments (Details) (USD $) In Millions	Sep. 30, 2011	Dec. 31, 2010
Investments in available-for-sale securities
Available-for-sale securities, Cost	$ 86.1	$ 17.9
Available-for-sale Securities, Gross Unrealized Gains	0.3	0
Available-for-sale Securities, Gross Unrealized Losses	6.9	0
Available-for-sale securities, Fair Value	79.5	17.9
Current [Member] | Federal government securities [Member]
Investments in available-for-sale securities
Available-for-sale securities, Cost	5.2	0.5
Available-for-sale Securities, Gross Unrealized Gains	0	0
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale securities, Fair Value	5.2	0.5
Current [Member] | U.S. corporate bonds [Member]
Investments in available-for-sale securities
Available-for-sale securities, Cost	4.6	1.9
Available-for-sale Securities, Gross Unrealized Gains	0	0
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale securities, Fair Value	4.6	1.9
Noncurrent [Member] | Federal government securities [Member]
Investments in available-for-sale securities
Available-for-sale securities, Cost	11.4	9.2
Available-for-sale Securities, Gross Unrealized Gains	0.2	0
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale securities, Fair Value	11.6	9.2
Noncurrent [Member] | U.S. corporate bonds [Member]
Investments in available-for-sale securities
Available-for-sale securities, Cost	9.4	6.3
Available-for-sale Securities, Gross Unrealized Gains	0.1	0
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale securities, Fair Value	9.5	6.3
Noncurrent [Member] | Marketable equity securities [Member]
Investments in available-for-sale securities
Available-for-sale securities, Cost	55.5
Available-for-sale Securities, Gross Unrealized Gains	0
Available-for-sale Securities, Gross Unrealized Losses	6.9
Available-for-sale securities, Fair Value	$ 48.6

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Fair Value Transfer, Policy [Policy Text Block]

The Company’s policy is to value all transfers between levels using the beginning of period valuation.

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Comprehensive Income

9 Months Ended

Sep. 30, 2011

Equity [Abstract]

Comprehensive Income

Comprehensive Income

The following table sets forth the after-tax components of comprehensive income:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011			2010		2011			2010
	(Dollars in millions)
Net income	$	281.5		$	236.3	$	752.4		$	587.2
Net increase (decrease) in fair value of cash flow hedges, net of income taxes	(197.4		)	268.1		(100.6		)	135.9
Net unrealized losses on available-for-sale securities, net of income taxes	(4.5		)	—		(4.3		)	—
Change in actuarial loss and prior service cost associated with postretirement plans and workers’ compensation obligations, net of income taxes	10.2			11.2		33.7			27.2
Comprehensive income	$	89.8		$	515.6	$	681.2		$	750.3

Comprehensive income differs from net income by the amount of unrealized gains or losses resulting from valuation changes of the Company’s cash flow hedges (see Note 5 and Note 6) or its available-for-sale securities (see Note 3) and the change in actuarial loss and prior service cost (see Note 9) during the periods presented. None of the reconciling items between net income and comprehensive income relates to the Company’s noncontrolling interests for the periods presented.

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Basis of Presentation

9 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements include the accounts of Peabody Energy Corporation (the Company) and its affiliates. All intercompany transactions, profits and balances have been eliminated in consolidation.

The accompanying condensed consolidated financial statements as of September 30, 2011 and for the three and nine months ended September 30, 2011 and 2010, and the notes thereto, are unaudited. However, in the opinion of management, these financial statements reflect all normal, recurring adjustments necessary for a fair presentation of the results of the periods presented. The balance sheet information as of December 31, 2010 has been derived from the Company’s audited consolidated balance sheet. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2011.

The Company classifies items within discontinued operations in the unaudited condensed consolidated statements of operations when the operations and cash flows of a particular component (defined as operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity) of the Company have been (or will be) eliminated from the ongoing operations of the Company as a result of a disposal transaction, and the Company will no longer have any significant continuing involvement in the operations of that component.

Certain amounts in prior periods have been reclassified to conform with the current year presentations with no effect on previously reported net income or stockholders’ equity.

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Financial Instruments and Guarantees with Off-Balance-Sheet Risk (Tables)

9 Months Ended

Sep. 30, 2011

Financial Instruments And Guarantees With Off Balance Sheet Risk Disclosure [Abstract]

Letters of credit, bank guarantees, surety bonds and corporate guarantees

As of September 30, 2011, the Company had the following financial instruments with off-balance sheet risk:

	Reclamation Obligations		Lease Obligations		Workers’ Compensation Obligations		Other(1)		Total
	(Dollars in millions)
Self bonding	$	936.9	$	—	$	—	$	—	$	936.9
Surety bonds	606.4		104.7		6.2		10.4		727.7
Bank guarantees	127.4		—		—		139.2		266.6
Letters of credit	—		—		62.2		2.8		65.0
Bilateral cash collateralization agreements	—		—		—		79.7		79.7
	$	1,670.7	$	104.7	$	68.4	$	232.1	$	2,075.9

⁽¹⁾  Other includes letter of credit and bilateral cash collateralization agreement obligations described below and an additional $149.6 million in bank guarantees and surety bonds related to collateral for surety companies, road maintenance, performance guarantees and other operations.

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Income Taxes

9 Months Ended

Sep. 30, 2011

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following is a reconciliation of the expected statutory federal income tax provision to the Company’s actual income tax provision:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Expected income tax provision at federal statutory rate	$	112.2		$	134.9		$	343.3		$	296.3
Excess depletion	(13.9		)	(25.8		)	(39.0		)	(44.4		)
Foreign earnings provision differential	(34.9		)	(29.8		)	(84.5		)	(57.1		)
Foreign earnings repatriation	—			84.5			—			84.5
Remeasurement of foreign income tax accounts	(38.7		)	42.7			(16.9		)	28.8
State income taxes, net of U.S. federal tax benefit	4.8			2.1			10.5			7.0
General business tax credits	(4.4		)	(5.6		)	(12.4		)	(13.1		)
Changes in valuation allowance	2.5			(63.7		)	7.0			(45.6		)
Changes in tax reserves	6.0			2.2			10.8			(4.9		)
Other, net	3.5			6.2			5.9			5.7
Total provision	$	37.1		$	147.7		$	224.7		$	257.2

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Earnings per Share (EPS)

9 Months Ended

Sep. 30, 2011

Earnings Per Share [Abstract]

Earnings per Share (EPS)

Earnings per Share (EPS)

Basic and diluted EPS are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. The Company’s restricted stock awards are considered participating securities because holders are entitled to receive non-forfeitable dividends during the vesting term. Diluted EPS includes securities that could potentially dilute basic EPS during a reporting period, which for the Company includes the Debentures and share-based compensation awards.

A conversion of the Debentures may result in payment for any conversion value in excess of the principal amount of the Debentures in the Company’s common stock. For diluted EPS purposes, potential common stock is calculated based on whether the market price of the Company’s common stock at the end of each reporting period is in excess of the conversion price of the Debentures. For a full discussion of the conditions under which the Debentures may be converted, the conversion rate to common stock and the conversion price, see Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

For all but the performance units, the potentially dilutive impact of the Company’s share-based compensation awards is determined using the treasury stock method. Under the treasury stock method, awards are treated as if they had been exercised with any proceeds used to repurchase common stock at the average market price during the period. Any incremental difference between the assumed number of shares issued and purchased is included in the diluted share computation. For the Company’s other share-based compensation awards, performance units, their contingent features result in an assessment for any potentially dilutive common stock by using the end of the reporting period as if it were the end of the contingency period for all units granted. For a full discussion of the Company’s share-based compensation awards, see Note 14 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

The computation of diluted EPS excludes anti-dilutive shares of approximately 0.2 million for the three and nine months ended September 30, 2011 and less than 0.1 million for the three and nine months ended September 30, 2010. These anti-dilutive shares were due to certain share-based compensation awards calculated under the treasury stock method. This anti-dilution generally occurs where the exercise prices are higher than the average market value of the Company’s stock price during the applicable period.

The following illustrates the earnings allocation method utilized in the calculation of basic and diluted EPS.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(In millions, except per share amounts)
EPS numerator:
Income from continuing operations, net of income taxes	$	283.5		$	237.6		$	756.1		$	589.4
Less: Net income attributable to noncontrolling interests	7.4			12.2			17.0			23.2
Income from continuing operations attributable to    common stockholders, before allocation of earnings to    participating securities	276.1			225.4			739.1			566.2
Less: Earnings allocated to participating securities	(1.6		)	(1.7		)	(4.2		)	(4.1		)
Income from continuing operations attributable to    common stockholders, after earnings allocated to    participating securities (1)	274.5			223.7			734.9			562.1
Loss from discontinued operations, net of income taxes	(2.0		)	(1.3		)	(3.7		)	(2.2		)
Net income attributable to common stockholders, after    earnings allocated to participating securities (1)	$	272.5		$	222.4		$	731.2		$	559.9
EPS denominator:
Weighted average shares outstanding — basic	269.2			267.1			269.0			266.7
Impact of dilutive securities	1.4			1.5			1.5			1.7
Weighted average shares outstanding — diluted	270.6			268.6			270.5			268.4
Basic EPS attributable to common stockholders:
Income from continuing operations	$	1.02		$	0.84		$	2.73		$	2.11
Loss from discontinued operations	(0.01		)	—			(0.01		)	(0.01		)
Net income	$	1.01		$	0.84		$	2.72		$	2.10
Diluted EPS attributable to common stockholders:
Income from continuing operations	$	1.01		$	0.83		$	2.72		$	2.09
Loss from discontinued operations	(0.01		)	—			(0.01		)	(0.01		)
Net income	$	1.00		$	0.83		$	2.71		$	2.08

⁽¹⁾  The reallocation adjustment for participating securities to arrive at the numerator used to calculate diluted EPS was less than $0.1 million for the periods presented.

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Long-Term Debt

9 Months Ended

Sep. 30, 2011

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

The Company’s total indebtedness consisted of the following at:

	September 30, 2011		December 31, 2010
	(Dollars in millions)
Term Loan	$	475.0	$	493.8
5.875% Senior Notes due April 2016	—		218.1
7.375% Senior Notes due November 2016	650.0		650.0
6.5% Senior Notes due September 2020	650.0		650.0
7.875% Senior Notes due November 2026	247.3		247.2
Convertible Junior Subordinated Debentures due 2066	374.7		373.3
6.34% Series B Bonds due December 2014	12.0		12.0
6.84% Series C Bonds due December 2016	33.0		33.0
Capital lease obligations	58.6		69.6
Fair value hedge adjustment	—		2.2
Other	1.8		0.8
Total Debt	$	2,502.4	$	2,750.0

5.875% Senior Notes Redemption

On April 15, 2011, the Company used cash on hand to redeem its 5.875% Senior Notes due in April 2016 (the 5.875% Notes) in the aggregate principal amount of $218.1 million. In compliance with the terms of the indenture governing the 5.875% Notes, the redemption price was equal to 100.979% of the aggregate principal amount of the 5.875% Notes, plus accrued and unpaid interest to April 15, 2011. The Company recognized costs of $1.7 million associated with the redemption.

Other Long-Term Debt

Other than the debt related activities discussed in Subsequent Events (Note 17), there were no other significant changes to the Company’s long-term debt since December 31, 2010.

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Pension and Postretirement Benefit Costs (Tables)

9 Months Ended

Sep. 30, 2011

Pension Plans, Defined Benefit [Member]

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Net Benefit Costs [Table Text Block]

Net periodic pension costs included the following components:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
				(Dollars in millions)
Service cost for benefits earned	$	0.4		$	0.4		$	1.3		$	1.2
Interest cost on projected benefit obligation	12.4			12.6			37.3			37.8
Expected return on plan assets	(16.1		)	(14.6		)	(48.3		)	(43.8		)
Amortization of prior service cost	0.3			0.4			0.8			1.1
Amortization of actuarial loss	7.5			5.4			22.5			16.4
Net periodic pension costs	$	4.5		$	4.2		$	13.6		$	12.7

Other Postretirement Benefit Plans, Defined Benefit [Member]

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Net Benefit Costs [Table Text Block]

Net periodic postretirement benefit costs included the following components:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
			(Dollars in millions)
Service cost for benefits earned	$	3.6	$	3.5	$	10.1	$	9.7
Interest cost on accumulated postretirement benefit obligation	14.5		14.7		43.4		43.8
Amortization of prior service cost	0.8		0.5		1.8		1.5
Amortization of actuarial loss	6.7		6.8		20.2		19.5
Net periodic postretirement benefit costs	$	25.6	$	25.5	$	75.5	$	74.5

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Coal Trading

9 Months Ended

Sep. 30, 2011

Coal Trading [Abstract]

Coal Trading

Coal Trading

Risk Management

The Company engages in direct and brokered trading of coal, ocean freight and fuel-related commodities in over-the-counter markets (coal trading), some of which is subsequently exchange-cleared and some of which is bilaterally-settled. Except those for which the Company has elected to apply a normal purchases and normal sales exception, all derivative coal trading contracts are accounted for on a fair value basis.

The Company’s policy is to include instruments associated with coal trading transactions as a part of its trading book. Trading revenues are recorded in “Other revenues” in the unaudited condensed consolidated statements of operations and include realized and unrealized gains and losses on derivative instruments, including coal deliveries related to contracts accounted for under the normal purchases and normal sales exception. Therefore, the Company has elected the trading exemption to reflect the disclosures for its coal trading activities.

	Three Months Ended September 30,					Nine Months Ended September 30,
Trading Revenues by Type of Instrument	2011			2010		2011			2010
	(Dollars in millions)
Commodity swaps and options	$	(0.6	)	$	38.9	$	(26.6	)	$	29.5
Physical commodity purchase/sale contracts	29.6			23.2		60.9			141.5
Total trading revenues	$	29.0		$	62.1	$	34.3		$	171.0

Hedge Ineffectiveness. The Company assesses, both at inception and at least quarterly thereafter, whether the derivatives used in hedging activities are highly effective at offsetting the changes in the anticipated cash flows of the hedged item. The effective portion of the change in the fair value is recorded in “Accumulated other comprehensive loss” until the hedged transaction impacts reported earnings, at which time gains and losses are reclassified to the unaudited consolidated statements of operations at the time of the recognition of the underlying hedged item. To the extent that the periodic changes in the fair value of the derivatives exceed the changes in the hedged item, the ineffective portion of the periodic non-cash changes are recorded in the unaudited consolidated statements of operations in the period of the change. If the hedge ceases to qualify for hedge accounting, the Company prospectively recognizes the mark-to-market movements in the unaudited consolidated statements of operations in the period of the change.

In some instances, the Company has designated an existing coal trading derivative as a hedge and, thus, the derivative has a non-zero fair value at hedge inception. The “off-market” nature of these derivatives, which is best described as an embedded financing element within the derivative, is a source of ineffectiveness. In other instances, the Company uses a coal trading derivative that settles at a different time, has different quality specifications, or has a different location basis than the occurrence of the cash flow being hedged. These collectively yield ineffectiveness to the extent that the derivative hedge contract does not exactly offset changes in the fair value or expected cash flows of the hedged item.

Forecasted Transactions No Longer Probable. During the nine months ended September 30, 2011, the Company reclassified losses of $9.1 million out of “Accumulated other comprehensive loss” to earnings as the underlying forecasted transactions were deemed no longer probable of occurring.

Fair Value Measurements

The fair value of assets and liabilities from coal trading activities is set forth below:

	September 30, 2011						December 31, 2010
	Gross Basis			Net Basis			Gross Basis			Net Basis
	(Dollars in millions)
Assets from coal trading activities	$	590.5		$	66.0		$	1,706.2		$	192.5
Liabilities from coal trading activities	(660.5		)	(62.6		)	(1,843.5		)	(181.7		)
Subtotal	(70.0		)	3.4			(137.3		)	10.8
Net margin posted (1)	73.4			—			148.1			—
Net value of coal trading positions	$	3.4		$	3.4		$	10.8		$	10.8

⁽¹⁾  Represents margin posted with counterparties and exchanges of $73.4 million at September 30, 2011; and margin posted with counterparties and exchanges of $148.2 million, net of margin held of $0.1 million, at December 31, 2010. In addition, at December 31, 2010, the Company held letters of credit of $5.0 million from counterparties in lieu of margin posted. Of the margin posted at September 30, 2011, approximately 94% related to cash flow hedges.

The Company’s trading assets and liabilities are generally made up of forward contracts, financial swaps and margin. The fair value of coal trading positions, before the application of margin, designated as cash flow hedges of anticipated future sales was a liability of $109.5 million and $174.2 million as of September 30, 2011 and December 31, 2010, respectively.

The following tables set forth the hierarchy of the Company’s net financial asset (liability) coal trading positions for which fair value is measured on a recurring basis:

	September 30, 2011
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Commodity swaps and options	$	15.1	$	3.9		$	—	$	19.0
Physical commodity purchase/sale contracts	—		(23.8		)	8.2		(15.6		)
Total net financial assets (liabilities)	$	15.1	$	(19.9	)	$	8.2	$	3.4

	December 31, 2010
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Commodity swaps and options	$	10.7	$	(76.2	)	$	—	$	(65.5	)
Physical commodity purchase/sale contracts	—		57.7			18.6		76.3
Total net financial assets (liabilities)	$	10.7	$	(18.5	)	$	18.6	$	10.8

For Level 1 and 2 financial assets and liabilities, the Company utilizes both direct and indirect observable price quotes, including U.S. interest rate curves, LIBOR yield curves, Chicago Mercantile Exchange (CME), New York Mercantile Exchange (NYMEX), Intercontinental Exchange indices (ICE), NOS Clearing ASA, LCH.Clearnet (formerly known as the London Clearing House), Singapore Exchange (SGX), broker quotes, published indices and other market quotes. Below is a summary of the Company’s valuation techniques for Level 1 and 2 financial assets and liabilities:

• Commodity swaps and options — generally valued based on unadjusted quoted prices in active markets (Level 1) or a valuation that is corroborated by the use of market-based pricing (Level 2).

• Physical commodity purchase/sale contracts — purchases and sales at locations with significant market activity corroborated by market-based information (Level 2).

Commodity swaps and options and physical commodity purchase/sale contracts transacted in less liquid markets or contracts, such as long-term arrangements with limited price availability, were classified in Level 3. Indicators of less liquid markets are those with periods of low trade activity or when broker quotes reflect wide pricing spreads. Generally, the Company’s Level 3 instruments or contracts are valued using internally generated models that include bid/ask price quotations, other market assessments obtained from multiple, independent third-party brokers or other transactional data. While the Company does not anticipate any decrease in the number of third-party brokers or market liquidity, such events could erode the quality of market information and therefore the valuing of its market positions should the number of third-party brokers decrease or if market liquidity is reduced. The Company’s valuation techniques also include basis adjustments for heat rate, sulfur and ash content, port and freight costs and credit and nonperformance risk. The Company validates its valuation inputs with third-party information and settlement prices from other sources where available. The Company has consistently applied these valuation techniques in all periods presented, and believes it has obtained the most accurate information available for the types of derivative contracts held.

The following table summarizes the changes in the Company’s recurring Level 3 net financial assets:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Beginning of period	$	9.9		$	13.8		$	18.6		$	17.0
Total gains (losses) realized/unrealized:
Included in earnings	(1.4		)	2.1			10.7			(0.6		)
Included in other comprehensive income	—			0.2			—			0.3
Settlements	(1.3		)	(0.7		)	(3.1		)	(1.4		)
Transfers in (out)	1.0			0.8			(18.0		)	0.9
End of period	$	8.2		$	16.2		$	8.2		$	16.2

The following table summarizes the changes in unrealized gains (losses) relating to Level 3 net financial assets held both as of the beginning and the end of the period:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011			2010		2011		2010
	(Dollars in millions)
Changes in unrealized gains (losses) (1)	$	(1.1	)	$	1.2	$	8.7	$	3.5

⁽¹⁾  Within the unaudited condensed consolidated statements of operations for the periods presented, unrealized gains and losses from Level 3 items are combined with unrealized gains and losses on positions classified in Level 1 or 2, as well as other positions that have been realized during the applicable periods.

The Company did not have any significant transfers between Level 1 and Level 2 during the three or nine months ended September 30, 2011 or 2010. During the nine months ended September 30, 2011, certain of the Company’s physical commodity purchase/sale contracts were transferred from Level 3 to Level 2 as the settlement dates entered a more liquid market. There were no significant transfers in or out of Level 3 during the three or nine months ended September 30, 2010. The Company’s policy is to value all transfers between levels using the beginning of period valuation.

Based on the net fair value of the Company’s coal trading positions held in “Accumulated other comprehensive loss” at September 30, 2011, unrealized losses to be reclassified from comprehensive income to earnings over the next 12 months are expected to be approximately $76 million. As these unrealized losses are associated with derivative instruments that represent hedges of forecasted transactions, the amounts reclassified to earnings may partially offset the realized transactions in the unaudited condensed consolidated statements of operations.

As of September 30, 2011, the timing of the estimated future realization of the value of the Company’s trading portfolio was as follows:

Year of	Percentage of
Expiration	Portfolio Total
2011	33%
2012	46%
2013	9%
2014	8%
2015	4%
	100%

Nonperformance and Credit Risk. The fair value of the Company’s coal derivative assets and liabilities reflects adjustments for nonperformance and credit risk. The Company’s exposure is substantially with electric utilities, steel producers, energy marketers and energy producers. The Company’s policy is to independently evaluate each customer’s creditworthiness prior to entering into transactions and to regularly monitor the credit extended. If the Company engages in a transaction with a counterparty that does not meet its credit standards, the Company seeks to protect its position by requiring the counterparty to provide an appropriate credit enhancement. Also, when appropriate (as determined by its credit management function), the Company has taken steps to reduce its exposure to customers or counterparties whose credit has deteriorated and who may pose a higher risk of failure to perform under their contractual obligations. These steps include obtaining letters of credit or cash collateral (margin), requiring prepayments for shipments or the creation of customer trust accounts held for the Company’s benefit to serve as collateral in the event of a failure to pay or perform. To reduce its credit exposure related to trading and brokerage activities, the Company seeks to enter into netting agreements with counterparties that permit the Company to offset asset and liability positions with such counterparties and, to the extent required, will post or receive margin amounts associated with exchange-cleared positions.

At September 30, 2011, 35% of the Company’s credit exposure related to coal trading activities was with investment grade counterparties while 54% was with non-investment grade counterparties and 11% was with counterparties that are not rated.

Performance Assurances and Collateral. Certain of the Company’s derivative trading instruments require the parties to provide additional performance assurances whenever a material adverse event jeopardizes one party’s ability to perform under the instrument. If the Company was to sustain a material adverse event (using commercially reasonable standards), the counterparties could request collateralization on derivative trading instruments in net liability positions which, based on an aggregate fair value at September 30, 2011 and December 31, 2010, would have amounted to collateral postings of approximately $48 million and $160 million, respectively, to its counterparties. As of September 30, 2011, $1.0 million of collateral was posted to counterparties for such positions while $5.8 million was posted at December 31, 2010 (reflected in “Liabilities from coal trading activities, net”).

Certain of the Company’s other derivative trading instruments require the parties to provide additional performance assurances whenever a credit downgrade occurs below a certain level as specified in each underlying contract. The terms of such derivative trading instruments typically require additional collateralization, which is commensurate with the severity of the credit downgrade. If a credit downgrade were to have occurred below contractually specified levels, the Company’s additional collateral requirement owed to its counterparties would have been approximately $2 million at September 30, 2011 and zero at December 31, 2010 based on the aggregate fair value of all derivative trading instruments with such features that were in a net liability position. As of September 30, 2011, the Company had zero posted for such instruments in a net liability position. As of December 31, 2010, $5.0 million of margin was posted with a counterparty due to timing and market fluctuations (reflected in “Liabilities from coal trading activities, net”).

The Company is required by an exchange to post certain collateral, known as initial margin, which represents an estimate of potential future adverse price movements across the Company’s portfolio under normal market conditions. As of September 30, 2011 and December 31, 2010, the Company had posted initial margin of $58.9 million and $39.5 million, respectively (reflected in “Other current assets”). In addition, the Company had posted $13.0 million and $4.4 million of margin in excess of the exchange-required variation (discussed below) and initial margin as of September 30, 2011 and December 31, 2010, respectively (also reflected in “Other current assets”).

The Company is required to post collateral on positions that are in a net liability position with an exchange, known as variation margin, which was $72.4 million as of September 30, 2011 and $137.4 million as of December 31, 2010 (reflected in “Liabilities from coal trading activities, net”).

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Pension and Postretirement Benefit Costs (Details) (USD $) In Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Maximum [Member] | Non Qualified Pension Plans, Defined Benefit [Member]
Components of net periodic pension costs
Expected contribution to defined benefit pension plans	$ 2.0		$ 2.0
Pension Plans, Defined Benefit [Member]
Components of net periodic pension costs
Service cost for benefits earned	0.4	0.4	1.3	1.2
Interest cost on projected benefit obligation	12.4	12.6	37.3	37.8
Expected return on plan assets	(16.1)	(14.6)	(48.3)	(43.8)
Amortization of prior service cost	0.3	0.4	0.8	1.1
Amortization of actuarial loss	7.5	5.4	22.5	16.4
Net periodic pension costs	4.5	4.2	13.6	12.7
Qualified Pension Plans, Defined Benefit [Member]
Components of net periodic pension costs
Expected contribution to defined benefit pension plans	0		0
Other Postretirement Benefit Plans, Defined Benefit [Member]
Components of net periodic pension costs
Service cost for benefits earned	3.6	3.5	10.1	9.7
Interest cost on projected benefit obligation	14.5	14.7	43.4	43.8
Amortization of prior service cost	0.8	0.5	1.8	1.5
Amortization of actuarial loss	6.7	6.8	20.2	19.5
Net periodic pension costs	$ 25.6	$ 25.5	$ 75.5	$ 74.5

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (USD $) In Millions	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests
Beginning Balance at Dec. 31, 2010	$ 4,689.3	$ 2.8	$ 2,182.0	$ (334.6)	$ 2,878.4	$ (67.9)	$ 28.6
Comprehensive income:
Net income	752.4				735.4		17.0
Net unrealized gains on available-for-sale securities (net of $2.3 tax benefit)	(4.3)					(4.3)
Increase in fair value of cash flow hedges (net of $66.7 tax benefit)	(100.6)					(100.6)
Postretirement plans and workers' compensation obligations (net of $12.8 tax provision)	33.7					33.7
Comprehensive income	681.2				735.4	(71.2)	17.0
Dividends paid	(69.1)				(69.1)
Share-based compensation	32.4		32.4
Excess tax benefits related to share-based compensation	6.1		6.1
Stock options exercised	4.5		4.5
Employee stock purchases	6.3		6.3
Repurchase of employee common stock relinquished for tax withholding	(16.1)			(16.1)
Distributions to noncontrolling interests	(13.5)						(13.5)
Contributions from noncontrolling interests	1.4						1.4
Ending Balance at Sep. 30, 2011	$ 5,322.5	$ 2.8	$ 2,231.3	$ (350.7)	$ 3,544.7	$ (139.1)	$ 33.5

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Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented

9 Months Ended

Sep. 30, 2011

Accounting Changes and Error Corrections [Abstract]

Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented

Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented

In June 2011, the Financial Accounting Standards Board (FASB) issued an accounting update that eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, an entity will be required to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The guidance will become effective for interim and annual periods beginning after December 15, 2011, or on January 1, 2012 for the Company. Because the update only impacts financial statement presentation, the guidance will not impact the Company’s results of operations, financial condition or cash flows.

In January 2010, the FASB issued accounting guidance that required new fair value disclosures, including disclosures about significant transfers into and out of Level 1 and Level 2 fair-value measurements and a description of the reasons for the transfers. In addition, the guidance required new disclosures regarding activity in Level 3 fair value measurements, including a gross basis reconciliation. The Company began complying with the new fair value disclosure requirements beginning January 1, 2010, except for the disclosure of activity within Level 3 fair value measurements, which became effective January 1, 2011. While the adoption of this guidance had an impact on the Company's disclosures, it did not affect the Company's results of operations, financial condition or cash flows. In May 2011, the FASB issued additional fair value measurement disclosure requirements that were intended to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between United States (U.S.) generally accepted accounting principles (GAAP) and International Financial Reporting Standards. That update required the categorization by level for financial instruments not measured at fair value but for which disclosure of fair value is required, disclosure of all transfers between Level 1 and Level 2, and additional disclosures for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. The guidance will become effective for interim and annual periods beginning after December 15, 2011, or on January 1, 2012 for the Company. The guidance issued in May 2011 will impact the Company's disclosures, but it will not impact the Company's results of operations, financial condition or cash flows.

In December 2010, the FASB issued an update to guidance on accounting for business combinations that clarified a public entity’s disclosure requirements for pro forma presentation of revenue and earnings related to a business combination. The new guidance, which became effective on January 1, 2011, requires that, if comparative statements are presented, the public entity should disclose revenue and earnings of the combined entity as though the business combination had occurred as of the beginning of the comparable prior annual reporting period only. The guidance also requires the supplemental pro forma disclosures to include a description of the nature and amount of material nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The guidance will impact the Company’s pro forma disclosures related to any business combination transactions, but it will not impact the Company’s results of operations, financial condition or cash flows.

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Investments (Details Textuals) (USD $) In Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2011	Dec. 31, 2010
Investments, Debt and Equity Securities [Abstract]
Short-term investments maturity period		Greater than three months and up to one year
Long-term investments maturity period		Greater than one year
Other than temporary losses on investments		$ 0
Held-to-maturity Securities	0	0	0
Investments (Textuals) [Abstract]
Fair Value of securities	29.4	29.4
Proceeds from Sale of Available-for-sale Securities	1.5	1.5
Realized gains from sale of available-for-sale securities	0.1	0.1
Realized losses from sale of available-for-sale securities	0
Securities in an unrealized loss position for greater than 12 months	$ 0	$ 0

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2011

Debt Disclosure [Abstract]

Long-Term Debt

The Company’s total indebtedness consisted of the following at:

	September 30, 2011		December 31, 2010
	(Dollars in millions)
Term Loan	$	475.0	$	493.8
5.875% Senior Notes due April 2016	—		218.1
7.375% Senior Notes due November 2016	650.0		650.0
6.5% Senior Notes due September 2020	650.0		650.0
7.875% Senior Notes due November 2026	247.3		247.2
Convertible Junior Subordinated Debentures due 2066	374.7		373.3
6.34% Series B Bonds due December 2014	12.0		12.0
6.84% Series C Bonds due December 2016	33.0		33.0
Capital lease obligations	58.6		69.6
Fair value hedge adjustment	—		2.2
Other	1.8		0.8
Total Debt	$	2,502.4	$	2,750.0

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Commitments and Contingencies (Details 2) (USD $) In Millions, unless otherwise specified	9 Months Ended		9 Months Ended		9 Months Ended
	Sep. 30, 2011 Navajo Nation Litigation [Member]	Jun. 18, 1999 Navajo Nation Litigation [Member] coalleases subsidiaries	Sep. 30, 2011 Gulf Power Company Litigation [Member] T	Sep. 30, 2010 Gulf Power Company Litigation [Member]	Sep. 30, 2011 Oklahoma Lead Litigation [Member] sites leadmills plaintiffs	Dec. 31, 2010 Oklahoma Lead Litigation [Member]
Loss Contingency [Abstract]
Number of Subsidiaries Served by Plaintiff		3
Number of coal lease terminations sought by plaintiff		2
Alleged shortage of past and future coal shipments under a coal supply agreement, tons			5,000,000
Litigation Settlement Damages Awarded to Plaintiff				$ 0
Litigation Settlement, Damages Awarded			20.5
Litigation Settlement, Prejudgement Interest			6.9
Settlement of Navajo claims	24.5
Number of lead mills formerly operated by predecessor of subsidiary					2
Percentage of total amount of crude ore mined in Picher, Oklahoma					0.15%
Number of national priority list sites based on the Superfund Amendments and Reauthorization Act of 1986 at which Gold Fields or the former affiliate, has been named a potentially responsible party (PRP)					5
Number of additional national priority list sites in which claims were asserted					13
Total number of national priority list sites					18
Reduced number of national priority list sites due to completion of work, transfer or regulatory inactivity					11
Undiscounted environmental clean-up liabilities, total					53.4	51.1
Undiscounted environmental clean-up liabilities, current					9.6	6.3
Alleged residential yard remediation costs incurred by the EPA due to potentially responsible parties' activities					$ 125
Number of plaintiffs seeking compensatory damages					4

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Supplemental Guarantor/Non-Guarantor Financial Information (Details) (USD $) In Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Unaudited Supplemental Condensed Consolidated Statements of Operations
Total revenues	$ 2,035.9	$ 1,864.7	$ 5,788.8	$ 5,041.7
Costs and expenses
Operating costs and expenses	1,458.8	1,243.3	4,119.7	3,526.7
Depreciation, depletion and amortization	113.7	116.7	327.8	327.3
Asset retirement obligation expense	15.0	9.9	43.9	30.3
Selling and administrative expenses	71.2	54.1	191.4	163.6
Other operating (income) loss:
Net gain on disposal or exchange of assets	(1.7)	(6.7)	(31.4)	(15.4)
(Income) loss from equity affiliates	3.2	2.7	9.0	(2.1)
Interest expense	59.2	62.2	159.3	170.1
Interest income	(4.1)	(2.8)	(11.7)	(5.4)
Income from continuing operations before income taxes	320.6	385.3	980.8	846.6
Income tax provision (benefit)	37.1	147.7	224.7	257.2
Income from continuing operations, net of income taxes	283.5	237.6	756.1	589.4
Gain (loss) from discontinued operations, net of income taxes	(2.0)	(1.3)	(3.7)	(2.2)
Net income	281.5	236.3	752.4	587.2
Less: Net income attributable to noncontrolling interests	7.4	12.2	17.0	23.2
Net income attributable to common stockholders	274.1	224.1	735.4	564.0
Parent Company [Member]
Unaudited Supplemental Condensed Consolidated Statements of Operations
Total revenues	0	0	0	0
Costs and expenses
Operating costs and expenses	(99.3)	(24.8)	(289.3)	(65.7)
Depreciation, depletion and amortization	0	0	0	0
Asset retirement obligation expense	0	0	0	0
Selling and administrative expenses	8.0	5.5	24.9	23.0
Other operating (income) loss:
Net gain on disposal or exchange of assets	0	0	0	0
(Income) loss from equity affiliates	(252.5)	(248.5)	(664.3)	(639.6)
Interest expense	61.0	61.6	162.3	168.6
Interest income	(4.1)	(4.0)	(12.8)	(11.6)
Income from continuing operations before income taxes	286.9	210.2	779.2	525.3
Income tax provision (benefit)	12.9	(14.8)	43.1	(39.6)
Income from continuing operations, net of income taxes	274.0	225.0	736.1	564.9
Gain (loss) from discontinued operations, net of income taxes	0.1	(0.9)	(0.7)	(0.9)
Net income	274.1	224.1	735.4	564.0
Less: Net income attributable to noncontrolling interests	0	0	0	0
Net income attributable to common stockholders	274.1	224.1	735.4	564.0
Guarantor Subsidiaries [Member]
Unaudited Supplemental Condensed Consolidated Statements of Operations
Total revenues	1,229.9	1,059.9	3,482.5	3,123.9
Costs and expenses
Operating costs and expenses	922.9	763.9	2,671.2	2,286.2
Depreciation, depletion and amortization	72.1	76.2	215.6	221.3
Asset retirement obligation expense	11.2	7.1	31.2	22.1
Selling and administrative expenses	52.5	47.3	151.0	133.8
Other operating (income) loss:
Net gain on disposal or exchange of assets	(1.8)	(7.1)	(32.3)	(15.6)
(Income) loss from equity affiliates	2.7	1.3	6.4	5.0
Interest expense	13.7	13.9	(40.6)	39.4
Interest income	(5.2)	(5.2)	(15.8)	(16.1)
Income from continuing operations before income taxes	161.8	162.5	414.6	447.8
Income tax provision (benefit)	48.3	55.1	109.9	143.0
Income from continuing operations, net of income taxes	113.5	107.4	304.7	304.8
Gain (loss) from discontinued operations, net of income taxes	(2.1)	(0.4)	(3.0)	(1.3)
Net income	111.4	107.0	301.7	303.5
Less: Net income attributable to noncontrolling interests	0	0	0	0
Net income attributable to common stockholders	111.4	107.0	301.7	303.5
Non-Guarantor Subsidiaries [Member]
Unaudited Supplemental Condensed Consolidated Statements of Operations
Total revenues	850.0	1,045.3	2,524.5	2,530.5
Costs and expenses
Operating costs and expenses	679.2	744.7	1,956.0	1,918.9
Depreciation, depletion and amortization	41.6	40.5	112.2	106.0
Asset retirement obligation expense	3.8	2.8	12.7	8.2
Selling and administrative expenses	10.7	1.3	15.5	6.8
Other operating (income) loss:
Net gain on disposal or exchange of assets	0.1	0.4	0.9	0.2
(Income) loss from equity affiliates	0.5	1.4	2.6	4.4
Interest expense	1.9	3.7	7.7	11.2
Interest income	(12.2)	(10.6)	(34.4)	(26.8)
Income from continuing operations before income taxes	124.4	261.1	451.3	501.6
Income tax provision (benefit)	(24.1)	107.4	71.7	153.8
Income from continuing operations, net of income taxes	148.5	153.7	379.6	347.8
Gain (loss) from discontinued operations, net of income taxes	0	0	0	0
Net income	148.5	153.7	379.6	347.8
Less: Net income attributable to noncontrolling interests	7.4	12.2	17.0	23.2
Net income attributable to common stockholders	141.1	141.5	362.6	324.6
Eliminations [Member]
Unaudited Supplemental Condensed Consolidated Statements of Operations
Total revenues	(44.0)	(240.5)	(218.2)	(612.7)
Costs and expenses
Operating costs and expenses	(44.0)	(240.5)	(218.2)	(612.7)
Depreciation, depletion and amortization	0	0	0	0
Asset retirement obligation expense	0	0	0	0
Selling and administrative expenses	0	0	0	0
Other operating (income) loss:
Net gain on disposal or exchange of assets	0	0	0	0
(Income) loss from equity affiliates	252.5	248.5	664.3	628.1
Interest expense	(17.4)	(17.0)	(51.3)	(49.1)
Interest income	17.4	17.0	51.3	49.1
Income from continuing operations before income taxes	(252.5)	(248.5)	(664.3)	(628.1)
Income tax provision (benefit)	0	0	0	0
Income from continuing operations, net of income taxes	(252.5)	(248.5)	(664.3)	(628.1)
Gain (loss) from discontinued operations, net of income taxes	0	0	0	0
Net income	(252.5)	(248.5)	(664.3)	(628.1)
Less: Net income attributable to noncontrolling interests	0	0	0	0
Net income attributable to common stockholders	$ (252.5)	$ (248.5)	$ (664.3)	$ (628.1)

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Long-Term Debt (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 30, 2011	Apr. 15, 2011	Dec. 31, 2010
Carrying amount of the Company's debt
Capital lease obligations	$ 58.6		$ 69.6
Fair value hedge adjustment	0		2.2
Other	1.8		0.8
Total	2,502.4		2,750.0
Percentage of aggregate principal amount of the notes included in the redemption price		100.979%
Term Loan [Member]
Carrying amount of the Company's debt
Long-term debt	475.0		493.8
5.875% Senior Notes due April 2016 [Member]
Carrying amount of the Company's debt
Long-term debt	0		218.1
Interest rates on debt instruments	5.875%	5.875%
Aggregate principal amount outstanding		218.1
Recognized debt extinguishment costs	1.7
7.375% Senior Notes due November 2016 [Member]
Carrying amount of the Company's debt
Long-term debt	650.0		650.0
Interest rates on debt instruments	7.375%
6.5% Senior Notes due September 2020 [Member]
Carrying amount of the Company's debt
Long-term debt	650.0		650.0
Interest rates on debt instruments	6.50%
7.875% Senior Notes due November 2026 [Member]
Carrying amount of the Company's debt
Long-term debt	247.3		247.2
Interest rates on debt instruments	7.875%
Senior Notes Five [Member]
Carrying amount of the Company's debt
Interest rates on debt instruments	6.875%
Convertible Junior Subordinated Debentures due 2066 [Member]
Carrying amount of the Company's debt
Long-term debt	374.7		373.3
6.34% Series B Bonds due December 2014 [Member]
Carrying amount of the Company's debt
Long-term debt	12.0		12.0
Interest rates on debt instruments	6.34%
6.84% Series C Bonds due December 2016 [Member]
Carrying amount of the Company's debt
Long-term debt	$ 33.0		$ 33.0
Interest rates on debt instruments	6.84%

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Investments

9 Months Ended

Sep. 30, 2011

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

The Company’s short-term investments are defined as those investments with original maturities of greater than three months and up to one year, and long-term investments are defined as those investments with original maturities greater than one year.

The Company classifies its investments as either held-to-maturity or available-for-sale at the time of purchase and reevaluates such designation periodically. Investments are classified as held-to-maturity when the Company has the intent and ability to hold the securities to maturity.

Investments in securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of income taxes, reported in “Accumulated other comprehensive income (loss)” in the condensed consolidated balance sheets. Realized gains and losses, determined on a specific identification method, are included in “Interest income” in the unaudited condensed consolidated statements of operations.

The Company did not have any held-to-maturity securities as of September 30, 2011 or December 31, 2010.

Investments in available-for-sale securities at September 30, 2011 were as follows:

Available-for-sale securities	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Dollars in millions)
Current:
Federal government securities	$	5.2	$	—	$	—	$	5.2
U.S. corporate bonds	4.6		—		—		4.6
Noncurrent:
Marketable equity securities	55.5		—		6.9		48.6
Federal government securities	11.4		0.2		—		11.6
U.S. corporate bonds	9.4		0.1		—		9.5
Total	$	86.1	$	0.3	$	6.9	$	79.5

Investments in available-for-sale securities at December 31, 2010 were as follows:

Available-for-sale securities	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			(Dollars in millions)
Current:
Federal government securities	$	0.5	$	—	$	—	$	0.5
U.S. corporate bonds	1.9		—		—		1.9
Noncurrent:
Federal government securities	9.2		—		—		9.2
U.S. corporate bonds	6.3		—		—		6.3
Total	$	17.9	$	—	$	—	$	17.9

Contractual maturities for available-for-sale investments in debt securities at September 30, 2011 were as shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Contractual maturities for available-for-sale securities	Cost		Fair Value
	(Dollars in millions)
Due in one year or less	$	9.8	$	9.8
Due in one to five years	20.8		21.1
Total	$	30.6	$	30.9

The Company’s investments in marketable equity securities consists of an investment in Winsway Coking Coal Holdings Limited and shares purchased of Macarthur Coal Limited (Macarthur). For additional information on the Macarthur shares purchased, see Note 17.

Proceeds from sales of securities amounted to $1.5 million and realized gains on the sales amounted to $0.1 million for the three and nine months ended September 30, 2011.

In addition to the securities described above, the Company held investments in debt and equity securities related to the Company's pro-rata share of funding in the Newcastle Coal Infrastructure Group (NCIG).  During the nine months ended September 30, 2011, the Company sold all of its interests in these debt and equity securities. New debt securities were purchased for the funding of the next phase of NCIG's port expansion during the three months ended September 30, 2011. These debt securities are recorded at cost, which approximates fair value, and are denominated in U.S. dollars. The fair value of these securities was $29.4 million at September 30, 2011.

At each reporting date, the Company performs separate evaluations of debt and equity securities to determine if any unrealized losses are other-than-temporary. None of the securities that were in an unrealized loss position at September 30, 2011 has been so for greater than 12 months. The Company did not recognize any other-than-temporary losses on any of its investments during the nine months ended September 30, 2011.

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Derivatives and Fair Value Measurements (Details) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2011 Foreign Currency Contracts [Member]	Sep. 30, 2011 A$:US$ hedge contracts [Member] GBP (£)	Sep. 30, 2011 A$:US$ hedge contracts [Member] AUD	Sep. 30, 2011 A$:US$ hedge contracts [Member] Fair value hedge [Member] GBP (£)	Sep. 30, 2011 A$:US$ hedge contracts [Member] Cash flow hedges [Member] GBP (£)	Sep. 30, 2011 A$:US$ hedge contracts [Member] Cash flow hedges [Member] AUD	Sep. 30, 2011 A$:US$ hedge contracts [Member] Economic hedge [Member] GBP (£)	Sep. 30, 2011 Diesel fuel hedge contracts [Member] gal	Sep. 30, 2011 Diesel fuel hedge contracts [Member] Fair value hedge [Member] gal	Sep. 30, 2011 Diesel fuel hedge contracts [Member] Cash flow hedges [Member] gal	Sep. 30, 2011 Diesel fuel hedge contracts [Member] Economic hedge [Member] gal	Sep. 30, 2011 U.S. explosives hedge contracts [Member] MMbtu	Sep. 30, 2011 U.S. explosives hedge contracts [Member] Fair value hedge [Member] MMbtu	Sep. 30, 2011 U.S. explosives hedge contracts [Member] Cash flow hedges [Member] MMbtu	Sep. 30, 2011 U.S. explosives hedge contracts [Member] Economic hedge [Member] MMbtu	Sep. 30, 2011 Interest Rate Swap [Member] derivatives
Company's foreign currency and commodity positions by Year of Maturity and Account Classification
Total		£ 6.5	3,977.9	£ 0	£ 6.5	3,977.9	£ 0
2011		0	391.3
2012		6.5	1,605.5
2013		0	1,210.6
2014		0	770.5
2015		0	0
2016 and thereafter		0	0
Total (gallons/MMbtu)								188,900,000	0	188,900,000	0	8,800,000	0	8,800,000	0
2011 (gallons/MMbtu)								21,400,000				1,100,000
2012 (gallons/MMbtu)								83,900,000				3,900,000
2013 (gallons/MMbtu)								57,900,000				2,600,000
2014 (gallons/MMbtu)								25,700,000				1,200,000
2015 (gallons/MMbtu)								0				0
2016 and thereafter (gallons/MMbtu)								0				0
Fair Value Asset (Liability)		£ (0.6)	412.5
Fair Value Asset (Liability) (gallons/MMbtu)								38,000,000				(4,900,000)
Timing differences between the hedge settlement and the purchase transaction	Less than a day and up to a maximum of 30 days
Number of Interest Rate Derivatives Held																0

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Derivatives and Fair Value Measurements (Tables) (Non Coal Trading [Member])

9 Months Ended

Sep. 30, 2011

Non Coal Trading [Member]

Derivative [Line Items]

Company's foreign currency and commodity positions

Notional Amounts and Fair Value. The following summarizes the Company’s foreign currency and commodity positions at September 30, 2011:

	Notional Amount by Year of Maturity
	Total		2011		2012		2013		2014		2015		2016 and thereafter
Foreign Currency
A$:US$ hedge contracts (A$ millions)	$	3,977.9	$	391.3	$	1,605.5	$	1,210.6	$	770.5	$	—	$	—
GBP£:US$ hedge contracts (GBP millions)	£	6.5	£	—	£	6.5	£	—	£	—	£	—	£	—
Commodity Contracts
Diesel fuel hedge contracts (million gallons)	188.9		21.4		83.9		57.9		25.7		—		—
U.S. explosives hedge contracts (million MMBtu)	8.8		1.1		3.9		2.6		1.2		—		—

	Account Classification by
	Cash Flow Hedge		Fair Value Hedge		Economic Hedge		Fair Value Asset (Liability)
							(Dollars in millions)
Foreign Currency
A$:US$ hedge contracts (A$ millions)	$	3,977.9	$	—	$	—	$	412.5
GBP£:US$ hedge contracts (GBP millions)	£	6.5	£	—	£	—	$	(0.6	)
Commodity Contracts
Diesel fuel hedge contracts (million gallons)	188.9		—		—		$	38.0
U.S. explosives hedge contracts (million MMBtu)	8.8		—		—		$	(4.9	)

Classification and amounts of pre-tax gains and losses related to the Company's non-trading hedges

The tables below show the classification and amounts of pre-tax gains and losses related to the Company’s non-trading hedges during the three and nine months ended September 30, 2011 and 2010:

		Three Months Ended September 30, 2011
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives		Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)		Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Diesel fuel cash flow hedge contracts	Operating costs and expenses	$	—	$	(47.9	)	$	8.4	$	(1.0	)
Explosives cash flow hedge contracts	Operating costs and expenses	—		(3.3		)	0.1		(0.2		)
Foreign currency cash flow hedge contracts:
— Operating costs	Operating costs and expenses	—		(269.1		)	92.2		—
— Capital expenditures	Depreciation, depletion and amortization	—		(0.5		)	—		—
Total		$	—	$	(320.8	)	$	100.7	$	(1.2	)

		Three Months Ended September 30, 2010
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives		Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)			Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Diesel fuel cash flow hedge contracts	Operating costs and expenses	$	—	$	22.3		$	(10.9	)	$	0.7
Explosives cash flow hedge contracts	Operating costs and expenses	—		(1.1		)	(2.5		)	—
Foreign currency cash flow hedge contracts	Operating costs and expenses	—		434.7			38.5			—
Total		$	—	$	455.9		$	25.1		$	0.7

		Nine Months Ended September 30, 2011
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives		Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)		Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Diesel fuel cash flow hedge contracts	Operating costs and expenses	$	—	$	25.0		$	28.4	$	1.1
Explosives cash flow hedge contracts	Operating costs and expenses	—		(4.1		)	—		(0.7		)
Foreign currency cash flow hedge contracts:
— Operating costs	Operating costs and expenses	—		33.8			261.1		—
— Capital expenditures	Depreciation, depletion and amortization	—		(0.7		)	—		—
Total		$	—	$	54.0		$	289.5	$	0.4

		Nine Months Ended September 30, 2010
Financial Instrument	Statement of Operations Classification Gains (Losses) - Realized	Gain (loss) recognized in income on non-designated derivatives(1)			Gain (loss) recognized in other comprehensive income on derivative (effective portion)			Gain (loss) reclassified from other comprehensive income into income (effective portion)			Gain (loss) reclassified from other comprehensive income into income (ineffective portion)
		(Dollars in millions)
Interest rate swaps cash flow hedge contracts	Interest expense	$	(8.5	)	$	0.8		$	(0.5	)	$	—
Diesel fuel cash flow hedge contracts	Operating costs and expenses	—			(7.5		)	(27.3		)	—
Explosives cash flow hedge contracts	Operating costs and expenses	—			(4.7		)	(7.4		)	—
Foreign currency cash flow hedge contracts	Operating costs and expenses	—			355.3			104.4			—
Total		$	(8.5	)	$	343.9		$	69.2		$	—

⁽¹⁾  Amounts relate to swaps that were de-designated and terminated in conjunction with the refinancing of the Company’s previous credit facility.

Classification and amount of derivatives, gross

The classification and amount of derivatives presented on a gross basis as of September 30, 2011 and December 31, 2010 are as follows:

	Fair Value as of September 30, 2011
Financial Instrument	Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
	(Dollars in millions)
Diesel fuel cash flow hedge contracts	$	37.1	$	14.3	$	1.1	$	12.3
Explosives cash flow hedge contracts	—		—		3.1		1.8
Foreign currency cash flow hedge contracts	243.2		203.2		13.0		21.5
Total	$	280.3	$	217.5	$	17.2	$	35.6

	Fair Value as of December 31, 2010
Financial Instrument	Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
	(Dollars in millions)
Diesel fuel cash flow hedge contracts	$	25.3	$	26.9	$	11.9	$	—
Explosives cash flow hedge contracts	0.5		0.1		0.1		0.6
Foreign currency cash flow hedge contracts	273.5		366.6		—		—
Total	$	299.3	$	393.6	$	12.0	$	0.6

Fair value measured on recurring basis of financial assets and liabilities

The following tables set forth the hierarchy of the Company’s net financial asset (liability) positions for which fair value is measured on a recurring basis:

	September 30, 2011
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Investment in debt and equity securities	$	79.5	$	—		$	—	$	79.5
Commodity swaps and options — diesel fuel	—		38.0			—		38.0
Commodity swaps and options — explosives	—		(4.9		)	—		(4.9		)
Foreign currency hedge contracts	—		411.9			—		411.9
Total net financial assets	$	79.5	$	445.0		$	—	$	524.5

	December 31, 2010
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Investment in debt securities	$	17.9	$	—		$	—	$	17.9
Commodity swaps and options — diesel fuel	—		40.3			—		40.3
Commodity swaps and options — explosives	—		(0.1		)	—		(0.1		)
Foreign currency hedge contracts	—		640.1			—		640.1
Total net financial assets	$	17.9	$	680.3		$	—	$	698.2

Carrying amounts and estimated fair values of the Company's debt

The carrying amounts and estimated fair values of the Company’s debt are summarized as follows:

	September 30, 2011				December 31, 2010
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(Dollars in millions)
Long-term debt	$	2,502.4	$	2,645.3	$	2,750.0	$	2,960.0

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Supplemental Guarantor/Non-Guarantor Financial Information (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 Parent Company [Member]	Sep. 30, 2010 Parent Company [Member]	Sep. 30, 2011 Guarantor Subsidiaries [Member]	Sep. 30, 2010 Guarantor Subsidiaries [Member]	Sep. 30, 2011 Non-Guarantor Subsidiaries [Member]	Sep. 30, 2010 Non-Guarantor Subsidiaries [Member]	Sep. 30, 2011 April 30, 2016 [Member]	Apr. 15, 2011 April 30, 2016 [Member]	Sep. 30, 2011 November 30, 2016 [Member]	Sep. 30, 2011 September 30, 2020 [Member]	Sep. 30, 2011 November 30, 2026 [Member]	Sep. 30, 2011 March 31, 2013 [Member]
Cash Flows From Operating Activities
Net cash provided by continuing operations		$ 1,194.1	$ 903.5	$ 144.7	$ (323.0)	$ 721.5	$ 1,002.7	$ 327.9	$ 223.8
Net cash used in discontinued operations		(3.6)	(11.3)	(1.6)	(9.5)	(2.0)	(1.8)	0	0
Net cash provided by operating activities		1,190.5	892.2	143.1	(332.5)	719.5	1,000.9	327.9	223.8
Cash Flows From Investing Activities
Additions to property, plant, equipment and mine development		(616.2)	(291.3)	0	0	(218.6)	(238.1)	(397.6)	(53.2)
Federal coal lease expenditures		(42.4)	0	0		(42.4)		0
Investment in Prairie State Energy Campus		(29.8)	(52.5)	0	0	(29.8)	(52.5)	0	0
Proceeds from disposal of assets		12.1	9.7	0	0	12.1	8.5	0	1.2
Investments in equity affiliates and joint ventures		(39.8)	(18.8)	0	0	(2.1)	(15.0)	(37.7)	(3.8)
Proceeds from sales of debt and equity securities		53.3	10.6	0	0	0	0	53.3	10.6
Purchases of debt and equity securities		(44.1)	(73.6)		0		0	(44.1)	(73.6)
Purchases of short-term investments		(100.0)	0	(75.0)		0		(25.0)
Maturity of short-term investments		100.0	0	75.0		0		25.0
Investment in shares of Macarthur Coal Limited	(45.5)	(45.5)	0	0		0		(45.5)
Other, net		(4.4)	(7.4)	0	0	(4.4)	(7.2)	0	(0.2)
Net cash used in investing activities		(756.8)	(423.3)	0	0	(285.2)	(304.3)	(471.6)	(119.0)
Cash Flows From Financing Activities
Proceeds from long-term debt		1.4	1,150.0	0	1,150.0	0	0	1.4	0
Payments of long-term debt		(248.4)	(1,148.5)	(236.9)	(1,140.3)	0	0	(11.5)	(8.2)
Dividends paid		(69.1)	(56.5)	(69.1)	(56.5)	0	0	0	0
Repurchase of employee common stock relinquished for tax withholding		(16.1)	(8.4)	(16.1)	(8.4)	0	0	0	0
Payment of debt issuance costs		(4.0)	(32.2)	(4.0)	(32.2)	0	0	0	0
Excess tax benefits related to share-based compensation		6.1	0	6.1		0		0
Proceeds from stock options exercised		4.5	5.9	4.5	5.9	0	0	0	0
Other, net		(1.7)	(0.5)	6.3	5.8	0	0	(8.0)	(6.3)
Transactions with affiliates, net		0	0	220.2	521.1	(438.5)	(696.7)	218.3	175.6
Net cash used in financing activities		(327.3)	(90.2)	(89.0)	445.4	(438.5)	(696.7)	200.2	161.1
Net change in cash and cash equivalents		106.4	378.7	54.1	112.9	(4.2)	(0.1)	56.5	265.9
Cash and cash equivalents at beginning of period		1,295.2	988.8	903.8	368.4	5.2	0.2	386.2	620.2
Cash and cash equivalents at end of period	$ 1,401.6	$ 1,401.6	$ 1,367.5	$ 957.9	$ 481.3	$ 1.0	$ 0.1	$ 442.7	$ 886.1
Supplemental Guarantor/Non-Guarantor Financial Information (Textuals)
Interest rates on Senior Notes										5.875%	5.875%	7.375%	6.50%	7.875%	6.875%

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Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2011

Equity [Abstract]

After-tax components of comprehensive income

The following table sets forth the after-tax components of comprehensive income:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011			2010		2011			2010
	(Dollars in millions)
Net income	$	281.5		$	236.3	$	752.4		$	587.2
Net increase (decrease) in fair value of cash flow hedges, net of income taxes	(197.4		)	268.1		(100.6		)	135.9
Net unrealized losses on available-for-sale securities, net of income taxes	(4.5		)	—		(4.3		)	—
Change in actuarial loss and prior service cost associated with postretirement plans and workers’ compensation obligations, net of income taxes	10.2			11.2		33.7			27.2
Comprehensive income	$	89.8		$	515.6	$	681.2		$	750.3

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Inventories (Details) (USD $) In Millions	Sep. 30, 2011	Dec. 31, 2010
Inventories
Materials and supplies	$ 109.8	$ 97.1
Raw coal	54.4	55.4
Saleable coal	187.7	180.4
Total	$ 351.9	$ 332.9

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2011

Income Tax Disclosure [Abstract]

Reconciliation of the expected statutory federal income tax provision to the Company's actual income tax provision

The following is a reconciliation of the expected statutory federal income tax provision to the Company’s actual income tax provision:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Expected income tax provision at federal statutory rate	$	112.2		$	134.9		$	343.3		$	296.3
Excess depletion	(13.9		)	(25.8		)	(39.0		)	(44.4		)
Foreign earnings provision differential	(34.9		)	(29.8		)	(84.5		)	(57.1		)
Foreign earnings repatriation	—			84.5			—			84.5
Remeasurement of foreign income tax accounts	(38.7		)	42.7			(16.9		)	28.8
State income taxes, net of U.S. federal tax benefit	4.8			2.1			10.5			7.0
General business tax credits	(4.4		)	(5.6		)	(12.4		)	(13.1		)
Changes in valuation allowance	2.5			(63.7		)	7.0			(45.6		)
Changes in tax reserves	6.0			2.2			10.8			(4.9		)
Other, net	3.5			6.2			5.9			5.7
Total provision	$	37.1		$	147.7		$	224.7		$	257.2

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Other Commercial Events

9 Months Ended

Sep. 30, 2011

Other Commercial Events [Abstract]

Other Commercial Events

Other Commercial Events

In June 2011, the Company exchanged coal reserves in Kentucky and coal reserves and surface lands in Illinois for coal reserves in West Virginia. Based on the fair value of the coal reserves received, the Company recognized a $23.5 million gain on the exchange. Fair value was determined by using a discounted cash flow model that included assumptions for future coal sales prices, operating costs and the discount rate. This non-cash transaction was excluded from the investing section of the unaudited condensed consolidated statement of cash flows.

In June 2011, the Company recognized income associated with the receipt of a $14.6 million project development fee related to its involvement in the Prairie State Energy Campus (Prairie State), a 1,600 megawatt coal-fueled electricity generation project currently under construction.

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Financial Instruments and Guarantees with Off-Balance-Sheet Risk (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010	Sep. 30, 2011		Sep. 30, 2010	Dec. 31, 2010
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	$ 2,075.9			$ 2,075.9
Financial Instruments and Guarantees with Off-Balance-Sheet Risk (Textuals) [Abstract]
Amount in letters of credit and surety bonds related to collateral for surety companies, road maintenance, performance guarantees and other operations	149.6			149.6
Time Period Of Lease That Permits The Partnership To Purchase The Terminal				30 years
Letter of credit for collateral for bank	2.8			2.8
Maximum capacity of the securitization program	275.0			275.0
Amount available under the securitization program	61.9			61.9
Total consideration received by Company related to accounts receivable sold under securitization program				3,740.9
Cash up front from sale of receivables				2,831.7
Additional cash upon collection of underlying receivables				674.4
Non collected receivables	234.8			234.8
Reduction in accounts receivable as a result of securitization	150.0			150.0			150.0
Expense associated with securitization transactions	0.4		0.6	1.5		1.8
The Company's undivided interest percentage in the Prairie State Energy Campus	5.06%			5.06%
Guarantee Obligations, Coal Off Take Agreements with Counterparties	10.0			10.0
Self bonding [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	936.9			936.9
Self bonding [Member] | Reclamation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	936.9			936.9
Self bonding [Member] | Property Lease Guarantee [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	0			0
Self bonding [Member] | Workers' Compensation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	0			0
Self bonding [Member] | Guarantee Type, Other [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	0	[1]		0	[1]
Surety bonds [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	727.7			727.7
Surety bonds [Member] | Reclamation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	606.4			606.4
Surety bonds [Member] | Property Lease Guarantee [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	104.7			104.7
Surety bonds [Member] | Workers' Compensation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	6.2			6.2
Surety bonds [Member] | Guarantee Type, Other [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	10.4	[1]		10.4	[1]
Bank guarantees [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	266.6			266.6
Bank guarantees [Member] | Reclamation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	127.4			127.4
Bank guarantees [Member] | Property Lease Guarantee [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	0			0
Bank guarantees [Member] | Workers' Compensation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	0			0
Bank guarantees [Member] | Guarantee Type, Other [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	139.2	[1]		139.2	[1]
Letters of credit [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	65.0			65.0
Letters of credit [Member] | Reclamation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	0			0
Letters of credit [Member] | Property Lease Guarantee [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	0			0
Letters of credit [Member] | Workers' Compensation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	62.2			62.2
Letters of credit [Member] | Guarantee Type, Other [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	2.8	[1]		2.8	[1]
Bilateral cash collateralization agreements [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	79.7			79.7
Bilateral cash collateralization agreements [Member] | Reclamation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	0			0
Bilateral cash collateralization agreements [Member] | Property Lease Guarantee [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	0			0
Bilateral cash collateralization agreements [Member] | Workers' Compensation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	0			0
Bilateral cash collateralization agreements [Member] | Guarantee Type, Other [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	79.7	[1]		79.7	[1]
Reclamation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	1,670.7			1,670.7
Property Lease Guarantee [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	104.7			104.7
Workers' Compensation Obligations [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	68.4			68.4
Guarantee Type, Other [Member]
Guarantee Obligations [Line Items]
Guarantor Obligations, Current Carrying Value	232.1	[1]		232.1	[1]
Dominion Terminal Associates Partnership [Member]
Financial Instruments and Guarantees with Off-Balance-Sheet Risk (Textuals) [Abstract]
Equity Method Investment, Ownership Percentage	37.50%			37.50%
Number of Letters of Credit Supporting Reimbursement Obligation				4
Maximum reimbursement obligation to commercial bank related to Dominion Terminals	42.7			42.7
Pension Plans Agreement With PBG and TXU Europe [Member]
Financial Instruments and Guarantees with Off-Balance-Sheet Risk (Textuals) [Abstract]
Letter of credit maintained by the Company in favor of the PBGC	37.0			37.0
Number of benefit pension plans	2			2
Guarantee in place from TXU Europe Limited	$ 110.0			$ 110.0

[1] Other includes letter of credit and bilateral cash collateralization agreement obligations described below and an additional $149.6 million in bank guarantees and surety bonds related to collateral for surety companies, road maintenance, performance guarantees and other operations.

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Supplemental Guarantor/Non-Guarantor Financial Information (Details 1) (USD $) In Millions	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2010	Dec. 31, 2009
Current assets
Cash and cash equivalents	$ 1,401.6	$ 1,295.2	$ 1,367.5	$ 988.8
Accounts receivable, net	591.4	558.2
Inventories	351.9	332.9
Assets from coal trading activities, net	66.0	192.5
Deferred income taxes	90.9	120.4
Other current assets	503.2	459.0
Total current assets	3,005.0	2,958.2
Property, plant, equipment and mine development, net	7,808.1	7,426.1
Deferred income taxes	0
Investments and other assets	878.5	978.8
Total assets	11,691.6	11,363.1
Current liabilities
Current maturities of long-term debt	43.8	43.2
Payables to (receivables from) affiliates, net	0	0
Liabilities from coal trading activities, net	62.6	181.7
Deferred income taxes	0	0
Accounts payable and accrued expenses	1,334.9	1,288.8
Total current liabilities	1,441.3	1,513.7
Long-term debt, less current maturities	2,458.6	2,706.8
Deferred income taxes	499.6	539.8
Notes payable to (receivables from) affiliates, net	0	0
Other noncurrent liabilities	1,969.6	1,913.5
Total liabilities	6,369.1	6,673.8
Peabody Energy Corporation's stockholders' equity	5,289.0	4,660.7
Noncontrolling interests	33.5	28.6
Total stockholders' equity	5,322.5	4,689.3
Total liabilities and stockholders' equity	11,691.6	11,363.1
Parent Company [Member]
Current assets
Cash and cash equivalents	957.9	903.8	481.3	368.4
Accounts receivable, net	4.6	2.1
Inventories	0	0
Assets from coal trading activities, net	0	0
Deferred income taxes	0	0
Other current assets	281.2	307.9
Total current assets	1,243.7	1,213.8
Property, plant, equipment and mine development, net	0	0
Deferred income taxes	3.1
Investments and other assets	9,845.7	9,331.0
Total assets	11,092.5	10,544.8
Current liabilities
Current maturities of long-term debt	25.0	25.0
Payables to (receivables from) affiliates, net	2,445.3	2,225.3
Liabilities from coal trading activities, net	0	0
Deferred income taxes	6.1	6.1
Accounts payable and accrued expenses	67.5	47.4
Total current liabilities	2,543.9	2,303.8
Long-term debt, less current maturities	2,372.0	2,609.6
Deferred income taxes	0	93.2
Notes payable to (receivables from) affiliates, net	819.1	818.9
Other noncurrent liabilities	68.5	58.6
Total liabilities	5,803.5	5,884.1
Peabody Energy Corporation's stockholders' equity	5,289.0	4,660.7
Noncontrolling interests	0	0
Total stockholders' equity	5,289.0	4,660.7
Total liabilities and stockholders' equity	11,092.5	10,544.8
Guarantor Subsidiaries [Member]
Current assets
Cash and cash equivalents	1.0	5.2	0.1	0.2
Accounts receivable, net	53.8	5.5
Inventories	204.3	168.0
Assets from coal trading activities, net	16.1	23.8
Deferred income taxes	62.6	78.6
Other current assets	77.8	30.7
Total current assets	415.6	311.8
Property, plant, equipment and mine development, net	4,801.4	4,732.7
Deferred income taxes	0
Investments and other assets	204.5	179.8
Total assets	5,421.5	5,224.3
Current liabilities
Current maturities of long-term debt	0	0
Payables to (receivables from) affiliates, net	(2,621.7)	(2,528.3)
Liabilities from coal trading activities, net	8.8	29.5
Deferred income taxes	0	0
Accounts payable and accrued expenses	740.6	777.2
Total current liabilities	(1,872.3)	(1,721.6)
Long-term debt, less current maturities	0.1	0.1
Deferred income taxes	193.7	135.4
Notes payable to (receivables from) affiliates, net	(823.6)	(825.3)
Other noncurrent liabilities	1,670.9	1,652.8
Total liabilities	(831.2)	(758.6)
Peabody Energy Corporation's stockholders' equity	6,252.7	5,982.9
Noncontrolling interests	0	0
Total stockholders' equity	6,252.7	5,982.9
Total liabilities and stockholders' equity	5,421.5	5,224.3
Non-Guarantor Subsidiaries [Member]
Current assets
Cash and cash equivalents	442.7	386.2	886.1	620.2
Accounts receivable, net	533.0	550.6
Inventories	147.6	164.9
Assets from coal trading activities, net	49.9	168.7
Deferred income taxes	34.4	47.9
Other current assets	144.2	120.4
Total current assets	1,351.8	1,438.7
Property, plant, equipment and mine development, net	3,006.7	2,693.4
Deferred income taxes	0
Investments and other assets	155.2	99.1
Total assets	4,513.7	4,231.2
Current liabilities
Current maturities of long-term debt	18.8	18.2
Payables to (receivables from) affiliates, net	176.4	303.0
Liabilities from coal trading activities, net	53.8	152.2
Deferred income taxes	0	0
Accounts payable and accrued expenses	526.8	464.2
Total current liabilities	775.8	937.6
Long-term debt, less current maturities	86.5	97.1
Deferred income taxes	309.0	311.2
Notes payable to (receivables from) affiliates, net	4.5	6.4
Other noncurrent liabilities	230.2	202.1
Total liabilities	1,406.0	1,554.4
Peabody Energy Corporation's stockholders' equity	3,074.2	2,648.2
Noncontrolling interests	33.5	28.6
Total stockholders' equity	3,107.7	2,676.8
Total liabilities and stockholders' equity	4,513.7	4,231.2
Eliminations [Member]
Current assets
Cash and cash equivalents	0	0
Accounts receivable, net	0	0
Inventories	0	0
Assets from coal trading activities, net	0	0
Deferred income taxes	(6.1)	(6.1)
Other current assets	0	0
Total current assets	(6.1)	(6.1)
Property, plant, equipment and mine development, net	0	0
Deferred income taxes	(3.1)
Investments and other assets	(9,326.9)	(8,631.1)
Total assets	(9,336.1)	(8,637.2)
Current liabilities
Current maturities of long-term debt	0	0
Payables to (receivables from) affiliates, net	0	0
Liabilities from coal trading activities, net	0	0
Deferred income taxes	(6.1)	(6.1)
Accounts payable and accrued expenses	0	0
Total current liabilities	(6.1)	(6.1)
Long-term debt, less current maturities	0	0
Deferred income taxes	(3.1)	0
Notes payable to (receivables from) affiliates, net	0	0
Other noncurrent liabilities	0	0
Total liabilities	(9.2)	(6.1)
Peabody Energy Corporation's stockholders' equity	(9,326.9)	(8,631.1)
Noncontrolling interests	0	0
Total stockholders' equity	(9,326.9)	(8,631.1)
Total liabilities and stockholders' equity	$ (9,336.1)	$ (8,637.2)

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Inventories

9 Months Ended

Sep. 30, 2011

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consisted of the following:

	September 30, 2011		December 31, 2010
	(Dollars in millions)
Materials and supplies	$	109.8	$	97.1
Raw coal	54.4		55.4
Saleable coal	187.7		180.4
Total	$	351.9	$	332.9

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Commitments

As of September 30, 2011, purchase commitments for capital expenditures were $521.4 million, all of which is obligated within the next five years with $477.6 million obligated in the next 12 months.

A subsidiary of the Company owns a 5.06% undivided interest in Prairie State. The Company invested $29.8 million during the nine months ended September 30, 2011, representing its 5.06% share of the construction costs. Included in “Investments and other assets” in the condensed consolidated balance sheets as of September 30, 2011 and December 31, 2010 are costs of $232.3 million and $202.5 million, respectively. The Company’s share of total construction costs for Prairie State is expected to be approximately $250 million with most of the remaining funding expected in 2011.

In July 2011, the Company was named the winning bidder for control of approximately 220 million tons of low sulfur coal reserves in the Powder River Basin of Wyoming that will be assigned to the Company’s Caballo Mine. The Company made its first payment of $42.1 million in July 2011, with the remaining annual payments of $42.1 million to be made in July of each of the next four years. The related lease was executed by the U.S. Bureau of Land Management effective November 1, 2011.

There were no other material changes to the Company’s commitments from the information provided in Note 20 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Contingencies

From time to time, the Company and/or its subsidiaries are involved in legal proceedings arising in the ordinary course of business or related to indemnities or historical operations. The Company believes it has recorded adequate reserves for these liabilities and that there is no individual case pending that is likely to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. The Company discusses its significant legal proceedings below.

Litigation Relating to Continuing Operations

Navajo Nation Litigation. On June 18, 1999, the Navajo Nation served three of the Company’s subsidiaries, including Peabody Western Coal Company (Peabody Western), with a complaint that had been filed in the U.S. District Court for the District of Columbia which alleged that the defendants jointly participated in unlawful activity to obtain favorable coal lease amendments. The plaintiff sought actual and punitive damages and the termination and reformation of two coal leases. The court allowed the Hopi Tribe to intervene in this lawsuit, and the Hopi Tribe sought unspecified actual and punitive damages and reformation of its coal lease. One of the Company’s subsidiaries named as a defendant is now a subsidiary of Patriot Coal Corporation (Patriot). However, the Company was responsible for this litigation under the Separation Agreement entered into with Patriot in connection with the spin-off.

In October 2010, the Company and the other defendants settled the Hopi claims, and the court dismissed those claims. In August 2011, the Company and other defendants settled the Navajo claims, and agreed to dismiss all of the pending litigation with prejudice. In connection with this settlement, the Company recorded a provision totaling $24.5 million in the nine months ended September 30, 2011. The court has dismissed this lawsuit, and this matter has concluded.

Gulf Power Company Litigation. On June 22, 2006, Gulf Power Company (Gulf Power) filed a breach of contract lawsuit against a Company subsidiary in the U.S. District Court, Northern District of Florida, contesting the force majeure declaration by the Company’s subsidiary under a coal supply agreement with Gulf Power and seeking damages for alleged past and future tonnage shortfalls of nearly five million tons under the agreement, which expired on December 31, 2007. Gulf Power filed a motion for partial summary judgment on liability, and the Company subsidiary filed a motion for summary judgment seeking complete dismissal. On June 30, 2009, the court granted Gulf Power’s motion for partial summary judgment and denied the Company subsidiary’s motion for summary judgment. The damages portion of the trial was held in February 2010. On September 30, 2010, the court entered its order on damages, awarding Gulf Power zero dollars in damages and the Company its costs to defend the lawsuit. The Company is also seeking its reasonable attorney’s fees incurred since October 15, 2008. On November 1, 2010, Gulf Power filed a motion to alter or amend the judgment, contesting the trial court’s damages order, to which the Company objected. The court entered an order on July 29, 2011, that (1) affirmed its September 30, 2010 decision in all respects except for 2007 cover coal purchases, (2) granted in part Gulf Power’s motion to alter judgment with respect to 2007 cover coal purchases, and (3) scheduled a hearing for August 25, 2011 to consider further evidence on expenses saved by Gulf Power in its 2007 cover coal purchases. On September 30, 2011, the court entered an order awarding Gulf Power damages in the amount of $20.5 million for its 2007 cover purchases. On October 4, 2011, the court ordered Gulf Power to submit within 10 days a calculation of the amount of interest to which it claims it is entitled, and Gulf Power has responded to the order requesting $6.9 million in prejudgment interest. On October 26, 2011, the court entered an order extending the time for filing notices of appeal until November 28, 2011 and referred the matter to a magistrate for a settlement conference prior to that date.  The court will defer ruling on prejudgment interest until after the settlement conference. The Company's subsidiary filed a notice of appeal on October 31, 2011. Based on the Company's evaluation of information currently available concerning the issues and their potential impact, the Company believes it will be successful in the liability appeals process and, therefore, no liability has been recorded at this time.

Claims and Litigation Relating to Indemnities or Historical Operations

Oklahoma Lead Litigation. Gold Fields Mining, LLC (Gold Fields) is a dormant, non-coal producing entity that was previously managed and owned by Hanson PLC, the Company’s predecessor owner. In a February 1997 spin-off, Hanson PLC transferred ownership of Gold Fields to the Company, despite the fact that Gold Fields had no ongoing operations and the Company had no prior involvement in its past operations. Gold Fields is currently one of the Company’s subsidiaries. The Company indemnified TXU Group with respect to certain claims relating to a former affiliate of Gold Fields. A predecessor of Gold Fields formerly operated two lead mills near Picher, Oklahoma prior to the 1950s and mined, in accordance with lease agreements and permits, approximately 0.15% of the total amount of the crude ore mined in the county.

Gold Fields and several other companies are defendants in a property damage lawsuit pending in the U.S. District Court for the Northern District of Oklahoma arising from past operations near Picher, Oklahoma. The plaintiffs are seeking compensatory damages for diminution in property values and punitive damages. This case was originally filed as putative class actions, but the court denied class certification and the case was subsequently amended to include a number of individual plaintiffs. Gold Fields was also a defendant in another case alleging property damage and pending in the U.S. District Court for the Northern District of Oklahoma arising out of past operations near Picher, Oklahoma, but the court granted summary judgment in Company's favor in that case.

Gold Fields and several other companies are also defendants in a personal injury lawsuit pending in the U.S. District Court for the Northern District of Oklahoma arising from past operations near Picher, Oklahoma. The four plaintiffs are seeking compensatory damages for cognitive impairments allegedly caused by exposure to lead and punitive damages.

In June 2005, Gold Fields and other potentially responsible parties (PRPs) received a letter from the U.S. Department of Justice alleging that the potentially responsible parties’ mining operations caused the U.S. Environmental Protection Agency (EPA) to incur approximately $125 million in residential yard remediation costs at Picher, Oklahoma and will cause the EPA to incur additional remediation costs relating to historical mining sites. In June 2008, Gold Fields and other PRPs received letters from the U.S. Department of Justice and the EPA re-initiating settlement negotiations. Gold Fields continues to participate in the settlement discussions. Gold Fields believes it has meritorious defenses to these claims.

In February 2005, the state of Oklahoma, on behalf of itself and several other parties, sent a notice to Gold Fields and other companies regarding a possible natural resources damage claim. The state of Oklahoma has also indicated that it seeks to recover remediation costs from these parties.

The outcome of litigation and these claims are subject to numerous uncertainties. Based on the Company’s evaluation of the issues and their potential impact, the amount of any future loss cannot be reasonably estimated. However, based on current information, the Company believes these claims are likely to be resolved without a material adverse effect on its financial condition, results of operations or cash flows.

Environmental Claims and Litigation

Environmental claims have been asserted against Gold Fields related to activities of Gold Fields or a former affiliate. Gold Fields or the former affiliate has been named a potentially responsible party (PRP) at five national priority list sites based on the Superfund Amendments and Reauthorization Act of 1986. Claims were asserted at 13 additional sites, bringing the total to 18, which have since been reduced to 11 by completion of work, transfer or regulatory inactivity. The number of PRP sites in and of itself is not a relevant measure of liability because the nature and extent of environmental concerns varies by site, as does the estimated share of responsibility for Gold Fields or the former affiliate. Undiscounted liabilities for environmental cleanup-related costs for all of the sites noted above were $53.4 million as of September 30, 2011 and $51.1 million as of December 31, 2010, $9.6 million and $6.3 million of which was reflected as a current liability, respectively. These amounts represent those costs that the Company believes are probable and reasonably estimable.

Gold Fields is involved in other litigation and claims in the Picher area, and the Company indemnified TXU Group with respect to a defendant as is more fully discussed under the “Oklahoma Lead Litigation” caption above.

Significant uncertainty exists as to whether claims will be pursued against Gold Fields in all cases, and where they are pursued, the amount of the eventual costs and liabilities, which could be greater or less than the liabilities recorded in the consolidated balance sheets. Based on the Company’s evaluation of the issues and their potential impact, the total amount of any future loss cannot be reasonably estimated. However, based on current information, the Company believes these claims and litigation are likely to be resolved without a material adverse effect on its financial condition, results of operations or cash flows.

Native Village of Kivalina and City of Kivalina v. ExxonMobil Corporation, et al. In February 2008, the Native Village of Kivalina and the City of Kivalina filed a lawsuit in the U.S. District Court for the Northern District of California against the Company, several owners of electricity generating facilities and several oil companies. The plaintiffs are the governing bodies of a village in Alaska that they contend is being destroyed by erosion allegedly caused by global warming that the plaintiffs attribute to emissions of greenhouse gases by the defendants. The plaintiffs assert claims for nuisance, and allege that the defendants have acted in concert and are jointly and severally liable for the plaintiffs’ damages. The suit seeks damages for lost property values and for the cost of relocating the village. The defendants filed motions to dismiss on the grounds of lack of personal and subject matter jurisdiction. In June 2009, the court granted defendants’ motion to dismiss for lack of subject matter jurisdiction finding that plaintiffs’ federal claim for nuisance is barred by the political question doctrine and for lack of standing. The plaintiffs are appealing the court’s dismissal to the U.S. Court of Appeals for the Ninth Circuit. The parties have filed their respective briefs with the court. The Ninth Circuit stayed the case until July 15, 2011, pending a decision by the U.S. Supreme Court in American Electric Power Co. (AEP) v. Connecticut. On June 20, 2011, the U.S. Supreme Court reversed and remanded the decision by the Second Circuit in AEP v. Connecticut, in which the Court unanimously held that plaintiffs’ federal common law public nuisance claim, which sought abatement of the utility company defendants’ carbon dioxide emissions from power plants, is displaced by the Clean Air Act, 42 U.S.C. § 7401, et. seq. The Kivalina parties have requested the Ninth Circuit to enter a briefing schedule to supplement the parties’ briefs based on the AEP decision.

Other

In addition, at times the Company becomes a party to other claims, lawsuits, arbitration proceedings and administrative procedures in the ordinary course of business in the U.S., Australia and other countries where the Company does business. In June 2007, the New York Office of the Attorney General served a letter and subpoena on the Company, seeking information and documents relating to the Company’s disclosure to investors of risks associated with possible climate change and related legislation and regulations. The Company believes that it has made full and proper disclosure of these potential risks. Based on current information, the Company believes that the ultimate resolution of such other pending or threatened proceedings is not reasonably likely to have a material adverse effect on its financial position, results of operations or liquidity.

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Subsequent Events (Details)	3 Months Ended	9 Months Ended										3 Months Ended	9 Months Ended
	Sep. 30, 2011 USD ($)	Sep. 30, 2011 USD ($)	Sep. 30, 2010 USD ($)	Oct. 25, 2011 days	Oct. 23, 2011	Nov. 02, 2011 Acquisition [Member] USD ($)	Nov. 02, 2011 Acquisition [Member] AUD	Sep. 30, 2011 Acquisition [Member] AUD	Aug. 01, 2011 Acquisition [Member] AUD	Sep. 30, 2011 Maximum [Member] Financing [Member] Bridge Loan [Member]	Oct. 28, 2011 Maximum [Member] Financing [Member] Term Loan [Member]	Sep. 30, 2011 Financing [Member] Bridge Loan [Member] USD ($)	Sep. 30, 2011 Financing [Member] Bridge Loan [Member] USD ($)	Nov. 03, 2011 Financing [Member] Bridge Loan [Member] USD ($)	Oct. 28, 2011 Financing [Member] Bridge Loan [Member] USD ($)	Jul. 29, 2011 Financing [Member] Bridge Loan [Member] USD ($)	Sep. 30, 2011 Financing [Member] Bridge Loan [Member] Minimum [Member]	Nov. 03, 2011 Financing [Member] Term Loan [Member] USD ($)	Oct. 28, 2011 Financing [Member] Term Loan [Member] USD ($)	Oct. 28, 2011 Financing [Member] Term Loan [Member] Minimum [Member]	Oct. 31, 2011 Bankruptcy of Coal Trading Broker [Member] USD ($)	Sep. 30, 2011 Bridge Loan [Member] USD ($)
Subsequent Event [Line Items]
Ownership percentage of the Company in the newly formed company	100.00%	100.00%							60.00%
Ownership percentage of the joint owner in the newly formed company									40.00%
PEAMCoal Ownership Percent, Making the Takeover Offer Unconditional					50.01%
Business Acquisitions, Days to Complete Financing				90
Cash price per share for proposed acquisition									16.00
Business Acquisition, Cost Of Acquired Entity, Cash Purchase Price Per Share If Company Meets Ownership Percentage Threshold								16.25
Business Acquisition, Ownership Percentage Threshold	90.00%	90.00%
Implied value for the equity of proposed acquired company						$ 5,100,000,000	4,900,000,000
Payments to Acquire Businesses and Interest in Affiliates	45,500,000	45,500,000	0
Relevant interest percentage in proposed acquisition by newly formed company						75.50%	75.50%
Financing Facility, Maximum Borrowing Capacity																2,000,000,000			1,000,000,000
Bridge Loan, Maturity Period													364 days
Bridge Loan, Commitment Fees and Debt Issuance Costs												12,700,000	12,700,000
Bridge Loan, Current Borrowing Capacity															1,000,000,000
Financing Facility, Rate Margin Over Federal Funds Rate												0.50%	0.50%						0.50%
Financing Facility, Rate Spread Over Libor												1.00%	1.00%						1.00%
Financing Facility, Libor Interest Rate										4.00%	3.00%						3.00%			1.75%
Financing Facility, Base Interest Rate										3.00%	2.00%						2.00%			0.75%
Bridge Loan, Duration Fee on 90th Day												1.00%	1.00%
Bridge Loan, Duration Fee on 180th Day												1.50%	1.50%
Bridge Loan, Duration Fee on 270th Day												2.00%	2.00%
Term Loan, Quarterly Amortization Percentage																			1.25%
Financing Facility, Amount Outstanding														0				1,000,000,000				0
Funds remaining with MF Global																					$ 39,000,000

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Investments (Details 1) (Debt Securities [Member], USD $) In Millions	Sep. 30, 2011
Debt Securities [Member]
Contractual maturities for available-for-sale maturities
Due in one year or less, Cost	$ 9.8
Due in one to five years, Cost	20.8
Total Cost	30.6
Due in one year or less, Fair Value	9.8
Due in one to five years, Fair Value	21.1
Total Fair Value	$ 30.9

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Coal Trading (Tables) (Coal Trading [Member])

9 Months Ended

Sep. 30, 2011

Coal Trading [Member]

Coal Trading [Line Items]

Trading revenue by type of instrument

	Three Months Ended September 30,					Nine Months Ended September 30,
Trading Revenues by Type of Instrument	2011			2010		2011			2010
	(Dollars in millions)
Commodity swaps and options	$	(0.6	)	$	38.9	$	(26.6	)	$	29.5
Physical commodity purchase/sale contracts	29.6			23.2		60.9			141.5
Total trading revenues	$	29.0		$	62.1	$	34.3		$	171.0

Fair value of assets and liabilities from coal trading activities

The fair value of assets and liabilities from coal trading activities is set forth below:

	September 30, 2011						December 31, 2010
	Gross Basis			Net Basis			Gross Basis			Net Basis
	(Dollars in millions)
Assets from coal trading activities	$	590.5		$	66.0		$	1,706.2		$	192.5
Liabilities from coal trading activities	(660.5		)	(62.6		)	(1,843.5		)	(181.7		)
Subtotal	(70.0		)	3.4			(137.3		)	10.8
Net margin posted (1)	73.4			—			148.1			—
Net value of coal trading positions	$	3.4		$	3.4		$	10.8		$	10.8

⁽¹⁾  Represents margin posted with counterparties and exchanges of $73.4 million at September 30, 2011; and margin posted with counterparties and exchanges of $148.2 million, net of margin held of $0.1 million, at December 31, 2010. In addition, at December 31, 2010, the Company held letters of credit of $5.0 million from counterparties in lieu of margin posted. Of the margin posted at September 30, 2011, approximately 94% related to cash flow hedges.

Fair value coal trading net assets (liabilities) measured on recurring basis

The following tables set forth the hierarchy of the Company’s net financial asset (liability) coal trading positions for which fair value is measured on a recurring basis:

	September 30, 2011
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Commodity swaps and options	$	15.1	$	3.9		$	—	$	19.0
Physical commodity purchase/sale contracts	—		(23.8		)	8.2		(15.6		)
Total net financial assets (liabilities)	$	15.1	$	(19.9	)	$	8.2	$	3.4

	December 31, 2010
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Commodity swaps and options	$	10.7	$	(76.2	)	$	—	$	(65.5	)
Physical commodity purchase/sale contracts	—		57.7			18.6		76.3
Total net financial assets (liabilities)	$	10.7	$	(18.5	)	$	18.6	$	10.8

Change in the Company's recurring Level 3 net financial assets

The following table summarizes the changes in the Company’s recurring Level 3 net financial assets:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Beginning of period	$	9.9		$	13.8		$	18.6		$	17.0
Total gains (losses) realized/unrealized:
Included in earnings	(1.4		)	2.1			10.7			(0.6		)
Included in other comprehensive income	—			0.2			—			0.3
Settlements	(1.3		)	(0.7		)	(3.1		)	(1.4		)
Transfers in (out)	1.0			0.8			(18.0		)	0.9
End of period	$	8.2		$	16.2		$	8.2		$	16.2

Changes in unrealized gains (losses) relating to Level 3 net financial assets

The following table summarizes the changes in unrealized gains (losses) relating to Level 3 net financial assets held both as of the beginning and the end of the period:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011			2010		2011		2010
	(Dollars in millions)
Changes in unrealized gains (losses) (1)	$	(1.1	)	$	1.2	$	8.7	$	3.5

⁽¹⁾  Within the unaudited condensed consolidated statements of operations for the periods presented, unrealized gains and losses from Level 3 items are combined with unrealized gains and losses on positions classified in Level 1 or 2, as well as other positions that have been realized during the applicable periods.

Schedule of future realization of the Company's trading portfolio

As of September 30, 2011, the timing of the estimated future realization of the value of the Company’s trading portfolio was as follows:

Year of	Percentage of
Expiration	Portfolio Total
2011	33%
2012	46%
2013	9%
2014	8%
2015	4%
	100%

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Millions	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash Flows From Operating Activities
Net income	$ 752.4	$ 587.2
Loss from discontinued operations, net of income taxes	3.7	2.2
Income from continuing operations, net of income taxes	756.1	589.4
Adjustments to reconcile income from continuing operations, net of income taxes to net cash provided by operating activities:
Depreciation, depletion and amortization	327.8	327.3
Deferred income taxes	49.1	178.6
Share-based compensation	32.4	30.1
Net gain on disposal or exchange of assets	(31.4)	(15.4)
Loss (income) from equity affiliates	9.0	(2.1)
Changes in current assets and liabilities:
Accounts receivable	(12.5)	(124.3)
Accounts receivable securitization program	0	(154.6)
Inventories	(17.5)	(71.2)
Net assets from coal trading activities	71.7	(0.8)
Other current assets	(41.6)	19.9
Accounts payable and accrued expenses	(8.6)	116.5
Asset retirement obligations	27.8	20.3
Workers' compensation obligations	0.3	5.6
Pension costs	25.5	17.5
Accrued postretirement benefit costs	26.6	18.4
Contributions to pension plans	(1.3)	(23.9)
Other, net	(19.3)	(27.8)
Net cash provided by continuing operations	1,194.1	903.5
Net cash used in discontinued operations	(3.6)	(11.3)
Net cash provided by operating activities	1,190.5	892.2
Cash Flows From Investing Activities
Additions to property, plant, equipment and mine development	(616.2)	(291.3)
Federal coal lease expenditures	(42.4)	0
Investment in Prairie State Energy Campus	(29.8)	(52.5)
Proceeds from disposal of assets	12.1	9.7
Investments in equity affiliates and joint ventures	(39.8)	(18.8)
Proceeds from sales of debt and equity securities	53.3	10.6
Purchases of debt and equity securities	(44.1)	(73.6)
Purchases of short-term investments	(100.0)	0
Maturity of short-term investments	100.0	0
Investment in shares of Macarthur Coal Limited	(45.5)	0
Other, net	(4.4)	(7.4)
Net cash used in investing activities	(756.8)	(423.3)
Cash Flows From Financing Activities
Proceeds from long-term debt	1.4	1,150.0
Payments of long-term debt	(248.4)	(1,148.5)
Dividends paid	(69.1)	(56.5)
Repurchase of employee common stock relinquished for tax withholding	(16.1)	(8.4)
Payment of debt issuance costs	(4.0)	(32.2)
Excess tax benefits related to share-based compensation	6.1	0
Proceeds from stock options exercised	4.5	5.9
Other, net	(1.7)	(0.5)
Net cash used in financing activities	(327.3)	(90.2)
Net change in cash and cash equivalents	106.4	378.7
Cash and cash equivalents at beginning of period	1,295.2	988.8
Cash and cash equivalents at end of period	$ 1,401.6	$ 1,367.5

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Segment Information

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company reports its operations primarily through the following reportable operating segments: “Western U.S. Mining,” “Midwestern U.S. Mining,” “Australian Mining,” “Trading and Brokerage” and “Corporate and Other.” The Company’s chief operating decision maker uses Adjusted EBITDA as the primary measure of segment profit and loss. The Company defines Adjusted EBITDA as income from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expense and depreciation, depletion and amortization.

Operating segment results were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Revenues:
Western U.S. Mining	$	758.5		$	707.4		$	2,124.5		$	2,021.6
Midwestern U.S. Mining	385.1			317.1			1,080.0			949.8
Australian Mining	757.4			733.4			2,223.3			1,777.3
Trading and Brokerage	131.5			101.8			329.5			273.7
Corporate and Other	3.4			5.0			31.5			19.3
Total	$	2,035.9		$	1,864.7		$	5,788.8		$	5,041.7
Adjusted EBITDA:
Western U.S. Mining	$	218.7		$	215.7		$	532.2		$	630.9
Midwestern U.S. Mining	104.0			77.2			295.9			222.7
Australian Mining	243.3			323.2			810.7			670.1
Trading and Brokerage	57.4			44.3			134.6			91.0
Corporate and Other	(119.0		)	(89.1		)	(273.3		)	(245.8		)
Total	$	504.4		$	571.3		$	1,500.1		$	1,368.9

A reconciliation of Adjusted EBITDA to consolidated income from continuing operations follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Total Adjusted EBITDA	$	504.4		$	571.3		$	1,500.1		$	1,368.9
Depreciation, depletion and amortization	113.7			116.7			327.8			327.3
Asset retirement obligation expense	15.0			9.9			43.9			30.3
Interest expense	59.2			62.2			159.3			170.1
Interest income	(4.1		)	(2.8		)	(11.7		)	(5.4		)
Income tax provision	37.1			147.7			224.7			257.2
Income from continuing operations, net of income taxes	$	283.5		$	237.6		$	756.1		$	589.4

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Derivatives and Fair Value Measurements (Details 2) (USD $) In Millions	Sep. 30, 2011	Dec. 31, 2010
Derivatives, Fair Value [Line Items]
Current Assets	$ 280.3	$ 299.3
Noncurrent Assets	217.5	393.6
Current Liabilities	17.2	12.0
Noncurrent Liabilities	35.6	0.6
Diesel fuel cash flow hedge contracts [Member] | Cash flow hedges [Member]
Derivatives, Fair Value [Line Items]
Current Assets	37.1	25.3
Noncurrent Assets	14.3	26.9
Current Liabilities	1.1	11.9
Noncurrent Liabilities	12.3	0
Cash flow hedges [Member] | Explosives cash flow hedge contracts [Member]
Derivatives, Fair Value [Line Items]
Current Assets	0	0.5
Noncurrent Assets	0	0.1
Current Liabilities	3.1	0.1
Noncurrent Liabilities	1.8	0.6
Cash flow hedges [Member] | Foreign currency cash flow hedge contracts [Member]
Derivatives, Fair Value [Line Items]
Current Assets	243.2	273.5
Noncurrent Assets	203.2	366.6
Current Liabilities	13.0	0
Noncurrent Liabilities	$ 21.5	$ 0

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Subsequent Events

9 Months Ended

Sep. 30, 2011

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Acquisition of Macarthur

On August 1, 2011, the Company and ArcelorMittal SA (ArcelorMittal) launched an all-cash off-market takeover offer to acquire a controlling ownership interest in Macarthur. The offer was made by a newly formed Australian company, PEAMCoal Pty Ltd (PEAMCoal), indirectly owned 60% by the Company and 40% by ArcelorMittal. Subsequent to the takeover offer, ArcelorMittal elected to sell its interest in PEAMCoal to the Company in lieu of proceeding with the PEAMCoal joint venture. As a result, the Company will own 100% of PEAMCoal and will become the owner of all the Macarthur shares tendered in the takeover offer to acquire Macarthur. ArcelorMittal must continue funding PEAMCoal for 90 days from October 25, 2011, and the Company has that timeframe to complete financing to purchase ArcelorMittal's interest in PEAMCoal. Together with the Company's funding obligations, this will cover all share purchase acceptances.

PEAMCoal's offer of $16.00 Australian dollars per share, which was agreed to by Macarthur's board of directors in August 2011, will increase to $16.25 Australian dollars per share if PEAMCoal acquires relevant interests in at least 90% of Macarthur shares by 7:00 p.m. (Brisbane, Australia time) on November 11, 2011. PEAMCoal reserves the right to extend this date. The $16.25 Australian dollars per share offer price values the equity in Macarthur at approximately $4.9 billion Australian dollars (or approximately $5.1 billion U.S. dollars as of November 2, 2011).

On October 23, 2011, the Company announced that PEAMCoal had acquired more than 50.01% of Macarthur's shares and that the takeover offer had become unconditional. Any holders that have validly tendered their Macarthur shares may no longer withdraw such tendered shares, and any shares subsequently tendered may not be withdrawn.

The Company intends to finance the acquisition of Macarthur with cash on hand, borrowings under its Credit Facility, senior term loan facility (Term Loan Facility), and other long term debt financing or borrowings under our bridge loan credit agreement (Bridge Facility). The Term Loan Facility and Bridge Facility are discussed in more detail below.

During the three months ended September 30, 2011, PEAMCoal purchased shares of Macarthur in the open market for $45.5 million (see Note 3). On November 2, 2011, PEAMCoal had a 75.5% relevant interest in Macarthur’s shares.

Bridge Facility

On July 29, 2011, the Company entered into a bridge commitment letter with certain lenders that committed to provide to the Company unsecured bridge financing of up to $2.0 billion, the proceeds of which may be used to finance, in part, the acquisition of Macarthur. On October 24, 2011, the Company entered into the Bridge Facility that contains the negotiated terms and conditions originally contemplated in the bridge commitment letter. The Bridge Facility matures 364 days following its effectiveness. Any initial funding of the Bridge Facility must occur by April 29, 2012.

The Company pays certain customary fees and expenses, including fees on the unused portion of the bridge commitments and a duration fee, which are described below. For the three and nine months ended September 30, 2011, the Company recorded charges of $12.7 million related to the Bridge Facility, which were recorded in “Interest expense” in the unaudited condensed consolidated statements of operations.

On October 28, 2011, the Company reduced the Bridge Facility commitment to $1.0 billion, in connection with the Term Loan Facility described below.

Borrowings under the Bridge Facility bear interest, at the Company's option, at a rate equal to (i) LIBOR plus an applicable margin or (ii) a base rate (defined as the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50% and (c) one month LIBOR plus 1.00%) plus an applicable margin. The applicable margin increases based on the number of days that have elapsed since the initial funding under the Bridge Facility and may adjust from 3.00% up to 4.00% per year for borrowings bearing interest at LIBOR and from 2.00% up to 3.00% per year for borrowings bearing interest at the base rate, in each case, depending on the number of days elapsed. The Company will also pay a duration fee calculated as a percentage of any aggregate borrowings outstanding at the 90th, 180th, and 270th day following the initial borrowing at a rate of 1.00%, 1.50% and 2.00%, respectively. There were no borrowings outstanding under the Bridge Facility as of September 30, 2011 or November 3, 2011.

The Bridge Facility is voluntarily prepayable from time to time without premium or penalty, subject to certain customary reimbursements of the lenders’ costs, and is mandatorily prepayable with the net cash proceeds from the issuance of certain specified equity securities, the issuance of certain indebtedness, certain dispositions of assets or the receipt of certain casualty insurance proceeds.

The obligations under the Bridge Facility are unsecured and are guaranteed by the Company's direct and indirect domestic subsidiaries that guarantee the Company's Credit Facility. The Bridge Facility contains covenants, including financial covenants, and events of default substantially the same as those set forth in the Credit Facility.

Term Loan Facility

On October 28, 2011, the Company entered into the Term Loan Facility, that permits the Company to borrow an aggregate principal amount of up to $1.0 billion, which will be available in multiple drawings for a period of six months. Borrowings under the Term Loan Facility will be used to finance, in part, the acquisition of Macarthur. Borrowings under the Term Loan Facility bear interest, at the Company's option, at a rate equal to (i) LIBOR plus an applicable margin or (ii) a base rate (defined as the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50% and (c) one month LIBOR plus 1.00%) plus an applicable margin. The applicable margin depends on the ratio of the Company's consolidated debt to its adjusted consolidated EBITDA, and may range from 1.75% to 3.00% per year for borrowings bearing interest at LIBOR and from 0.75% to 2.00% per year for borrowings bearing interest at the base rate.

The obligations under the Term Loan Facility are unsecured and are guaranteed by the Company's direct and indirect domestic subsidiaries that guarantee the Company's Credit Facility. The Term Loan Facility contains covenants, including financial covenants, and events of default substantially the same as those set forth in the Credit Facility.

The Term Loan Facility is voluntarily prepayable from time to time without premium or penalty, subject to certain customary reimbursements of the lenders’ costs. The Term Loan Facility will be subject to quarterly amortization of 1.25% commencing six months after the initial funding, with the final payment of all amounts outstanding due five years from the date of such initial funding. As of November 3, 2011, the Company had $1.0 billion of borrowings outstanding under the Term Loan Facility.

MF Global UK Limited

On October 31, 2011, MF Global UK Limited (MF Global UK), a United Kingdom (U.K.) based broker-dealer, was placed into the U.K.'s administration process (a process similar to bankruptcy proceedings in the U.S.) by the Financial Services Authority following the Chapter 11 bankruptcy filing of its U.S. parent, MF Global Holdings Ltd.  The Company had used MF Global UK to broker certain of its coal trading transactions.  The interruption of the Company's trading operations was limited as the Company opened new accounts with different brokerage firms and transferred most of its open trading positions formerly held with MF Global UK to those new accounts.  While the open trading positions were transferred from MF Global UK successfully, the related margin posted by the Company will be retained by MF Global UK pending resolution of the Company's claims with the special administrators.  As such, there will be a period of time where the Company has funds remaining at MF Global UK and margin posted with its new brokerage firms. The Company had funds remaining with MF Global UK totaling approximately $39 million as of October 31, 2011.

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Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) (USD $) In Millions	9 Months Ended
	Sep. 30, 2011
Comprehensive income:
Net unrealized gains on available-for-sale securities, tax benefit	$ 2.3
Cash flow hedges, tax provision	66.7
Postretirement plans and workers' compensation obligations, tax provision	$ 12.8

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Pension and Postretirement Benefit Costs

9 Months Ended

Sep. 30, 2011

Compensation and Retirement Disclosure [Abstract]

Pension and Postretirement Benefit Costs

Pension and Postretirement Benefit Costs

Net periodic pension costs included the following components:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
				(Dollars in millions)
Service cost for benefits earned	$	0.4		$	0.4		$	1.3		$	1.2
Interest cost on projected benefit obligation	12.4			12.6			37.3			37.8
Expected return on plan assets	(16.1		)	(14.6		)	(48.3		)	(43.8		)
Amortization of prior service cost	0.3			0.4			0.8			1.1
Amortization of actuarial loss	7.5			5.4			22.5			16.4
Net periodic pension costs	$	4.5		$	4.2		$	13.6		$	12.7

As of September 30, 2011, the Company’s qualified defined benefit pension plans were at or above the thresholds of the Pension Protection Act of 2006 to avoid benefit restrictions and at-risk penalties for 2011. No contributions to the qualified plans are expected during 2011. However, the Company does expect to make contributions to its non-qualified defined benefit pension plans during 2011 totaling less than $2 million.

Net periodic postretirement benefit costs included the following components:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
			(Dollars in millions)
Service cost for benefits earned	$	3.6	$	3.5	$	10.1	$	9.7
Interest cost on accumulated postretirement benefit obligation	14.5		14.7		43.4		43.8
Amortization of prior service cost	0.8		0.5		1.8		1.5
Amortization of actuarial loss	6.7		6.8		20.2		19.5
Net periodic postretirement benefit costs	$	25.6	$	25.5	$	75.5	$	74.5

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Earnings per Share (EPS) (Details) (USD $) In Millions, except Per Share data	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010
EPS numerator:
Income from continuing operations, net of income taxes	$ 283.5		$ 237.6		$ 756.1		$ 589.4
Less: Net income attributable to noncontrolling interests	7.4		12.2		17.0		23.2
Income from continuing operations attributable to common stockholders, before allocation of earnings to participating securities	276.1		225.4		739.1		566.2
Less: Earnings allocated to participating securities	(1.6)		(1.7)		(4.2)		(4.1)
Income from continuing operations attributable to common stockholders, after earnings allocated to participating securities	274.5	[1]	223.7	[1]	734.9	[1]	562.1	[1]
Loss from discontinued operations, net of income taxes	(2.0)		(1.3)		(3.7)		(2.2)
Net income attributable to common stockholders, after earnings allocated to participating securities	272.5	[1]	222.4	[1]	731.2	[1]	559.9	[1]
EPS denominator:
Weighted average shares outstanding - basic	269.2		267.1		269.0		266.7
Impact of dilutive securities	1.4		1.5		1.5		1.7
Weighted average shares outstanding - diluted	270.6		268.6		270.5		268.4
Basic EPS attributable to common stockholders:
Income from continuing operations	$ 1.02		$ 0.84		$ 2.73		$ 2.11
Loss from discontinued operations	$ (0.01)		$ 0.00		$ (0.01)		$ (0.01)
Net income	$ 1.01		$ 0.84		$ 2.72		$ 2.10
Diluted EPS attributable to common stockholders:
Income from continuing operations	$ 1.01		$ 0.83		$ 2.72		$ 2.09
Loss from discontinued operations	$ (0.01)		$ 0.00		$ (0.01)		$ (0.01)
Net income	$ 1.00		$ 0.83		$ 2.71		$ 2.08
Earnings per Share (EPS) (Textuals) [Abstract]
Adjustment for participating securities used to calculate diluted EPS was less than	$ 0.1		$ 0.1		$ 0.1		$ 0.1
Anti-dilutive shares, in millions	0.2				0.2
Maximum [Member]
Earnings per Share (EPS) (Textuals) [Abstract]
Anti-dilutive shares, in millions			0.1				0.1

[1] The reallocation adjustment for participating securities to arrive at the numerator used to calculate diluted EPS was less than $0.1 million for the periods presented.

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Segment Information (Details) (USD $) In Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Operating segment results
Revenues	$ 2,035.9	$ 1,864.7	$ 5,788.8	$ 5,041.7
Adjusted EBITDA	504.4	571.3	1,500.1	1,368.9
Reconciliation Of Adjusted Ebitda To Consolidated Income From Continuing Operations [Abstract]
Adjusted EBITDA	504.4	571.3	1,500.1	1,368.9
Depreciation, depletion and amortization	113.7	116.7	327.8	327.3
Asset retirement obligation expense	15.0	9.9	43.9	30.3
Interest expense	59.2	62.2	159.3	170.1
Interest income	(4.1)	(2.8)	(11.7)	(5.4)
Income tax provision	37.1	147.7	224.7	257.2
Income from continuing operations, net of income taxes	283.5	237.6	756.1	589.4
Western U.S. Mining [Member]
Operating segment results
Revenues	758.5	707.4	2,124.5	2,021.6
Adjusted EBITDA	218.7	215.7	532.2	630.9
Reconciliation Of Adjusted Ebitda To Consolidated Income From Continuing Operations [Abstract]
Adjusted EBITDA	218.7	215.7	532.2	630.9
Midwestern U.S. Mining [Member]
Operating segment results
Revenues	385.1	317.1	1,080.0	949.8
Adjusted EBITDA	104.0	77.2	295.9	222.7
Reconciliation Of Adjusted Ebitda To Consolidated Income From Continuing Operations [Abstract]
Adjusted EBITDA	104.0	77.2	295.9	222.7
Australian Mining [Member]
Operating segment results
Revenues	757.4	733.4	2,223.3	1,777.3
Adjusted EBITDA	243.3	323.2	810.7	670.1
Reconciliation Of Adjusted Ebitda To Consolidated Income From Continuing Operations [Abstract]
Adjusted EBITDA	243.3	323.2	810.7	670.1
Trading and Brokerage [Member]
Operating segment results
Revenues	131.5	101.8	329.5	273.7
Adjusted EBITDA	57.4	44.3	134.6	91.0
Reconciliation Of Adjusted Ebitda To Consolidated Income From Continuing Operations [Abstract]
Adjusted EBITDA	57.4	44.3	134.6	91.0
Corporate and Other [Member]
Operating segment results
Revenues	3.4	5.0	31.5	19.3
Adjusted EBITDA	(119.0)	(89.1)	(273.3)	(245.8)
Reconciliation Of Adjusted Ebitda To Consolidated Income From Continuing Operations [Abstract]
Adjusted EBITDA	$ (119.0)	$ (89.1)	$ (273.3)	$ (245.8)

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Earnings per Share (EPS) (Tables)

9 Months Ended

Sep. 30, 2011

Earnings Per Share [Abstract]

Earnings allocation method utilized in the calculation of basic and diluted EPS

The following illustrates the earnings allocation method utilized in the calculation of basic and diluted EPS.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(In millions, except per share amounts)
EPS numerator:
Income from continuing operations, net of income taxes	$	283.5		$	237.6		$	756.1		$	589.4
Less: Net income attributable to noncontrolling interests	7.4			12.2			17.0			23.2
Income from continuing operations attributable to    common stockholders, before allocation of earnings to    participating securities	276.1			225.4			739.1			566.2
Less: Earnings allocated to participating securities	(1.6		)	(1.7		)	(4.2		)	(4.1		)
Income from continuing operations attributable to    common stockholders, after earnings allocated to    participating securities (1)	274.5			223.7			734.9			562.1
Loss from discontinued operations, net of income taxes	(2.0		)	(1.3		)	(3.7		)	(2.2		)
Net income attributable to common stockholders, after    earnings allocated to participating securities (1)	$	272.5		$	222.4		$	731.2		$	559.9
EPS denominator:
Weighted average shares outstanding — basic	269.2			267.1			269.0			266.7
Impact of dilutive securities	1.4			1.5			1.5			1.7
Weighted average shares outstanding — diluted	270.6			268.6			270.5			268.4
Basic EPS attributable to common stockholders:
Income from continuing operations	$	1.02		$	0.84		$	2.73		$	2.11
Loss from discontinued operations	(0.01		)	—			(0.01		)	(0.01		)
Net income	$	1.01		$	0.84		$	2.72		$	2.10
Diluted EPS attributable to common stockholders:
Income from continuing operations	$	1.01		$	0.83		$	2.72		$	2.09
Loss from discontinued operations	(0.01		)	—			(0.01		)	(0.01		)
Net income	$	1.00		$	0.83		$	2.71		$	2.08

⁽¹⁾  The reallocation adjustment for participating securities to arrive at the numerator used to calculate diluted EPS was less than $0.1 million for the periods presented

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Financial Instruments and Guarantees with Off-Balance-Sheet Risk

9 Months Ended

Sep. 30, 2011

Financial Instruments And Guarantees With Off Balance Sheet Risk Disclosure [Abstract]

Financial Instruments and Guarantees with Off-Balance-Sheet Risk

Financial Instruments and Guarantees with Off-Balance Sheet Risk

In the normal course of business, the Company is a party to guarantees and financial instruments with off-balance-sheet risk, which are not reflected in the accompanying condensed consolidated balance sheets. Such financial instruments are valued based on the amount of exposure under the instrument and the likelihood of required performance. In the Company’s past experience, virtually no claims have been made against these financial instruments. Management does not expect any material losses to result from these guarantees or off-balance-sheet instruments.

Financial Instruments with Off-Balance Sheet Risk

As of September 30, 2011, the Company had the following financial instruments with off-balance sheet risk:

	Reclamation Obligations		Lease Obligations		Workers’ Compensation Obligations		Other(1)		Total
	(Dollars in millions)
Self bonding	$	936.9	$	—	$	—	$	—	$	936.9
Surety bonds	606.4		104.7		6.2		10.4		727.7
Bank guarantees	127.4		—		—		139.2		266.6
Letters of credit	—		—		62.2		2.8		65.0
Bilateral cash collateralization agreements	—		—		—		79.7		79.7
	$	1,670.7	$	104.7	$	68.4	$	232.1	$	2,075.9

⁽¹⁾  Other includes letter of credit and bilateral cash collateralization agreement obligations described below and an additional $149.6 million in bank guarantees and surety bonds related to collateral for surety companies, road maintenance, performance guarantees and other operations.

The Company owns a 37.5% interest in Dominion Terminal Associates, a partnership that operates a coal export terminal in Newport News, Virginia under a 30-year lease that permits the partnership to purchase the terminal at the end of the lease term for a nominal amount. The partners have severally (but not jointly) agreed to make payments under various agreements which in the aggregate provide the partnership with sufficient funds to pay rents and to cover the principal and interest payments on the floating-rate industrial revenue bonds issued by the Peninsula Ports Authority, and which are supported by letters of credit from a commercial bank. As of September 30, 2011, the Company’s maximum reimbursement obligation to the commercial bank was in turn supported by four letters of credit totaling $42.7 million. The Company has a bilateral cash collateralization agreement for these letters of credit whereby the Company posted cash collateral in lieu of utilizing the Company’s unsecured credit facility (Credit Facility). See Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 for more information on the Company’s Credit Facility. Such cash collateral is classified within "Cash and cash equivalents" given the Company has the ability to substitute letters of credit at any time for this cash collateral and it is, therefore, readily available to the Company.

The Company is party to an agreement with the PBGC and TXU Europe Limited, an affiliate of the Company’s former parent corporation, under which the Company is required to make special contributions to two of the Company’s defined benefit pension plans and to maintain a $37.0 million letter of credit in favor of the PBGC. If the Company or the PBGC gives notice of an intent to terminate one or more of the covered pension plans in which liabilities are not fully funded, or if the Company fails to maintain the letter of credit, the PBGC may draw down on the letter of credit and use the proceeds to satisfy liabilities under the Employee Retirement Income Security Act of 1974, as amended. The PBGC, however, is required to first apply amounts received from a $110.0 million guarantee in place from TXU Europe Limited in favor of the PBGC before it draws on the Company’s letter of credit. The Company has a bilateral cash collateralization agreement for this letter of credit whereby the Company posted cash collateral in lieu of utilizing the Company’s Credit Facility. Such cash collateral is classified within "Cash and cash equivalents" given the Company has the ability to substitute a letter of credit at any time for this cash collateral and it is, therefore, readily available to the Company. On November 19, 2002, TXU Europe Limited was placed under the administration process in the United Kingdom (a process similar to bankruptcy proceedings in the U.S.) and continues under this process as of September 30, 2011. As a result of these proceedings, TXU Europe Limited may be liquidated or otherwise reorganized in such a way as to relieve it of its obligations under its guarantee.

At September 30, 2011, the Company had a $2.8 million letter of credit outstanding for collateral for bank guarantees issued with respect to certain performance obligations related to some of the Company’s Australian mines.

Accounts Receivable Securitization

The Company has an accounts receivable securitization program (securitization program) with a maximum capacity of $275.0 million through its wholly-owned, bankruptcy-remote subsidiary (Seller). At September 30, 2011, the Company had $61.9 million available under the securitization program, net of outstanding letters of credit and amounts drawn. Under the securitization program, the Company contributes, on a revolving basis, trade receivables of most of the Company’s U.S. subsidiaries to the Seller, which then sells the receivables in their entirety to a consortium of unaffiliated asset-backed commercial paper conduits (the Conduits). After the sale, the Company, as servicer of the assets, collects the receivables on behalf of the Conduits for a nominal servicing fee. The Company utilizes proceeds from the sale of its accounts receivable as an alternative to short-term borrowings under the Company’s Credit Facility, effectively managing its overall borrowing costs and providing an additional source for working capital. The securitization program extends to May 2012, while the letter of credit commitment that supports the commercial paper facility underlying the securitization program must be renewed annually.

The Seller is a separate legal entity whose assets are available first and foremost to satisfy the claims of its creditors. Of the receivables sold to the Conduits, a portion of the amount due to the Seller is deferred until the ultimate collection of the underlying receivables. During the nine months ended September 30, 2011, the Company received total consideration of $3,740.9 million related to accounts receivable sold under the securitization program, including $2,831.7 million of cash up front from the sale of the receivables, an additional $674.4 million of cash upon the collection of the underlying receivables, and $234.8 million that had not been collected at September 30, 2011 and was recorded at fair value which approximates carrying value. The reduction in accounts receivable as a result of securitization activity with the Conduits was $150.0 million at September 30, 2011 and December 31, 2010.

The securitization activity has been reflected in the unaudited condensed consolidated statements of cash flows as operating activity because both the cash received from the Conduits upon sale of the receivables as well as the cash received from the Conduits upon the ultimate collection of the receivables are not subject to significantly different risks given the short-term nature of the Company’s trade receivables. The Company recorded expense associated with securitization transactions of $0.4 million and $0.6 million for the three months ended September 30, 2011 and 2010, respectively, and $1.5 million and $1.8 million for the nine months ended September 30, 2011 and 2010, respectively.

Other

The Company is the lessee under numerous equipment and property leases. It is common in such commercial lease transactions for the Company, as the lessee, to agree to indemnify the lessor for the value of the property or equipment leased, should the property be damaged or lost during the course of the Company’s operations. The Company expects that losses with respect to leased property would be covered by insurance (subject to deductibles). The Company and certain of its subsidiaries have guaranteed other subsidiaries’ performance under various lease obligations. Aside from indemnification of the lessor for the value of the property leased, the Company’s maximum potential obligations under its leases are equal to the respective future minimum lease payments, and the Company assumes that no amounts could be recovered from third parties.

In connection with the development of Prairie State, each owner, including one of the Company’s subsidiaries, has issued a guarantee for its proportionate share (5.06% for the Company) of the construction costs under an agreement with Bechtel Power Corporation.

From time to time, the Company enters into coal off-take agreements with counterparties where, as a part of the arrangements, the Company may provide certain financial guarantees on behalf of the counterparties. As of September 30, 2011, the Company had in place guarantees of $10.0 million on behalf of its counterparties relating to such agreements. To mitigate risk, the Company places liens on the counterparties' production equipment or requires performance bonds. 

The Company has provided financial guarantees under certain long-term debt agreements entered into by its subsidiaries, and substantially all of the Company’s subsidiaries provide financial guarantees under long-term debt agreements entered into by the Company. The maximum amounts payable under the Company’s debt agreements are equal to the respective principal and interest payments.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Millions, except Per Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Revenues
Sales	$ 1,737.3	$ 1,663.4	$ 5,151.8	$ 4,618.3
Other revenues	298.6	201.3	637.0	423.4
Total revenues	2,035.9	1,864.7	5,788.8	5,041.7
Costs and expenses
Operating costs and expenses	1,458.8	1,243.3	4,119.7	3,526.7
Depreciation, depletion and amortization	113.7	116.7	327.8	327.3
Asset retirement obligation expense	15.0	9.9	43.9	30.3
Selling and administrative expenses	71.2	54.1	191.4	163.6
Other operating (income) loss:
Net gain on disposal or exchange of assets	(1.7)	(6.7)	(31.4)	(15.4)
Loss (income) from equity affiliates	3.2	2.7	9.0	(2.1)
Operating profit	375.7	444.7	1,128.4	1,011.3
Interest expense	59.2	62.2	159.3	170.1
Interest income	(4.1)	(2.8)	(11.7)	(5.4)
Income from continuing operations before income taxes	320.6	385.3	980.8	846.6
Income tax provision	37.1	147.7	224.7	257.2
Income from continuing operations, net of income taxes	283.5	237.6	756.1	589.4
Loss from discontinued operations, net of income taxes	(2.0)	(1.3)	(3.7)	(2.2)
Net income	281.5	236.3	752.4	587.2
Less: Net income attributable to noncontrolling interests	7.4	12.2	17.0	23.2
Net income attributable to common stockholders	$ 274.1	$ 224.1	$ 735.4	$ 564.0
Income From Continuing Operations
Basic earnings per share	$ 1.02	$ 0.84	$ 2.73	$ 2.11
Diluted earnings per share	$ 1.01	$ 0.83	$ 2.72	$ 2.09
Net Income Attributable to Common Stockholders
Basic earnings per share	$ 1.01	$ 0.84	$ 2.72	$ 2.10
Diluted earnings per share	$ 1.00	$ 0.83	$ 2.71	$ 2.08
Dividends declared per share	$ 0.085	$ 0.070	$ 0.255	$ 0.210

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Operating segment results

Operating segment results were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Revenues:
Western U.S. Mining	$	758.5		$	707.4		$	2,124.5		$	2,021.6
Midwestern U.S. Mining	385.1			317.1			1,080.0			949.8
Australian Mining	757.4			733.4			2,223.3			1,777.3
Trading and Brokerage	131.5			101.8			329.5			273.7
Corporate and Other	3.4			5.0			31.5			19.3
Total	$	2,035.9		$	1,864.7		$	5,788.8		$	5,041.7
Adjusted EBITDA:
Western U.S. Mining	$	218.7		$	215.7		$	532.2		$	630.9
Midwestern U.S. Mining	104.0			77.2			295.9			222.7
Australian Mining	243.3			323.2			810.7			670.1
Trading and Brokerage	57.4			44.3			134.6			91.0
Corporate and Other	(119.0		)	(89.1		)	(273.3		)	(245.8		)
Total	$	504.4		$	571.3		$	1,500.1		$	1,368.9

Reconciliation of Adjusted EBITDA to consolidated income from continuing operations

A reconciliation of Adjusted EBITDA to consolidated income from continuing operations follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in millions)
Total Adjusted EBITDA	$	504.4		$	571.3		$	1,500.1		$	1,368.9
Depreciation, depletion and amortization	113.7			116.7			327.8			327.3
Asset retirement obligation expense	15.0			9.9			43.9			30.3
Interest expense	59.2			62.2			159.3			170.1
Interest income	(4.1		)	(2.8		)	(11.7		)	(5.4		)
Income tax provision	37.1			147.7			224.7			257.2
Income from continuing operations, net of income taxes	$	283.5		$	237.6		$	756.1		$	589.4

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Coal Trading (Details 2) (Coal Trading [Member], Credit Concentration Risk [Member], Coal Trading Positions [Member])	Sep. 30, 2011
External Credit Rating, Investment Grade [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	35.00%
External Credit Rating, Non Investment Grade [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	54.00%
Non Rated [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	11.00%

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Commitments and Contingencies (Details 1) (USD $) In Millions, unless otherwise specified	9 Months Ended			9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Jul. 31, 2011 T	Sep. 30, 2011 Prarie State Energy Campus Member [Member]	Dec. 31, 2010 Prarie State Energy Campus Member [Member]	Sep. 30, 2011 Capital Additions [Member]
Long-term Purchase Commitment [Line Items]
Expenditures for construction of Prairie State Energy Campus	$ 29.8	$ 52.5		$ 29.8
Commitments outstanding for capital expenditures, Current						521.4
Investment in Prairie State Energy Campus included in Investments and Other Assets				232.3	202.5
Company's estimated share of total construction costs				250
Number of tons of coal in the Powder River Basin of Wyoming in which the Company was named the winning bidder			220,000,000
Commitments outstanding for capital expenditures next year						477.6
Subsidiary Company's Interest in Prairie State Energy Campus	5.06%			5.06%
First coal reserve payment made by the Company			42.1
Annual coal reserve payments to be made by the Company in July of each of the next four years			$ 42.1

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Derivatives and Fair Value Measurements (Details 3)	9 Months Ended
	Sep. 30, 2011 USD ($)	Sep. 30, 2011 Foreign currency hedge contracts [Member] Fair Value, Measurements, Recurring [Member] USD ($)	Dec. 31, 2010 Foreign currency hedge contracts [Member] Fair Value, Measurements, Recurring [Member] USD ($)	Sep. 30, 2011 Foreign currency hedge contracts [Member] Fair Value, Measurements, Recurring [Member] Level 1[Member] USD ($)	Dec. 31, 2010 Foreign currency hedge contracts [Member] Fair Value, Measurements, Recurring [Member] Level 1[Member] USD ($)	Sep. 30, 2011 Foreign currency hedge contracts [Member] Fair Value, Measurements, Recurring [Member] Level 2 [Member] USD ($)	Dec. 31, 2010 Foreign currency hedge contracts [Member] Fair Value, Measurements, Recurring [Member] Level 2 [Member] USD ($)	Sep. 30, 2011 Foreign currency hedge contracts [Member] Fair Value, Measurements, Recurring [Member] Level 3 [Member] USD ($)	Dec. 31, 2010 Foreign currency hedge contracts [Member] Fair Value, Measurements, Recurring [Member] Level 3 [Member] USD ($)	Sep. 30, 2011 Diesel Fuel Hedge Contracts [Member] Fair Value, Measurements, Recurring [Member] USD ($)	Dec. 31, 2010 Diesel Fuel Hedge Contracts [Member] Fair Value, Measurements, Recurring [Member] USD ($)	Sep. 30, 2011 Diesel Fuel Hedge Contracts [Member] Fair Value, Measurements, Recurring [Member] Level 1[Member] USD ($)	Dec. 31, 2010 Diesel Fuel Hedge Contracts [Member] Fair Value, Measurements, Recurring [Member] Level 1[Member] USD ($)	Sep. 30, 2011 Diesel Fuel Hedge Contracts [Member] Fair Value, Measurements, Recurring [Member] Level 2 [Member] USD ($)	Dec. 31, 2010 Diesel Fuel Hedge Contracts [Member] Fair Value, Measurements, Recurring [Member] Level 2 [Member] USD ($)	Sep. 30, 2011 Diesel Fuel Hedge Contracts [Member] Fair Value, Measurements, Recurring [Member] Level 3 [Member] USD ($)	Dec. 31, 2010 Diesel Fuel Hedge Contracts [Member] Fair Value, Measurements, Recurring [Member] Level 3 [Member] USD ($)	Sep. 30, 2011 Explosives Hedge Contracts Member Fair Value, Measurements, Recurring [Member] USD ($)	Dec. 31, 2010 Explosives Hedge Contracts Member Fair Value, Measurements, Recurring [Member] USD ($)	Sep. 30, 2011 Explosives Hedge Contracts Member Fair Value, Measurements, Recurring [Member] Level 1[Member] USD ($)	Dec. 31, 2010 Explosives Hedge Contracts Member Fair Value, Measurements, Recurring [Member] Level 1[Member] USD ($)	Sep. 30, 2011 Explosives Hedge Contracts Member Fair Value, Measurements, Recurring [Member] Level 2 [Member] USD ($)	Dec. 31, 2010 Explosives Hedge Contracts Member Fair Value, Measurements, Recurring [Member] Level 2 [Member] USD ($)	Sep. 30, 2011 Explosives Hedge Contracts Member Fair Value, Measurements, Recurring [Member] Level 3 [Member] USD ($)	Dec. 31, 2010 Explosives Hedge Contracts Member Fair Value, Measurements, Recurring [Member] Level 3 [Member] USD ($)	Sep. 30, 2011 Fair Value, Measurements, Recurring [Member] USD ($)	Dec. 31, 2010 Fair Value, Measurements, Recurring [Member] USD ($)	Sep. 30, 2011 Fair Value, Measurements, Recurring [Member] Level 1[Member] USD ($)	Dec. 31, 2010 Fair Value, Measurements, Recurring [Member] Level 1[Member] USD ($)	Sep. 30, 2011 Fair Value, Measurements, Recurring [Member] Level 2 [Member] USD ($)	Dec. 31, 2010 Fair Value, Measurements, Recurring [Member] Level 2 [Member] USD ($)	Sep. 30, 2011 Fair Value, Measurements, Recurring [Member] Level 3 [Member] USD ($)	Dec. 31, 2010 Fair Value, Measurements, Recurring [Member] Level 3 [Member] USD ($)	Sep. 30, 2011 Foreign currency hedge contracts [Member] GBP (£)	Sep. 30, 2011 Foreign currency hedge contracts [Member] AUD
Fair value of financial asset (liability) positions measured on a recurring basis
Investment in debt and equity securities	$ 29,400,000																									$ 79,500,000	$ 17,900,000	$ 79,500,000	$ 17,900,000	$ 0	$ 0	$ 0	$ 0
Derivative assets (liabilities), at fair value, net		411,900,000	640,100,000	0	0	411,900,000	640,100,000	0	0	38,000,000	40,300,000	0	0	38,000,000	40,300,000	0	0	(4,900,000)	(100,000)	0	0	(4,900,000)	(100,000)	0	0									(600,000)	412,500,000
Total net financial assets																										524,500,000	698,200,000	79,500,000	17,900,000	445,000,000	680,300,000	0	0
Fair value, level 1 to level 2 transfers, amount	0
Fair value, level 2 to level 1 transfers, amount	$ 0

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Derivatives and Fair Value Measurements (Details 4) (USD $) In Millions, unless otherwise specified	Sep. 30, 2011	Dec. 31, 2010
7.875% Senior Notes due November 2026 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rates on Senior Notes	7.875%
Long-term debt	$ 247.3	$ 247.2
Carrying amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	2,502.4	2,750.0
Estimated fair value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 2,645.3	$ 2,960.0

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Other Commercial Events (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	9 Months Ended
	Jun. 30, 2011	Sep. 30, 2011 mW
Other Commercial Events [Abstract]
Recognized gain on coal reserves exchange		$ 23.5
Project development fee received	$ 14.6
Capacity of new electricity generation project, Megawatts		1,600

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Supplemental Guarantor/Non-Guarantor Financial Information (Tables)

9 Months Ended

Sep. 30, 2011

Supplemental Guarantor Non Guarantor Financial Information [Abstract]

Unaudited Supplemental Condensed Consolidating Statements of Operations

Unaudited Supplemental Condensed Consolidating Statements of Operations

	Three Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	1,229.9		$	850.0		$	(44.0	)	$	2,035.9
Costs and expenses
Operating costs and expenses	(99.3		)	922.9			679.2			(44.0		)	1,458.8
Depreciation, depletion and amortization	—			72.1			41.6			—			113.7
Asset retirement obligation expense	—			11.2			3.8			—			15.0
Selling and administrative expenses	8.0			52.5			10.7			—			71.2
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(1.8		)	0.1			—			(1.7		)
(Income) loss from equity affiliates	(252.5		)	2.7			0.5			252.5			3.2
Interest expense	61.0			13.7			1.9			(17.4		)	59.2
Interest income	(4.1		)	(5.2		)	(12.2		)	17.4			(4.1		)
Income from continuing operations before income taxes	286.9			161.8			124.4			(252.5		)	320.6
Income tax provision (benefit)	12.9			48.3			(24.1		)	—			37.1
Income from continuing operations, net of income taxes	274.0			113.5			148.5			(252.5		)	283.5
Gain (loss) from discontinued operations, net of income taxes	0.1			(2.1		)	—			—			(2.0		)
Net income	274.1			111.4			148.5			(252.5		)	281.5
Less: Net income attributable to noncontrolling interests	—			—			7.4			—			7.4
Net income attributable to common stockholders	$	274.1		$	111.4		$	141.1		$	(252.5	)	$	274.1

Unaudited Supplemental Condensed Consolidated Statements of Operations

	Three Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	1,059.9		$	1,045.3		$	(240.5	)	$	1,864.7
Costs and expenses
Operating costs and expenses	(24.8		)	763.9			744.7			(240.5		)	1,243.3
Depreciation, depletion and amortization	—			76.2			40.5			—			116.7
Asset retirement obligation expense	—			7.1			2.8			—			9.9
Selling and administrative expenses	5.5			47.3			1.3			—			54.1
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(7.1		)	0.4			—			(6.7		)
(Income) loss from equity affiliates	(248.5		)	1.3			1.4			248.5			2.7
Interest expense	61.6			13.9			3.7			(17.0		)	62.2
Interest income	(4.0		)	(5.2		)	(10.6		)	17.0			(2.8		)
Income from continuing operations before income taxes	210.2			162.5			261.1			(248.5		)	385.3
Income tax provision (benefit)	(14.8		)	55.1			107.4			—			147.7
Income from continuing operations, net of income taxes	225.0			107.4			153.7			(248.5		)	237.6
Loss from discontinued operations, net of income taxes	(0.9		)	(0.4		)	—			—			(1.3		)
Net income	224.1			107.0			153.7			(248.5		)	236.3
Less: Net income attributable to noncontrolling interests	—			—			12.2			—			12.2
Net income attributable to common stockholders	$	224.1		$	107.0		$	141.5		$	(248.5	)	$	224.1

Unaudited Supplemental Condensed Consolidating Statements of Operations

	Nine Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	3,482.5		$	2,524.5		$	(218.2	)	$	5,788.8
Costs and expenses
Operating costs and expenses	(289.3		)	2,671.2			1,956.0			(218.2		)	4,119.7
Depreciation, depletion and amortization	—			215.6			112.2			—			327.8
Asset retirement obligation expense	—			31.2			12.7			—			43.9
Selling and administrative expenses	24.9			151.0			15.5			—			191.4
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(32.3		)	0.9			—			(31.4		)
(Income) loss from equity affiliates	(664.3		)	6.4			2.6			664.3			9.0
Interest expense	162.3			40.6			7.7			(51.3		)	159.3
Interest income	(12.8		)	(15.8		)	(34.4		)	51.3			(11.7		)
Income from continuing operations before income taxes	779.2			414.6			451.3			(664.3		)	980.8
Income tax provision	43.1			109.9			71.7			—			224.7
Income from continuing operations, net of income taxes	736.1			304.7			379.6			(664.3		)	756.1
Loss from discontinued operations, net of income taxes	(0.7		)	(3.0		)	—			—			(3.7		)
Net income	735.4			301.7			379.6			(664.3		)	752.4
Less: Net income attributable to noncontrolling interests	—			—			17.0			—			17.0
Net income attributable to common stockholders	$	735.4		$	301.7		$	362.6		$	(664.3	)	$	735.4

Unaudited Supplemental Condensed Consolidating Statements of Operations

	Nine Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(Dollars in millions)
Total revenues	$	—		$	3,123.9		$	2,530.5		$	(612.7	)	$	5,041.7
Costs and expenses
Operating costs and expenses	(65.7		)	2,286.2			1,918.9			(612.7		)	3,526.7
Depreciation, depletion and amortization	—			221.3			106.0			—			327.3
Asset retirement obligation expense	—			22.1			8.2			—			30.3
Selling and administrative expenses	23.0			133.8			6.8			—			163.6
Other operating (income) loss:
Net (gain) loss on disposal or exchange of assets	—			(15.6		)	0.2			—			(15.4		)
(Income) loss from equity affiliates	(639.6		)	5.0			4.4			628.1			(2.1		)
Interest expense	168.6			39.4			11.2			(49.1		)	170.1
Interest income	(11.6		)	(16.1		)	(26.8		)	49.1			(5.4		)
Income from continuing operations before income taxes	525.3			447.8			501.6			(628.1		)	846.6
Income tax provision (benefit)	(39.6		)	143.0			153.8			—			257.2
Income from continuing operations, net of income taxes	564.9			304.8			347.8			(628.1		)	589.4
Loss from discontinued operations, net of income taxes	(0.9		)	(1.3		)	—			—			(2.2		)
Net income	564.0			303.5			347.8			(628.1		)	587.2
Less: Net income attributable to noncontrolling interests	—			—			23.2			—			23.2
Net income attributable to common stockholders	$	564.0		$	303.5		$	324.6		$	(628.1	)	$	564.0

Unaudited Supplemental Condensed Consolidating Balance Sheet

Unaudited Supplemental Condensed Consolidating Balance Sheets

	September 30, 2011
	Parent Company		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Reclassifications/ Eliminations			Consolidated
	(Dollars in millions)
Assets
Current assets
Cash and cash equivalents	$	957.9	$	1.0		$	442.7	$	—		$	1,401.6
Accounts receivable, net	4.6		53.8			533.0		—			591.4
Inventories	—		204.3			147.6		—			351.9
Assets from coal trading activities, net	—		16.1			49.9		—			66.0
Deferred income taxes	—		62.6			34.4		(6.1		)	90.9
Other current assets	281.2		77.8			144.2		—			503.2
Total current assets	1,243.7		415.6			1,351.8		(6.1		)	3,005.0
Property, plant, equipment and mine development, net	—		4,801.4			3,006.7		—			7,808.1
Deferred income taxes	3.1		—			—		(3.1		)	—
Investments and other assets	9,845.7		204.5			155.2		(9,326.9		)	878.5
Total assets	$	11,092.5	$	5,421.5		$	4,513.7	$	(9,336.1	)	$	11,691.6
Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	25.0	$	—		$	18.8	$	—		$	43.8
Payables to (receivables from) affiliates, net	2,445.3		(2,621.7		)	176.4		—			—
Liabilities from coal trading activities, net	—		8.8			53.8		—			62.6
Deferred income taxes	6.1		—			—		(6.1		)	—
Accounts payable and accrued expenses	67.5		740.6			526.8		—			1,334.9
Total current liabilities	2,543.9		(1,872.3		)	775.8		(6.1		)	1,441.3
Long-term debt, less current maturities	2,372.0		0.1			86.5		—			2,458.6
Deferred income taxes	—		193.7			309.0		(3.1		)	499.6
Notes payable to (receivables from) affiliates, net	819.1		(823.6		)	4.5		—			—
Other noncurrent liabilities	68.5		1,670.9			230.2		—			1,969.6
Total liabilities	5,803.5		(831.2		)	1,406.0		(9.2		)	6,369.1
Peabody Energy Corporation’s stockholders’ equity	5,289.0		6,252.7			3,074.2		(9,326.9		)	5,289.0
Noncontrolling interests	—		—			33.5		—			33.5
Total stockholders’ equity	5,289.0		6,252.7			3,107.7		(9,326.9		)	5,322.5
Total liabilities and stockholders’ equity	$	11,092.5	$	5,421.5		$	4,513.7	$	(9,336.1	)	$	11,691.6

Supplemental Condensed Consolidating Balance Sheets

	December 31, 2010
	Parent Company		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Reclassifications/ Eliminations			Consolidated
	(Dollars in millions)
Assets
Current assets
Cash and cash equivalents	$	903.8	$	5.2		$	386.2	$	—		$	1,295.2
Accounts receivable, net	2.1		5.5			550.6		—			558.2
Inventories	—		168.0			164.9		—			332.9
Assets from coal trading activities, net	—		23.8			168.7		—			192.5
Deferred income taxes	—		78.6			47.9		(6.1		)	120.4
Other current assets	307.9		30.7			120.4		—			459.0
Total current assets	1,213.8		311.8			1,438.7		(6.1		)	2,958.2
Property, plant, equipment and mine development, net	—		4,732.7			2,693.4		—			7,426.1
Investments and other assets	9,331.0		179.8			99.1		(8,631.1		)	978.8
Total assets	$	10,544.8	$	5,224.3		$	4,231.2	$	(8,637.2	)	$	11,363.1
Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	25.0	$	—		$	18.2	$	—		$	43.2
Payables to (receivables from) affiliates, net	2,225.3		(2,528.3		)	303.0		—			—
Liabilities from coal trading activities, net	—		29.5			152.2		—			181.7
Deferred income taxes	6.1		—			—		(6.1		)	—
Accounts payable and accrued expenses	47.4		777.2			464.2		—			1,288.8
Total current liabilities	2,303.8		(1,721.6		)	937.6		(6.1		)	1,513.7
Long-term debt, less current maturities	2,609.6		0.1			97.1		—			2,706.8
Deferred income taxes	93.2		135.4			311.2		—			539.8
Notes payable to (receivables from) affiliates, net	818.9		(825.3		)	6.4		—			—
Other noncurrent liabilities	58.6		1,652.8			202.1		—			1,913.5
Total liabilities	5,884.1		(758.6		)	1,554.4		(6.1		)	6,673.8
Peabody Energy Corporation’s stockholders’ equity	4,660.7		5,982.9			2,648.2		(8,631.1		)	4,660.7
Noncontrolling interests	—		—			28.6		—			28.6
Total stockholders’ equity	4,660.7		5,982.9			2,676.8		(8,631.1		)	4,689.3
Total liabilities and stockholders’ equity	$	10,544.8	$	5,224.3		$	4,231.2	$	(8,637.2	)	$	11,363.1

Unaudited Supplemental Condensed Consolidating Statements of Cash Flows

Unaudited Supplemental Condensed Consolidating Statements of Cash Flows

	Nine Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidated
	(Dollars in millions)
Cash Flows From Operating Activities
Net cash provided by continuing operations	$	144.7		$	721.5		$	327.9		$	1,194.1
Net cash used in discontinued operations	(1.6		)	(2.0		)	—			(3.6		)
Net cash provided by operating activities	143.1			719.5			327.9			1,190.5
Cash Flows From Investing Activities
Additions to property, plant, equipment and mine development	—			(218.6		)	(397.6		)	(616.2		)
Federal coal lease expenditures	—			(42.4		)	—			(42.4		)
Investment in Prairie State Energy Campus	—			(29.8		)	—			(29.8		)
Proceeds from disposal of assets	—			12.1			—			12.1
Investment in equity affiliates and joint ventures	—			(2.1		)	(37.7		)	(39.8		)
Proceeds from sales of debt and equity securities	—			—			53.3			53.3
Purchases of debt and equity securities	—			—			(44.1		)	(44.1		)
Purchases of short-term investments	(75.0		)	—			(25.0		)	(100.0		)
Maturity of short-term investments	75.0			—			25.0			100.0
Investment in shares of Macarthur Coal Limited	—			—			(45.5		)	(45.5		)
Other, net	—			(4.4		)	—			(4.4		)
Net cash used in investing activities	—			(285.2		)	(471.6		)	(756.8		)
Cash Flows From Financing Activities
Proceeds from long-term debt	—			—			1.4			1.4
Payments of long-term debt	(236.9		)	—			(11.5		)	(248.4		)
Dividends paid	(69.1		)	—			—			(69.1		)
Repurchase of employee common stock relinquished for tax withholding	(16.1		)	—			—			(16.1		)
Payment of debt issuance costs	(4.0		)	—			—			(4.0		)
Excess tax benefits related to share-based compensation	6.1			—			—			6.1
Proceeds from stock options exercised	4.5			—			—			4.5
Other, net	6.3			—			(8.0		)	(1.7		)
Transactions with affiliates, net	220.2			(438.5		)	218.3			—
Net cash provided by (used in) financing activities	(89.0		)	(438.5		)	200.2			(327.3		)
Net change in cash and cash equivalents	54.1			(4.2		)	56.5			106.4
Cash and cash equivalents at beginning of period	903.8			5.2			386.2			1,295.2
Cash and cash equivalents at end of period	$	957.9		$	1.0		$	442.7		$	1,401.6

Unaudited Supplemental Condensed Consolidating Statements of Cash Flows

	Nine Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidated
	(Dollars in millions)
Cash Flows From Operating Activities
Net cash provided by (used in) continuing operations	$	(323.0	)	$	1,002.7		$	223.8		$	903.5
Net cash used in discontinued operations	(9.5		)	(1.8		)	—			(11.3		)
Net cash provided by (used in) operating activities	(332.5		)	1,000.9			223.8			892.2
Cash Flows From Investing Activities
Additions to property, plant, equipment and mine development	—			(238.1		)	(53.2		)	(291.3		)
Investment in Prairie State Energy Campus	—			(52.5		)	—			(52.5		)
Proceeds from disposal of assets	—			8.5			1.2			9.7
Investment in equity affiliates and joint ventures	—			(15.0		)	(3.8		)	(18.8		)
Proceeds from sales of debt and equity securities	—			—			10.6			10.6
Purchases of debt and equity securities	—			—			(73.6		)	(73.6		)
Other, net	—			(7.2		)	(0.2		)	(7.4		)
Net cash used in investing activities	—			(304.3		)	(119.0		)	(423.3		)
Cash Flows From Financing Activities
Proceeds from long-term debt	1,150.0			—			—			1,150.0
Payments of long-term debt	(1,140.3		)	—			(8.2		)	(1,148.5		)
Dividends paid	(56.5		)	—			—			(56.5		)
Repurchase of employee common stock relinquished for tax withholding	(8.4		)	—			—			(8.4		)
Payment of debt issuance costs	(32.2		)	—			—			(32.2		)
Proceeds from stock options exercised	5.9			—			—			5.9
Other, net	5.8			—			(6.3		)	(0.5		)
Transactions with affiliates, net	521.1			(696.7		)	175.6			—
Net cash provided by (used in) financing activities	445.4			(696.7		)	161.1			(90.2		)
Net change in cash and cash equivalents	112.9			(0.1		)	265.9			378.7
Cash and cash equivalents at beginning of period	368.4			0.2			620.2			988.8
Cash and cash equivalents at end of period	$	481.3		$	0.1		$	886.1		$	1,367.5