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12/04/2011

Outlook for Markets & Industry International Energy Agency April 14, 2011

Jacob Williams Vice President Global Energy Analytics

Peabody’s Global Portfolio Customers in 26 Countries on 6 Continents

Offices in 7 Countries

Trading/Business Development Offices Brisbane St. Louis Newcastle Beijing London Singapore Ulaanbaatar Jakarta

Dominion St. Louis Terminal

Mongolia London

Beijing

Mining Operations

SantaPosition Cruz Sales ReservesX Venezuela Singapore Dalrymple Bay Gladstone Powder River Basin #1 141 2,872 Brisbane Midwest #1 30 3,650 Newcastle NCIG Jakarta Southwest #1 16 1,076 Port Kembla Colorado #1 7 230 Export terminal Australia #5 27 1,185 22 Tons in millions. 2010 sales volumes for consolidated results and proven and probable reserves.

1 12/04/2011

Coal: Entering the Early Stages of a Long-Term Supercycle

Coal: The World’s Fastest Growing Fuel for the Past Decade

Growth in Major Energy Forms (1999 – 2009)

Natural Gas +27% Oil +10%

Coal +46% Hydro +25% Nuclear +7%

Source: BP Statistical Review of World Energy, June 2010. 3

Coal is the Affordable, Stable Fuel

Natural Gas 50% More and Oil Three Times the Cost of Coal in 2010

International Fuel Prices $25 WTI Oil

$20 Europe Nat Gas / LNG $15

$10 $USD /$USD mmBtu

$5 Newcastle Coal

$0

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2 12/04/2011

Good Energy Access is a Human Right and Rapidly Rising Need

3.6 Billion People Have No or Only Partial Access to Electricity

488

64 195 114 881 2 21 614

218

432 587 34

Millions of People Who Lack Adequate Electricity Millions of People Who Have No Electricity

5 Source: International Energy Agency 2009 World Energy Outlook and The World Bank, 2010.

Global Coal Use and Economic Growth: Near Perfect Correlation

Coal-Fueled Electricity in 2030: Equal To Current Power in the Western Hemisphere, The EU and Five Times Japan 16,000 95,000

14,000 85,000 World GDP (billions of 2005 $) 2005 of (billions GDP World

) 75,000

twh 12,000

65,000 10,000 Global World 55,000 Electricity GDP 8,000 from Coal 45,000

Electricity Electricity from Coal ( 6,000 35,000

4,000 25,000

2,000 15,000 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

6 Source: Developed from International Energy Agency World Energy Outlook 2009 and Energy Information Administration International Energy Outlook 2010.

3 12/04/2011

Coal Grows to Largest Primary Energy Source by 2020

Coal and Natural Gas Account for the Majority of Growth in Primary Energy

Global Primary Energy Use 700 Total Global Primary Energy +2.8% CAGR 600 Other • Total energy growth 2.8% (historical Renewables 500 10 year CAGR 2.4%) 10.9B Hydro +4.1% CAGR tonnes Coal is the dominant share of primary 400 33% • Nuclear energy at 33% by 2020 300 416 Quadrillion Btu Quadrillion +3.3% CAGR BCF/ Coal 24% day 200 • Coal is the fastest growing at 4.1% Natural Gas due to total electricity growth of 3.8% 100 +1.4% CAGR 101M bbl/ 30% day Oil 0 2010 2015 2020 Coal by Sector Coal 14.0 +4.1% CAGR • Fastest growing primary energy 12.0 10.9 source at 4.1% 10.0 8.8 Electricity 8.0 7.2 • ~65% of coal use related to electricity 7.1

Tonnes Steel 6.0 5.8 • ~15% of coal use for making steel: 4.7 Cement 4.0 growing at 4.8% Billion 1.5 Other 2.0 0.9 1.2 • ~10% of coal use for making cement; 0.6 0.8 1.1 1.2 growing at 6.2% 0.0 1.0 1.0 2010 2015 2020 7 Source: IEA World Energy Outlook 2010, EIA International Energy Outlook 2010, British Energy Outlook 2030 (Jan 2011), Peabody Global Energy Analytics

Electricity Demand Increases ~50% by 2020 Fueled by Coal

Developing World Electricity Growth Will Drive Higher Coal Demand; ~40% of Electricity Mix in 2020

Global Electicity Consumption Fuel 35,000 (% Elec. Mix in 2020) 176 30,500 249 30,000 885 1,037 Oil (3%) 1,425 2,349 2,599 Renewables (8%) 25,000 3,172 4,166 (TWH) Nuclear (11%) 21,000 4,575 20,000 861 1,464 Hydro (15%) 2,923

Generation 6,801 15,000 Natural gas (22%) 3,150 Coal (41%)

10,000 4,202 Electricity Electricity

12,566 5,000 8,400

0 2010 Coal Natural gas Hydro Nuclear Renewables Oil 2020

8 Source: IEA World Energy Outlook 2010, EIA International Energy Outlook 2010, British Petroleum Energy Outlook 2030 (Jan 2011), Peabody Global Energy Analytics

4 12/04/2011

Asia Represents 90% of 3.5 Billion Tonnes Long-Term Global Demand Growth

China and India Lead Long-Term Coal Demand Growth

+90 +30 -45 +2,300

+750 +120 +150 +95 +50

+65

Growth 2008 - 2020 (Tonnes in Millions)

9 Source: World Energy Outlook 2010, International Energy Agency; Peabody Energy analysis.

Asia-Pacific Dominates Supply Growth

Most Growth from Existing Supply Regions

+110

+35 -100

+2,250

+560 +130 +45

+230 +70

+275

Growth 2008 - 2020 (Tonnes in Millions)

Source: World Energy Outlook 2010, International Energy Agency; Peabody Energy analysis. 10

5 12/04/2011

Outlook for Coal Markets & Industry International Energy Agency April 14, 2011

Jacob Williams Vice President Global Energy Analytics

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