BTU's Aussie Unit Signs Deal

Peabody Energy Australia signs coal haulage pact with Queensland Rail

Peabody Energy Australia – a subsidiary of Peabody Energy Corp. (BTU - Analyst Report) – recently entered into an 11-year coal haulage agreement with Queensland Rail (QR). As per the agreement, QRNational Coal (QR’s coal business division) will transport up to 12 million tons of coal annually from Peabody’s Wambo and Wilpinjong mines in New South Wales to the Port of Newcastle.

The transportation will commence in 2010. The transported coal will be exported to the Asian markets from the Port of Newcastle. QR will be investing over $100 million in railway vehicles for this purpose. The transport and logistics company has been already transporting coal from five of Peabody’s operating mines in Queensland.

Peabody closed at $28.11 on Monday, trading at 7.13X ttm EPS. We maintain our Hold recommendation for the company.

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