Safe... technology driven... low-cost... and productive. Peabody Energy’s ability to achieve record results in all market conditions comes from executing the basics with a goal of achieving best-in-class safety, operations and marketing. It also means achieving world-class results in stewardship.

We operated the nation’s safest mine and the nation’s most productive mine in 2006. We achieved one of the safest years in our history, set an industry record for sales, and earned the highest industry honors for sustainable practices.

Our vision for safety is achieving zero incidents of any kind, and a record nine U.S. and Australian mines completed the year with zero reportable accidents. Peabody operations achieved a U.S. safety rate of 3.05 incidents per 200,000 hours worked, improving performance 37 percent in the past three years.

Employees earned eight major safety awards, and the Lee Ranch Mine in New Mexico was honored by the U.S. Department of Labor as the safest U.S. surface mine, a distinction Peabody operations have earned two of the past three years.

Mines that achieve strong safety performance are typically highly productive. Our skilled workforce delivered industry-leading sales of nearly 248 million tons, representing record volume in every region and production records at six mines in Wyoming and the Midwest. The North Antelope Rochelle Mine in the Powder River Basin was number one in the nation for productivity, and the Rawhide and Caballo mines were among the top four, according to the latest data.

Centers of Excellence Drive Continuous Improvement Culture

Peabody works aggressively to optimize operations and control costs through a culture of continuous improvement. Newly established Centers of Excellence are using a team-based approach to examine and refine best practices for our operations, engineering, commercial and sourcing activities, which are resulting in considerable cost savings through efficiencies and capital spending reductions.

At the Caballo Mine in the Powder River Basin, the pilot location for the Operations Center of Excellence, some 20 initiatives are expected to result in millions of dollars of savings the first year. Efficiencies are being gained at every level, and the savings and improvements are expected to build.

Increasing efficiencies at the rail loadout and silo facilities, for instance, enable Caballo technicians to improve load time 5 percent and create the potential to move an additional 500,000 tons of coal through the silos per year. Center of Excellence teams will analyze every operation for improvement opportunities.

Peabody also uses technology and infrastructure to create efficiencies. At the North Antelope Rochelle Mine, our largest operation, new modular mining technology synchronizes haul truck routing for optimized blending. The technology also provides real-time data to equipment operators and mine dispatchers and provides remote diagnostics on equipment, identifying maintenance issues for early resolution. The system saved nearly $8 million during its first year.

Executing the basics also means demonstrating leadership as a good environmental steward, returning lands for community and citizen benefits. Within the spirit of sustainability that is articulated in Peabody’s mission statement, mined lands are restored to a condition that is “equal to or better than we found it.”

Lands are restored as high-yield farmland, productive rangeland, sturdy forests, pristine wetlands, wildlife habitat and recreation areas.

In 2006, Peabody reclaimed more than 5,400 acres of land and planted nearly 580,000 trees. The company also recycled more than 20,000 tons of metals, oil, fuel and other materials.

Peabody garnered a dozen awards for stewardship recognizing performance in every region. Five major awards from the U.S. Department of the Interior recognized environmental excellence in Colorado, Illinois and Indiana. U.S. Interior also honored Peabody’s Roy Karo for a lifetime of achievement in reclamation.