Demands on Our Coal Industry Making the Case for 55 Foot Channels Bruce A. Hartshorn
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Demands on Our Coal IndustryMaking the Case for 55 Foot Channels
Bruce A. HartshornHampton Roads Navigational Summit April 4, 2012
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Forward-Looking StatementsStatements in this presentation which are not statements of historical fact are “forward-looking statements” within the Safe
Harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future
performance. Many factors could cause our actual results, performance or achievements, or industry results, to be materially
different from any future results, performance or achievements expressed or implied by such forward looking-statements.
These factors are discussed in detail in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in our other
filings with the SEC. We make forward-looking statements based on currently available information, and we assume no
obligation to update the statements made today or contained in our Annual Report or other filings due to changes in
underlying factors, new information, future developments, or otherwise, except as required by law.
Third Party Information This presentation, including certain forward-looking statements herein, include information obtained from third party sources
that we believe to be reliable. However, we have not independently verified this third party information and cannot assure you
of its accuracy or completeness. While we are not aware of any misstatements regarding any third party data contained in
this presentation, such data involve risks and uncertainties and are subject to change based on various factors, including
those discussed detail in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in our other filings with the
SEC. We assume no obligation to revise or update this third party information to reflect future events or circumstances.
Legal Disclaimers
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• DTA - owned by Alpha Natural Resources, Peabody Energy and Arch Coal
• Pier IX - owned by Kinder Morgan Terminals• CSX provides rail service to both
Dominion Terminal Associates and Pier IX Terminal, Newport News, VA Lambert’s Point Terminal, Norfolk, VA
• Norfolk Southern owns and provides rail service
Hampton Roads Coal Terminals
Coal to Hampton Roads primarily originates in Central Appalachia - Virginia, West Virginia, and Kentucky
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1936
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1976
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2010
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Historic Coal Exports in Hampton RoadsM
illio
n Sh
ort T
ons
1957: 52 million
1970: 48 million
1991: 59 million
2011:42.2 million
1980: 50 million
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Hampton Roads Export Volume Trends
Hampton roads also ships coal to U.S. coastwise locations – annual volumes have ranged from 4.7 mn to 6.2 mn net tons since 2006
2006 2007 2008 2009 2010 2011 CAPACITIESPIX 2.9 3.8 9.4 7.1 6.2 11.2 12.0NS 9.7 12.8 17.7 13.8 15.8 19.7 40.0
DTA 3.0 6.0 9.7 6.9 10.9 11.2 22.0Total 15.5 22.6 36.8 27.8 32.8 42.3 74.0
Source: T. Parker Host, Internal
2006 2007 2008 2009 2010 20110.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0
PIX NS DTA
NetTtons
(millions
)
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Hampton Roads Exports by Coal Type
• Metallurgical volumes more than doubled from 2006, on strength in international steel markets and propelled by strong growth in Asia
• Steam volumes generally trending up on increasing world coal demand
2006 2007 2008 2009 2010 20110.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
0.0 2.1
8.7 6.6
4.5
8.5
15.5
20.5
28.1
21.1
28.4
33.6
Steam Metallurgical
Net
Ton
s (m
illio
ns)
Source: T. Parker Host, Internal
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Hampton Roads Top Ten Export Countries - 2006 vs. 2011
2006 SHIPMENTS (mn net tons) ITALY 3.4 BRAZIL 2.5 BELGIUM 1.8 UNITED KINGDOM 1.7 FRANCE 1.1 INDIA .8 SPAIN .7 TURKEY .7 EGYPT .6 SWEDEN .4
Source: T. Parker Host, Internal
ITALY25%
BRAZIL19%
BELGIUM13%
UNITED KINGDOM12%
FRANCE8%
INDIA6%
SPAIN5%
TURKEY5%
EGYPT4%
SWEDEN3%
2006
2011 SHIPMENTS (mm net tons) ITALY 4.9 BRAZIL 4.8 NETHERLANDS 4.6 INDIA 2.9 FRANCE 2.8 UKRAINE 2.5 KOREA 2.3 JAPAN 2.2 U.K. 1.8 TURKEY 1.7
ITALY16%
BRAZIL16%
NETHERLANDS15%
INDIA10%
FRANCE9%
UKRAINE8%
KOREA7%
JAPAN7%
U.K.6%
TURKEY5% 2011
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Sources: JT Boyd, Wood Mackenzie
Historical CAPP Cash Costs
Sources: JT Boyd, Wood Mackenzie
1 2 3 4 5 6 7 8 9$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Series1 Cash Cost Range Average
• Not only have average costs increased significantly but the range of costs has widened substantially
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Capesize Fleet (150-180,000 dwt) by Year of Build
April 2012
0.0
4.0
8.0
12.0
16.0
20.0
24.0P
re-8
519
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
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Mill
ion
Dw
t
150-159,999 160-169,999 170-180,000
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M/V CAPE DOVER
Capesize VesselYear Built: 2006
LOA: 290 mBeam: 47m
185,805 MT DWT
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1 foot depth increase
•Equals 4,200 NT additional
cargo intake
ADDITIONAL CARGO INTAKE
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CARGO INTAKE: M/V CAPE DOVER
55 ft: 172,017 NT
(+13.91%)
50 ft: 151,017
NT
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NORFOLK/ROTTERDAM NORFOLK/ROTTERDAM150,000 DWT VESSEL 180,000 DWT VESSEL
LIFTS 124,311 MT BSS 50 FT LIFTS 142,000 MT BSS 50 FTLIFTS 140,211 MT BSS 55 FT LIFTS 159,000 MT BSS 55 FT
TCE 50 FT 55 FT DIFFERENTIAL TCE 50 FT 55 FT DIFFERENTIAL
5,000 $ 9.28 $ 8.31 $ 0.97 5,000 $ 9.35 $ 8.35 $ 1.00 10,000 $ 10.60 $ 9.53 $ 1.07 10,000 $ 10.52 $ 9.45 $ 1.07 15,000 $ 11.93 $ 10.75 $ 1.18 15,000 $ 11.70 $ 10.52 $ 1.18 20,000 $ 13.25 $ 11.97 $ 1.28 20,000 $ 12.89 $ 11.60 $ 1.29
NORFOLK/POHANG (VIA COGH) NORFOLK/POHANG (VIA COGH)150,000 DWT VESSEL 180,000 DWT VESSEL
LIFTS 123,311 MT BSS 50 FT LIFTS 141,000 MT BSS 50 FTLIFTS 139,211 MT BSS 55 FT LIFTS 159,000 MT BSS 55 FT
TCE 50 FT 55 FT DIFFERENTIAL TCE 50 FT 55 FT DIFFERENTIAL
25,000 $ 35.03 $ 31.75 $ 3.28 25,000 $ 32.36 $ 28.95 $ 3.41 30,000 $ 37.90 $ 34.00 $ 3.90 30,000 $ 34.85 $ 31.20 $ 3.65
35,000 $ 39.90 $ 36.50 $ 3.40 35,000 $ 37.30 $ 33.44 $ 3.86
Ocean Freight Relative to 55-Foot Channel
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Economic Impact of the Coal Industry In Virginia
Source: Chmusa Economics & Analytics**.
*8222
Study Period: 2010
Virginia Coal Production: 22,400,000 Net Tons
Virginia Coal Industry Spending: $3.7 Billion
Spending Per Ton Mined: $165.18/Ton
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Cost of Dredging
to 55 feet:$150,000,00
0
Potential Annual
Economic Benefit /
Destruction: $1,650,000,
000*
55-FOOT DREDGE PROJECT
*Basis 10.0 million tons
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