Macarthur Coal Limited

Macarthur Coal Limited ("Macarthur") (stock ticker: MCC.ASX) is an Australian resources company listed on the Australian Stock Exchange in July 2001. It is a participant in joint ventures involved in exploration, mine development and coal production within the Bowen Basin, Queensland, Australia. Its joint venture interests are: Coppabella and Moorvale Joint Venture 73.3% Bowen Basin Coal Exploration Joint Venture 85.0% Monto Coal Joint Venture (Note) (Note) Monto Coal 2 Pty Ltd, a 80.39% owned subsidiary of Macarthur, holds 51% interest in the joint venture. Macarthur is recognised as an important supplier of low volatile "Pulverised Coal Injection" ("PCI") coal, providing about 47% of the low volatile PCI coal exported from Australia to the major steel mills in Asia, Europe and Brazil. The Company has an indirect 16.27% interest in Macarthur.

Coppabella and Moorvale Coal Mines

The Coppabella and Moorvale coal mines are operated by an unincorporated joint ventures ("CMJV") established in December 2003. The CMJV brings together a group of companies with a highly successful track record in coal mining and marketing. The current participants are: Parent Company Joint Venture Participant Interest Macarthur Coal Limited Coppabella Coal Pty Limited 73.3% CITIC Resources Holdings Limited CITIC Australia Coppabella Pty Limited 7.0% Marubeni Corporation Mapella Pty Limited 7.0% Sojitz Corporation Winview Pty Limited 7.0% JFE Shoji Trade Corporation KC Resources Pty Limited 3.7% Nippon Steel Trading Co. Limited NS Coal Pty Limited 2.0% CMJV employs over 300 people. The mines are located in Queensland, Australia. They are situated 140 km and 157 km respectively by rail from the Dalrymple Bay Coal Terminal ("Terminal"). Australian Premium Coals Pty Limited ("APC"), in which the Group also has a 7% ownership, has been appointed to manage the mines on behalf of the CMJV participants and also acts as the marketing agent. The coal resources of the mines date from the late Permian age and are located within the Rangal Coal Measures of the Bowen Basin. The resources have been proven by extensive drilling programs and, to date, over 1,000 boreholes have been drilled. The mines are open cut mines and the CMJV has identified up to 200 million tonnes of resources. Once an area has been mined it is recontoured using the removed overburden and topsoil. Topsoil is fertilized and seeded and native tree and grass species are planted.

The CMJV is one of only five producers of low volatile PCI coal in Australia. This coal is predominately sold to steel mills for use in the production of pig iron from iron ore in the blast furnace process. It is recognized as a cheaper alternative for coking coal which has been used traditionally in the blast furnace process. Low volatile PCI coal is high in carbon and energy but low in ash and sulphur and is more efficient in the blast furnace process and cheaper to prepare for injection. The quality of coal from the mines is monitored at all stages of production to ensure that contractual quality specifications are met consistently. The coal is sampled and analysed at the following stages: prior to exploration drilling; prior to mining; at the preparation plant feed stage; on delivery at the Terminal; and during ship loading prior to export. The processed coal is then conveyed onto the product stockpile to await train loading and transport to the Terminal for export. CITIC Australia Commodity Trading Pty Limited has been appointed the exclusive sales agent for any coal sales by the Group to China. The coal is loaded onto Queensland Rail's electric trains at the mines' dedicated rail loops, at a rate of 3,000 tonnes per hour. Each train has a unit capacity of 10,000 tonnes.

The Terminal operates 365 days per year and can accommodate vessels up to 200,000 DWT with a loading rate of 7,200 tonnes per hour. It receives a range of coal from a variety of coal producers. Customers are able to access a suite of coals to meet their specific production requirements from one port, thereby avoiding the additional cost of loading at multiple ports. The Terminal provides the added cost benefit of being one of the closest Australian ports to the Asian market. Current port capacity at the Terminal is 68 million tonnes per annum and is expected to reach 85 million tonnes per annum from early 2009. The mines have long term agreements with Queensland Rail and Prime Infrastructure for railing and shipping coal. The CMJV participants are members of the Australian Coal Association. The Australian Coal Association Research Program contributes towards research into safety and health, greenhouse gas emissions, mining technology development and the environmental impacts of mining. APC employs an environmental consultant to advise on environmental management practices at the mines and to ensure compliance with applicable laws, regulations and standards. Mining and coal processing operations are undertaken by contractors. Both of the mining contractors at the mines are signatories of the Australian Minerals Industry Code for Environmental Management. The code, developed by the Minerals Council of Australia, seeks to achieve continual improvement in environmental performance and accountability in the mining industry. The coal mining industry positively impacts the provision of both urban and rural infrastructure. The Queensland government receives royalties for all Queensland coal sold. Coppabella Coal Mine The Coppabella Mine is situated 140 km south-west of Mackay in North Queensland, Australia. The development of the Coppabella Mine from a greenfields project to a coal producing project set an industry benchmark. Development was completed in less than 12 months, allowing mining to commence in July 1998. The mining lease over the initial mining area was granted on 1 June 1998 following the signing of a Native Title Agreement on 11 May 1998. The successful development of the Coppabella Mine is based on: production of an 8.5% ash low volatile PCI coal for a growing market; the existence of a large, shallow coal deposit with an average seam thickness of about ten metres; the close proximity to rail and port infrastructure; and the modern, efficient coal preparation plant. The Coppabella Mine completed its first shipment of PCI coal on 6 November 1998 which was exported to Japan. The washing capacity of the coal handling and preparation plant is currently above 850 tonnes per hour, giving the plant an annual throughput capacity in excess of 6 million tonnes of raw coal. The seam currently being mined is 10 metres thick. It has 59.7 million tonnes of measured resources and 121.6 million tonnes of indicated resources as at 30 June 2010. The Coppabella Mine is currently operating at full capacity. The Coppabella Mine currently has a market share of about 35% of world seaborne low volatile PCI coal production, of which coal is exported to Asia, Europe and Brazil. Roche Mining Pty Limited is its principal mining contractor. Moorvale Coal Mine The Moorvale Mine is situated 157 km by rail from the Terminal and 13 km south of the Coppabella Mine. The strategic strengths of the Moorvale Mine include: its proximity to the rail corridor and port; relatively low operating and capital costs; and flexibility to produce: - an 9% ash low volatile PCI coal; - 13% to 17% ash thermal coal; and, - an 8% ash coking coal. The development of the Moorvale Mine from a greenfields project to a coal producing project was completed in just 12 months after the grant of the mining leases on 5 December 2002. The overburden removal commenced shortly afterwards. Uncovering coal began in March 2003. The Moorvale Mine completed its first shipment of export coal on 6 December 2003. The washing capacity of the coal handling and preparation plant is currently 600 tonnes per hour, giving the plant an annual throughput capacity in excess of 3.4 million tonnes of raw coal. The seam currently being mined is approximately 9 metres thick. It has 66.7 million tonnes of measured resources as at 30 June 2010. The Moorvale Mine is capable of building up to an annual capacity of 2.2 million tonnes as at 2009. Leighton Contractors Pty Limited has responsibility for the current stage of mining operations.

Updated: 1 Sep 2010