Washington (Platts)--18Sep2008

The capital markets squeeze that led to Lehman Brothers' bankruptcy
filing earlier this week is drying up credit in the US coal industry,
including funding for new mining operations, industry officials said this
week.

Speaking at a Platts coal conference in Pittsburgh, Patriot Coal CEO
Richard Wright said that given the scarcity of capital and permitting
problems, mining companies should consider expanding current project or
improving output of existing operations before they turn to developing new
projects.

In eastern US coal fields, long waits for permits and a shortage of
trained workers are also hurting producers, speakers said.

Despite those difficulties, other speakers at the conference said the
economic outlook for the domestic industry is still good, particularly if such
traditional coal exporters as Russia, China and South Africa devote much of
their production to internal markets.

Increasing global demand and continued tight supply are likely to be a
long-term trend, one speaker added.

Other speakers at the conference, however, were less sure. On a panel of
four industry experts, two said they expect to see more coal demand in 10
years, while the other two said they expect less coal demand.

--Charlotte Wright, charlotte_wright@platts.com