Jan. 7--Peabody Energy Corp. is cutting coal production in the Powder River Basin and reducing output of metallurgical coal in Australia in response to sagging demand and weak prices.

St. Louis-based Peabody, the world's largest private-sector coal company, is reducing output at its Wyoming mines in the Powder River Basin by about 5 percent, or 10 million tons, compared with 2008, the company said in a statement. Peabody now expects to produce 190 million to 195 million tons from its PRB mines in 2009, down from more than 200 million tons last year.

Production cuts in the basin, which extends across parts of northeast Wyoming and southeast Montana, will target lower-quality, lower-margin coal reserves and equipment will be redeployed to other mines, Peabody said.

In Australia, the company is cutting output of so-called metallurgical coal used in steelmaking by 2 million tons -- or about 8 percent -- because of a drop in global steel demand.

"We are taking prompt market-driven actions to make adjustments to our production platform and respond to the global economic downturn," Chief Executive Gregory H. Boyce said in the statement.

The company is confident that demand for coal will rebound and said actual 2009 production will depend on the speed of recovery in electricity and steel markets as well as the magnitude and timing of economic stimulus packages in the United States and China, Boyce said.

The slumping global economy and lower coal prices have also prompted other mining companies, including Arch Coal Inc., to respond with production cuts. In October, Arch announced it was idling some equipment at its Black Thunder mine in the PRB.

jtomich@post-dispatch.com -- 314-340-8320

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