1255895--3/26/2009--ARCH_WESTERN_RESOURCES

related topics

{gas, price, oil}

{cost, regulation, environmental}

{customer, product, revenue}

{debt, indebtedness, cash}

{cost, contract, operation}

{cost, operation, labor}

{loss, insurance, financial}

{investment, property, distribution}

{capital, credit, financial}

{operation, natural, condition}

{acquisition, growth, future}

Our coal mining operations are subject to operating risks that are beyond our control, which could result in materially increased operating expenses and decreased production levels and could materially and adversely affect our profitability. Competition within our industry and with producers of competing energy sources may materially and adversely affect our ability to sell coal at favorable prices. Excess production and production capacity in the coal industry could put downward pressure on coal prices and, as a result, materially and adversely affect our revenues and profitability. Decreases in demand for electricity resulting from economic, weather changes or other conditions could adversely affect coal prices and materially and adversely affect our results of operations. The use of alternative energy sources for power generation could reduce coal consumption by U.S. electric power generators, which could result in lower prices for our coal. Declines in the prices at which we sell our coal could reduce our revenues and materially and adversely affect our business and results of operations. Our inability to acquire additional coal reserves or our inability to develop coal reserves in an economically feasible manner may adversely affect our business. Inaccuracies in our estimates of our coal reserves could result in decreased profitability from lower than expected revenues or higher than expected costs. Increases in the costs of mining and other industrial supplies, including steel-based supplies, diesel fuel and rubber tires, or the inability to obtain a sufficient quantity of those supplies, could negatively affect our operating costs or disrupt or delay our production. Our labor costs could increase if the shortage of skilled coal mining workers continues. Our ability to collect payments from our customers could be impaired if their creditworthiness deteriorates. A defect in title or the loss of a leasehold interest in certain property could limit our ability to mine our coal reserves or result in significant unanticipated costs. The availability and reliability of transportation facilities and fluctuations in transportation costs could affect the demand for our coal or impair our ability to supply coal to our customers. We may be unable to realize the benefits we expect to occur as a result of acquisitions that we undertake. Our profitability depends upon the long-term coal supply agreements we have with our customers. Changes in purchasing patterns in the coal industry could make it difficult for us to extend our existing long-term coal supply agreements or to enter into new agreements in the future. The loss of, or significant reduction in, purchases by our largest customers could adversely affect our profitability. The amount of indebtedness we have incurred could significantly affect our business. Volatility and disruptions in the capital and credit markets could adversely affect our business, including affecting the cost of new capital, our ability to refinance scheduled debt maturities and meet other obligations as they come due. We may be unable to comply with restrictions imposed by our financing arrangements. Failure to obtain or renew surety bonds on acceptable terms could affect our ability to secure reclamation and coal lease obligations and, therefore, our ability to mine or lease coal. Terrorist attacks and threats, escalation of military activity in response to such attacks or acts of war may adversely affect our business. RISKS RELATED TO ENVIRONMENTAL AND OTHER REGULATIONS Extensive environmental regulations, including existing and potential future regulatory requirements relating to air emissions, affect our customers and could reduce the demand for coal as a fuel source and cause coal prices and sales of our coal to materially decline. Our failure to obtain and renew permits necessary for our mining operations could negatively affect our business. Federal or state regulatory agencies have the authority to order certain of our mines to be temporarily or permanently closed under certain circumstances, which could materially and adversely affect our ability to meet our customers demands. The characteristics of coal may make it difficult for coal users to comply with various environmental standards related to coal combustion or utilization. As a result, coal users may switch to other fuels, which could affect the volume of our sales and the price of our products. Extensive environmental regulations impose significant costs on our mining operations, and future regulations could materially increase those costs or limit our ability to produce and sell coal.

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1255895--3/26/2009--ARCH_WESTERN_RESOURCES_LLC