Ambre Energy’s overall strategic business plan in the US is to acquire and operate producing assets, with idle production capacity, in a relatively undervalued domestic market and utilize that idle capacity to service the booming export market, particularly Asia.

The USA has the largest coal reserves in the world and the Powder River Basin (PRB) in Montana and Wyoming produces the cheapest coal in the world on a Free on Rail basis. Mining conditions in this region can only be described as spectacular with massive seams under relatively low levels of cover. The relatively high moisture content of these coals is offset by very low ash and sulphur levels which has underwritten significant growth in the sales of these coals both in the US and the Asian thermal 15 2011 Annual Report coal market. Powder River Basin coal is shipped across the US and used to generate electricity in 38 US states.

Coals such as those at Ambre Energy’s newly acquired Decker coal mine based in Montana are the best suited coals for the Asian export market. In addition to the state’s geographical advantage to the US west coast, the Montana coals have higher energy levels compared to the southern PRB in Wyoming.

The Powder River Basin currently represents approximately 50% of the US’s total coal production and the reserves are massive. The key to accessing the Asian export market is port capacity. The US west coast currently supplies only 8Mtpa of Asia’s total thermal coal demand of 550Mtpa. Current port capacity restricts any further growth.

In 2009, coal accounted for 28% of global energy use and generated 42% of the world’s electricity. Japan is the world’s largest coal importer (182 million tons in 2009), South Korea imported 110 million tons and Taiwan imported 65 million tons. Asia’s thermal coal demand is forecast (Wood Mackenzie) to increase by 560Mtpa over the next 10 years. The US can only participate in this phenomenal growth if new port capacity comes on stream. Ambre Energy’s Millennium Bulk Terminals port at Longview in Washington State could be the next shorebased coal loading facility to be commissioned.

Ambre is seeking to join the Asian export market earlier through a barge and transshipment operation on the Columbia River. The company’s plan is to load barges at the Port of Morrow in Oregon and transship to panamax sized vessels nearer the mouth of the Columbia River. Ambre plans to ship first coal via transshipment in 2013 followed by coal through the Millennium shore based terminal in 2014-15. Ambre’s first mover status with new export coal port capacity will give the company a significant competitive edge over other US coal exporters to the Asian market.