Rentech Contracts for Coal Supply for CTL and Fertilizer Plant

8 March 2007

Rentech, Inc. has signed a term sheet with Peabody Energy for the initial coal supply contract for Rentech Energy Midwest Corporation’s (REMC) fuel, fertilizer and power project in East Dubuque, Illinois. (Earlier post.)

The coal will come from Peabody’s Gateway Mine near Coulterville, Illinois. It will supply the REMC project, which will convert the existing natural gas-fired ammonia fertilizer facility into what the Company believes will be the United States’ first Fischer-Tropsch and ammonia fertilizer production facility utilizing coal technologies.

The conversion calls for two gasification trains and a spare, standby gasifier at the site eventually to process 5,200 tons per day of coal, the commercial equivalent capacity of a 650 MW Integrated Gasification Combined Cycle (IGCC) power plant.

The new expanded gasification process will generate the synthesis gas necessary to increase the nitrogen fertilizer production to more than 900 tons per day and is projected to produce an estimated 87 million gallons per year of Fischer-Tropsch (FT) fuels as well as surplus electricity.

The terms call for Peabody to provide up to approximately 7.2 million tons of Illinois coal commencing between August 2009 and January 2010 through December 2017. The parties may mutually agree to extend the term of the contract for an additional five years after that. The arrangement provides for a fixed price coal contract with standard industry escalation for five years, and a potential market based adjustment with a ceiling thereafter.