Peabody Energy Grant Moves Closer to Building Coal-Fired Power Plant in New Mexico

Peabody Energy Corp., armed with a grant of $19.7 million from the Energy Department, is moving closer to building an ultra-clean $500 million coal-fired power plant in northwest New Mexico.

Dubbed the Mustang Energy Project, the 300-megawatt plant is smallest of three generating plants proposed since 2001 by St. Louis-based Peabody, the world's largest producer of coal.

Like the two other proposed plants -- one in southwestern Illinois about 50 miles southeast of St. Louis and the other in Kentucky -- the fate of the Mustang operation will hinge on Peabody finding ownership partners and commitments to purchase a large share of the electricity.

Peabody said Friday that no date has been set to break ground. Construction is expected to take three to four years.

Under the Mustang proposal, Peabody would team up with several companies to demonstrate a new type of technology designed to reduce emissions to minute levels. In addition, byproducts from the pollution-control process would create enough granular fertilizer for 1 million acres of farmland.

On Thursday, the Energy Department announced it would provide a grant as part of President George W. Bush's Clean Coal Power Initiative. Once the plant is built and the technology is demonstrated, the money will be repaid, Peabody said.

"Our goal for Mustang is to demonstrate technology that will continue to improve emissions from coal-fueled generating plants," Roger Walcott, Peabody's executive vice president for corporate development, said in a statement.

The Mustang site is close to Peabody's El Segundo mine, which is being developed. The mine would supply about 1 million tons of coal each year to the proposed power plant.

Peabody said it expects the Mustang project to yield 200 to 250 permanent jobs from the mining, fertilizer and power-plant operations.

Peabody continues to work on plans to build the 1,500-megawatt power plants in Kentucky and Illinois. Peabody has lined up several investors and customers for the Illinois plant, and could break ground as early as next year.