Weak pricing conditions have combined with rising costs to reduce the profitability of mining in Australia. Australian costs have been driven up by a series of factors, including resource extraction taxes, carbon taxes, elevated demands in labor negotiations, extended regulatory review, and a strong local currency. Production has been reduced in higher cost mines and closures have been announced for several older mines that are near the end of their planned life.Despite this depressed outlook, there is the potential for upside. Natural gas prices in the U.S. have been improving and should continue moving toward the cost of replacement, which the Company estimates is above $4.00 per million BTU’s. As a result, power generation should continue switching back from natural gas to coal, but it is not expected that all of the volume losses will be regained. However, the upside can be extended by utilizing the greater excess capacity available in the coal-fired generating fleet. Exports from the U.S. will be at their second consecutive record level in 2012, and customers are investing in port expansions that can double export capacity over the next five years. Additionally, there are signs of improvement in China. For example, fixed asset investment for infrastructure grew 30 percent year on year in September, largely aided by the government’s $157 billion of stimulus focused on infrastructure. Electricity demand is a more discrete measure of economic and industrial activity, and it rebounded 6 percent in October over last year after recording only minimal growth for all of the third calendar quarter. India’s coal imports are up 18 percent and reached 64 million tonnes in the first half of its fiscal year beginning in April. However, Coal India’s production is behind last year and stockpiles at 60 percent of India’s generating stations have fallen to less than a week of supply. Imports are expected to continue to fill the gap and are on pace to reach 140 million tonnes for the full year.