Paso Diablo produces 6.5-7 million tonnes of thermal and coking coal annually, which is exported to North America and Europe.

On a pro forma basis, the 2003 earnings contribution for the 25.5% ownership would have been $8 million.

"This transaction provides a good strategic fit and investment in a high-quality operation," Peabody chief Irl Engelhardt said.

In other Peabody news, Bryan Galli has been named group executive for midwest operations, replacing Daniel Hermann.

Peabody's midwest operations include four underground and 10 surface mines in Southern Illinois, southwestern Indiana and Western Kentucky. These mines collectively shipped 31.8 million tons of coal in 2003, more than any other midwestern producer.

"Bryan brings a combination of energy, experience and creative skills to build upon our leading midwestern coal position," energy president Gregory Boyce said.

"We thank Dan for his leadership in overseeing the significant growth of Black Beauty Coal Company, shepherding the company through its transition following the April 2003 acquisition by Peabody, and helping to develop a successor who understands the needs of all stakeholders."

In addition, Michael Siebers has been promoted to senior vice president of sales and marketing for the Midwest.