Headwaters Incorporated, Subsidiary Covol Engineered Fuels Completes Refined Coal Facility

HEADWATERS INCORPORATED (NYSE:HW) today announced that its wholly owned subsidiary, Covol Engineered Fuels, LC (“CEF”), has completed the refined coal facility located in Adger, Alabama at the Jim Walter Resources Mine number 3, and has placed the facility into operation. The business was obtained in an acquisition Headwaters announced in May of 2006 and was shut down in November to allow for the construction of a plant with improved ability to clean and recover waste coal fines. CEF, designed the process to allow for improved recovery and product quality. The recovered coal from this under-utilized resource base will be marketed for steam production in utility and industrial boilers.

“We are pleased to have this facility in operation as we continue our goal to add to the resource base of one of our country’s most utilized sources of energy – coal”, said Ken Frailey, President of Headwaters Energy Resources, the parent company of CEF. Jim O’Neil, Sr. Vice President of CEF, continued, “Our partners in the Alabama area are pleased to have the additional coal resource to help meet current market needs.”

Commencing in the second calendar quarter of 2007, CEF anticipates that this facility will produce approximately 200,000 tons per year of high quality 11,000 – 12,000 btu coal.

In addition to this facility, CEF currently anticipates the construction of two additional facilities in Alabama during 2007, along with the construction of its Chinook facility located near Terre Haute, Indiana.