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                                                                    EXHIBIT 10.3

                            NATURAL RESOURCE PARTNERS
                            LONG-TERM INCENTIVE PLAN

SECTION 1. Purpose of the Plan.

         The Natural Resource Partners Long-Term Incentive Plan (the "Plan") is
intended to promote the interests of Natural Resource Partners L.P., a Delaware
limited partnership (the "Partnership"), by providing to employees and directors
of GP Natural Resource Partners LLC (the "Company") and its Affiliates who
perform services for the Partnership incentive compensation awards for superior
performance that are based on Units. The Plan is also contemplated to enhance
the ability of the Company and its Affiliates to attract and retain the services
of individuals who are essential for the growth and profitability of the
Partnership and to encourage them to devote their best efforts to the business
of the Partnership, thereby advancing the interests of the Partnership and its
partners.

SECTION 2. Definitions.

         As used in the Plan, the following terms shall have the meanings set
forth below:

         "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.

         "Award" means an Option or Phantom Unit granted under the Plan.

         "Board" means the Board of Directors of the Company.

         "Change in Control" shall be deemed to have occurred upon the
occurrence of one or more of the following events: (i) any sale, lease, exchange
or other transfer (in one or a series of related transactions) of all or
substantially all of the assets of the Partnership or the Company to any Person
or its Affiliates, other than the Partnership, the Company or any of their
Affiliates, or (ii) any merger, reorganization, consolidation or other
transaction pursuant to which more than 50% of the combined voting power of the
equity interests in either the Company or its general partner ceases to be owned
by Persons who own such interests, respectively, as of the effective date of the
initial public offering of Units.

         "Committee" means the Compensation Committee of the Board or such other
committee of the Board appointed by the Board to administer the Plan.

         "Director" means a member of the Board who is not an Employee.

         "Employee" means any employee of the Company or an Affiliate, as
determined by the Committee.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.



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         "Fair Market Value" means the closing sales price of a Unit on the
applicable date (or if there is no trading in the Units on such date, on the
next preceding date on which there was trading) as reported in The Wall Street
Journal (or other reporting service approved by the Committee). In the event
Units are not publicly traded at the time a determination of fair market value
is required to be made hereunder, the determination of fair market value shall
be made in good faith by the Committee.

         "Option" means an option to purchase Units granted under the Plan.

         "Participant" means any Employee or Director granted an Award under the
Plan.

         "Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of Natural Resource Partners L.P.

         "Person" means an individual or a corporation, limited liability
company, partnership, joint venture, trust, unincorporated organization,
association, government agency or political subdivision thereof or other entity.

         "Phantom Unit" means a phantom (notional) Unit granted under the Plan
which upon vesting entitles the Participant to receive a Unit or an amount of
cash equal to the Fair Market Value of a Unit, whichever is determined by the
Committee.

         "Restricted Period" means the period established by the Committee with
respect to an Award during which the Award remains subject to forfeiture (is not
vested) and is not exercisable by or payable to the Participant; provided,
however, the Restricted Period with respect to any Award may not terminate prior
to the end of the Subordination Period (as defined in the Partnership Agreement)
except (i) at the same time and in the same proportion as subordinated units are
converted into Common Units, and (ii) upon a Change in Control.

         "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under the Exchange
Act, or any successor rule or regulation thereto as in effect from time to time.

         "SEC" means the Securities and Exchange Commission, or any successor
thereto.

         "Unit" means a Common Unit of the Partnership.

SECTION 3. Administration.

         The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum, and the acts of the members of the
Committee who are present at any meeting thereof at which a quorum is present,
or acts unanimously approved by the members of the Committee in writing, shall
be the acts of the Committee. Subject to the following and any applicable law,
the Committee, in its sole discretion, may delegate any or all of its powers and
duties under the Plan (provided the Chief Executive Officer is a member of the
Board), including the power to grant Awards under the Plan, to the Chief
Executive Officer of the Company, subject to such limitations on such delegated
powers and duties as the Committee may impose, if any. Upon any such delegation
all references in the Plan to the "Committee", other than in Section 7, shall be


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deemed to include the Chief Executive Officer; provided, however, that such
delegation shall not limit the Chief Executive Officer's right to receive Awards
under the Plan. Notwithstanding the foregoing, the Chief Executive Officer may
not grant Awards to, or take any action with respect to any Award previously
granted to, a person who is an officer subject to Rule 16b-3 or a member of the
Board. Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Committee by the Plan,
the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to a
Participant; (iii) determine the number of Units to be covered by Awards; (iv)
determine the terms and conditions of any Award; (v) determine whether, to what
extent, and under what circumstances Awards may be settled, exercised, canceled,
or forfeited; (vi) interpret and administer the Plan and any instrument or
agreement relating to an Award made under the Plan; (vii) establish, amend,
suspend, or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (viii) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations, and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive, and binding upon all Persons, including the Company, the
Partnership, any Affiliate, any Participant, and any beneficiary of any Award.

SECTION 4. Units.

         (a) Units Available. Subject to adjustment as provided in Section 4(c),
the number of Units with respect to which Awards may be granted under the Plan
shall be equal to 3% of the number of Units outstanding immediately following
the initial public offering of Units. If any Option or Phantom Unit is forfeited
or otherwise terminates or is canceled without the delivery of Units, then the
Units covered by such Award, to the extent of such forfeiture, termination or
cancellation, shall again be Units with respect to which Awards may be granted.

         (b) Sources of Units Deliverable Under Awards. Any Units delivered
pursuant to an Award shall consist, in whole or in part, of Units acquired in
the open market, from any Affiliate, the Partnership or any other Person, or any
combination of the foregoing, as determined by the Committee in its discretion.

         (c) Adjustments. In the event that the Committee determines that any
distribution (whether in the form of cash, Units, other securities, or other
property), recapitalization, split, reverse split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of Units
or other securities of the Partnership, issuance of warrants or other rights to
purchase Units or other securities of the Partnership, or other similar
transaction or event affects the Units such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Units (or other securities or property) with
respect to which Awards may be granted, (ii) the number and type of Units (or
other securities or property) subject to outstanding Awards, and (iii) the grant
or exercise price with respect to any Award or, if deemed appropriate, make
provision for a


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cash payment to the holder of an outstanding Award; provided, that the number of
Units subject to any Award shall always be a whole number.

SECTION 5. Eligibility.

         Any Employee or Director who performs services for the Partnership
shall be eligible to be designated a Participant and receive an Award under the
Plan.

SECTION 6. Awards.

         (a) Options. The Committee shall have the authority to determine the
Employees and Directors to whom Options shall be granted, the number of Units to
be covered by each Option, the purchase price therefor and the conditions and
limitations applicable to the exercise of the Option, including the following
terms and conditions and such additional terms and conditions, as the Committee
shall determine, that are not inconsistent with the provisions of the Plan.

                  (i) Exercise Price. The purchase price per Unit purchasable
         under an Option shall be determined by the Committee at the time the
         Option is granted and may not be less than its Fair Market Value as of
         the date of grant.

                  (ii) Time and Method of Exercise. The Committee shall
         determine the Restricted Period, i.e., the time or times at which an
         Option may be exercised in whole or in part, which may include, without
         limitation, accelerated vesting upon the achievement of specified
         performance goals, and the method or methods by which payment of the
         exercise price with respect thereto may be made or deemed to have been
         made, which may include, without limitation, cash, check acceptable to
         the Company, a "cashless-broker" exercise through procedures approved
         by the Company, a recourse note from the Participant in a form
         acceptable to the Company, or any combination thereof, having a Fair
         Market Value on the exercise date equal to the relevant exercise price.

                  (iii) Forfeiture. Except as otherwise provided in the terms of
         the Option grant, upon termination of a Participant's employment with
         the Company and its Affiliates or membership on the Board, whichever is
         applicable, for any reason during the applicable Restricted Period, all
         Options shall be forfeited by the Participant. The Committee may, in
         its discretion, waive in whole or in part such forfeiture with respect
         to a Participant's Options.

         (b) Phantom Units. The Committee shall have the authority to determine
the Employees and Directors to whom Phantom Units shall be granted, the number
of Phantom Units to be granted to each such Participant, the Restricted Period,
the conditions under which the Phantom Units may become vested or forfeited,
which may include, without limitation, the accelerated vesting upon the
achievement of specified performance goals, and such other terms and conditions
as the Committee may establish with respect to such Awards.

                  (i) Forfeiture. Except as otherwise provided in the terms of
         the Phantom Units grant, upon termination of a Participant's employment
         with the Company and its Affiliates or membership on the Board,
         whichever is applicable, for any reason during the applicable


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         Restricted Period, all Phantom Units shall be forfeited by the
         Participant. The Committee may, in its discretion, waive in whole or in
         part such forfeiture with respect to a Participant's Phantom Units.

                  (ii) Lapse of Restrictions. Upon or as soon as reasonably
         practical following the vesting of each Phantom Unit, the Participant
         shall be entitled to receive from the Company one Unit or cash equal to
         the Fair Market Value of a Unit, as determined by the Committee in its
         discretion.

         (c) General.

                  (i) Awards May Be Granted Separately or Together. Awards may,
         in the discretion of the Committee, be granted either alone or in
         addition to, in tandem with, or in substitution for any other Award
         granted under the Plan or any award granted under any other plan of the
         Company or any Affiliate. Awards granted in addition to or in tandem
         with other Awards or awards granted under any other plan of the Company
         or any Affiliate may be granted either at the same time as or at a
         different time from the grant of such other Awards or awards.

                  (ii) Limits on Transfer of Awards.

                           (A) Except as provided in (C) below, each Option
                  shall be exercisable only by the Participant during the
                  Participant's lifetime, or by the person to whom the
                  Participant's rights shall pass by will or the laws of descent
                  and distribution.

                           (B) Except as provided in (C) below, no Award and no
                  right under any such Award may be assigned, alienated,
                  pledged, attached, sold or otherwise transferred or encumbered
                  by a Participant and any such purported assignment,
                  alienation, pledge, attachment, sale, transfer or encumbrance
                  shall be void and unenforceable against the Company or any
                  Affiliate.

                           (C) To the extent specifically provided by the
                  Committee with respect to an Option grant, an Option may be
                  transferred by a Participant without consideration to
                  immediate family members or related family trusts, limited
                  partnerships or similar entities or on such terms and
                  conditions as the Committee may from time to time establish.
                  In addition, Awards may be transferred by will and the laws of
                  descent and distribution.

                  (iii) Term of Awards. The term of each Award shall be for such
         period as may be determined by the Committee.

                  (iv) Unit Certificates. All certificates for Units or other
         securities of the Partnership delivered under the Plan pursuant to any
         Award or the exercise thereof shall be subject to such stop transfer
         orders and other restrictions as the Committee may deem advisable under
         the Plan or the rules, regulations, and other requirements of the SEC,
         any stock exchange upon which such Units or other securities are then
         listed, and any applicable


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         federal or state laws, and the Committee may cause a legend or legends
         to be put on any such certificates to make appropriate reference to
         such restrictions.

                  (v) Consideration for Grants. Awards may be granted for such
         consideration, including services, as the Committee determines.

                  (vi) Delivery of Units or other Securities and Payment by
         Participant of Consideration. Notwithstanding anything in the Plan or
         any grant agreement to the contrary, delivery of Units pursuant to the
         exercise or vesting of an Award may be deferred for any period during
         which, in the good faith determination of the Committee, the Company is
         not reasonably able to obtain Units to deliver pursuant to such Award
         without violating the rules or regulations of any applicable law or
         securities exchange. No Units or other securities shall be delivered
         pursuant to any Award until payment in full of any amount required to
         be paid pursuant to the Plan or the applicable Award grant agreement
         (including, without limitation, any exercise price or tax withholding)
         is received by the Company. Such payment may be made by such method or
         methods and in such form or forms as the Committee shall determine,
         including, without limitation, cash, other Awards, withholding of
         Units, cashless-broker exercises with simultaneous sale, or any
         combination thereof; provided that the combined value, as determined by
         the Committee, of all cash and cash equivalents and the Fair Market
         Value of any such Units or other property so tendered to the Company,
         as of the date of such tender, is at least equal to the full amount
         required to be paid to the Company pursuant to the Plan or the
         applicable Award agreement.

                  (vii) Change in Control. Upon a Change in Control or such
         period prior thereto as may be established by the Committee, all Awards
         shall automatically vest and become payable or exercisable, as the case
         may be, in full. In this regard, all Restricted Periods shall terminate
         and all performance criteria, if any, shall be deemed to have been
         achieved at the maximum level. To the extent an Option is not exercised
         upon a Change in Control, the Committee may, in its discretion, cancel
         such Award without payment or provide for a replacement grant with
         respect to such property and on such terms as it deems appropriate.

SECTION 7. Amendment and Termination.

         Except to the extent prohibited by applicable law:

         (a) Amendments to the Plan. Except as required by the rules of the
principal securities exchange on which the Units are traded and subject to
Section 7(b) below, the Board or the Committee may amend, alter, suspend,
discontinue, or terminate the Plan in any manner, including increasing the
number of Units available for Awards under the Plan, without the consent of any
partner, Participant, other holder or beneficiary of an Award, or other Person;
provided, however, that no amendment to the Plan may be made without the
approval of a Unit Majority (as defined in the Partnership Agreement) that would
accelerate vesting to prior to the end of the Subordination Period, except as
provided in the current definition of Restricted Period.

         (b) Amendments to Awards. Subject to Section 7(a), the Committee may
waive any conditions or rights under, amend any terms of, or alter any Award
theretofore granted, provided no


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change, other than pursuant to Section 7(c), in any Award shall materially
reduce the benefit to a Participant without the consent of such Participant.

         (c) Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(c) of the Plan) affecting the Partnership or the
financial statements of the Partnership, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan.

SECTION 8. General Provisions.

         (a) No Rights to Award. No Person shall have any claim to be granted
any Award under the Plan, and there is no obligation for uniformity of treatment
of Participants. The terms and conditions of Awards need not be the same with
respect to each recipient.

         (b) Withholding. The Company or any Affiliate is authorized to withhold
from any Award, from any payment due or transfer made under any Award or from
any compensation or other amount owing to a Participant the amount (in cash,
Units, Units that would otherwise be issued pursuant to such Award or other
property) of any applicable taxes payable in respect of the grant of an Award,
its exercise, the lapse of restrictions thereon, or any payment or transfer
under an Award or under the Plan and to take such other action as may be
necessary in the opinion of the Company to satisfy its withholding obligations
for the payment of such taxes.

         (c) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate or to remain on the Board, as applicable. Further, the
Company or an Affiliate may at any time dismiss a Participant from employment,
free from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award agreement.

         (d) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware law without regard to its
conflict of laws principles.

         (e) Severability. If any provision of the Plan or any award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, person or award and the remainder of the Plan
and any such Award shall remain in full force and effect.

         (f) Other Laws. The Committee may refuse to issue or transfer any Units
or other consideration under an Award if, in its sole discretion, it determines
that the issuance or transfer or


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such Units or such other consideration might violate any applicable law or
regulation, the rules of the principal securities exchange on which the Units
are then traded, or entitle the Partnership or an Affiliate to recover the same
under Section 16(b) of the Exchange Act, and any payment tendered to the Company
by a Participant, other holder or beneficiary in connection with the exercise of
such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary.

         (g) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any participating Affiliate and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company or any participating Affiliate pursuant to
an award, such right shall be no greater than the right of any general unsecured
creditor of the Company or any participating Affiliate.

         (h) No Fractional Units. No fractional Units shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Units or whether such fractional Units or any rights
thereto shall be canceled, terminated, or otherwise eliminated.

         (i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

         (j) Facility Payment. Any amounts payable hereunder to any person under
legal disability or who, in the judgment of the Committee, is unable to properly
manage his financial affairs, may be paid to the legal representative of such
person, or may be applied for the benefit of such person in any manner which the
Committee may select, and the Company shall be relieved of any further liability
for payment of such amounts.

         (k) Gender and Number. Words in the masculine gender shall include the
feminine gender, the plural shall include the singular and the singular shall
include the plural.

SECTION 9. Term of the Plan.

         The Plan shall be effective on the date of its approval by the Board
and shall continue until the date terminated by the Board or Units are no longer
available for the payment of Awards under the Plan, whichever occurs first.
However, unless otherwise expressly provided in the Plan or in an applicable
Award Agreement, any Award granted prior to such termination, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under such Award,
shall extend beyond such termination date.


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