Peabody Energy – which is the biggest coal miner in the USA and says it is the largest private-sector coal company in the world – is looking to restructure its heavy debt load and gain relief from its creditors.
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It’s been expected for months, but finally happened Wednesday – Peabody, the nation’s largest coal company, filed for bankruptcy protection amid an industry struggling with a plethora of finance forces.
New energy technology and tightening environmental regulations have throttled the industry and led to a wave of mine closures and job cuts.
The St. Louis-based company filed for Chapter 11 protection to restructure its large debt load.
However it has said it’s Australian platform is not part of the filing and will not be impacted.
Peabody said in its statement that the company is proud of its work in land restoration, or repairing areas damaged by mining, and will “meet its reclamation obligations”.
Peabody Energy’s bankruptcy filing helps draw attention to plans for financially troubled coal companies to cover the potential cost of filling in mines that close.
Coal was once the provider of roughly half of the nation’s power, but it was surpassed by natural gas as the No. 1 source of electricity for the first time a year ago. Beyond the obvious anxiety of working for a company that just filed bankruptcy, I feel sad that my company, once so prominent, is at this point.
But as demand for metallurgical coal fell, particularly in China, Peabody’s financial woes intensified. “This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we’ve made in recent years and lay the foundation for long-term stability and success in the future”, Glenn Kellow, the Peabody Chief Executive Officer stated.
But Jenny Marienau, U.S. divestment campaign manager with the climate action group 350.org, said in a news release, “Peabody Energy’s bankruptcy is a harbinger of the end of the fossil fuel era”. That compares with a $34 million adjustment to Kinder Morgan’s Ebitda as a result of Arch Coal’s bankruptcy last year, which represented a half a percent of its Ebitda that year, according to a Wednesday report by Piper Jaffray unit Simmons & Co.
“It actually causes a depression in people, the families and individuals, because of how many years they’ve worked and how many mines are here”. The industry entered a long slump – where it remains today. Pressures in recent years include “a dramatic drop in the price of metallurgical coal, weakness in the Chinese economy, overproduction of domestic shale gas and ongoing regulatory challenges”, it explained.
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Also, increased awareness amongst countries to focus towards a clean environment has caused coal demand to fall drastically.
