The largest private-sector coal company in the world has filed for Chapter 11 Bankruptcy is looking to restructure its heavy debt load and gain relief from its creditors.
NPR is reporting that Peabody Energy — which is the biggest coal miner in the U.S. and says it is the largest private-sector coal company in the world — has filed for Chapter 11 Bankruptcy is looking to restructure its heavy debt load and gain relief from its creditors. It hopes to continue operations unimpeded.
The St. Louis-based company said in a statement that the pressure on the coal industry is "unprecedented." It cited a drop in prices, weaker demand from China, the rise of competition from fracking and "ongoing regulatory challenges" as reasons for the restructuring.
Earlier this year, Arch Coal — the second-largest coal miner in the U.S. — filed for bankruptcy. Bloomberg noted that three other major coal miners went bankrupt the year before that, and many industry watchers had expected Peabody to follow suit.
Dashed dreams of China-powered prosperity contributed to the coal giant's financial woes. Peabody bought Australian mining firm MacArthur in 2011 for nearly $5 billion. It was a bet on Asian growth, planned at a time when coal prices had been on the rise for two years.
That same year, coal prices began to drop. The industry entered a long slump — where it remains today. And instead of surging, growth in China was stagnant.
Today, Peabody carries a heavy debt burden. Australia's ABC News reports that Peabody owes $10.1 billion and has $10.9 billion in assets — and that the company lost $2 billion in 2015.
In the statement announcing the Chapter 11 restructuring, Peabody also revealed that a planned sale of its New Mexico and Colorado mines has fallen through.
Mine operations are continuing as usual, Peabody said in the statement.
Last month, Inside Energy's Leigh Paterson reported for NPR on what bankruptcy means in the coal industry. She noted that a bankrupt Peabody subsidiary recently raised ire by trying to cut insurance for retired employees.
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