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Friday, 07 August 20
PEABODY'S $1.42 BILLION WRITE-DOWN CONCEDES COAL MINES HAVE LITTLE VALUE AND DIM FUTURE - IEEFA
 Trouble at biggest mine in Powder River Basin speaks volumes about state of industry
Peabody Energy, the world’s largest privately owned coal company and the biggest U.S. coal producer, has finally acknowledged a long-apparent reality: Thermal coal mines in the U.S. have little value anymore and not much of a future.
The company said as much earlier this month when it slashed the book value of the largest coal mine in the country—the North Antelope Rochelle mine in Wyoming’s Powder River Basin—by $1.42 billion, or 22% of Peabody’s total asset value.
When Peabody emerged from bankruptcy three years ago after having discarded $5 billion of its unsustainable $10.1 billion debt load, CEO Glenn Kellow said the company was “well positioned to create substantial value for shareholders and other stakeholders over time,” and that Peabody had “taken significant steps to create a capital structure to succeed through all cycles.”
On its first full day of trading after that—on April 4, 2017—Peabody’s stock price closed at $27.25. After the company’s most recent earnings release on Aug. 5, the stock closed at $2.90, a drop of almost 90% after the company’s supposed comeback.
Peabody’s North Antelope Rochelle write-down is simply a reflection of the new reality in U.S. coal-mining that has been evident almost since the moment the company came out of bankruptcy. The industry continues to be battered by rapid structural decline driven by low gas prices, the low and falling cost of building wind and solar power generation, and sweeping initiatives by utilities and corporations to cut emissions. Peabody conceded the obstacles, almost word-for-word, in its earnings release.
DEMAND FOR COAL IS IN FREE FALL. In 2018, U.S. utilities consumed 637 million tons of thermal coal, and an additional 54 million tons were exported. This year, utilities are likely to reduce their consumption to 377 million tons, a 41% decrease over two years, while exports of thermal coal may fall to 25 million tons, a 50% drop over the same period, according to the latest short-term forecast from the Energy Information Administration.
Coal company bankruptcies more recent than Peabody’s, including Westmoreland Coal, Cloud Peak Energy and Blackjewel, have all drawn little investor interest, with mine values approaching zero, and in some cases, essentially negative asset valuations because of the significant payouts needed to coax financially weak buyers to take on huge cleanup liabilities.
Most of this action has centered on the Powder River Basin (PRB), the single biggest repository of U.S. coal, and one that has been beset by intractable problems for years.
Peabody, with some of the best economies of scale in the PRB and global expertise in coal mining, should have been well-positioned to outlast financially weaker and smaller rivals. But instead, the industry—Peabody included—embraced a perverse business model. The companies have been enabled by a lenient bankruptcy process and feeble oversight by federal and state regulators that has allowed companies to continue mining coal and undercutting each other on price while shirking their cleanup obligations, falling far behind on royalty and tax payments, and investing little capital in mine upkeep—all while spiraling toward bankruptcy anew.
ECONOMICALLY SPEAKING, THIS CAN’T CONTINUE. The U.S. thermal coal market has a vast oversupply of product chasing fewer and fewer customers. An orderly retreat would make sense, but instead, chaos reigns.
The growing probability is that the collapse of U.S. coal mining will be disorderly, resulting in bankruptcies that end in liquidation, abrupt mine closures, the abandonment of cleanup obligations, and possibly the financial collapse of some bonding companies that are supposed to be the backstop for those liabilities.
State and county finances are already at great peril in the Powder River Basin, as falling asset values and production reduce tax and royalty payments, adding to the pain of lost paychecks and damage to local businesses.
What seemed to be a slow-moving catastrophe not too long ago has gained momentum, and Peabody’s huge write-down is a stark warning that coal mining’s financial distress will continue.
Seth Feaster is an IEEFA data analyst.
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Wednesday, 12 August 20
THE COAL MARKET IN ITALY - ASSOCARBONI
Italy, which in 2019 reported a decrease in thermal coal imports, with a volume of 7,5 million tons (-32% compared to 11 million tons in 2018), whi ...
Wednesday, 12 August 20
U.S. COAL PRODUCTION IN 2020 WILL DECREASE BY 29% FROM 2019 LEVELS TO 502 MMST - EIA
U.S. coal consumption, which dropped to its lowest point since April, totaled 95 MMst in the second quarter of 2020.
EIA expec ...
Tuesday, 11 August 20
BHP COAL ASSETS WORTH A BILLION LESS THAN JUST TWO YEARS AGO - IEEFA
Another global investor, the UK’s biggest public pension fund NEST, has withdrawn funds from BHP this week because the company is profiting & ...
Monday, 10 August 20
COAL IMPORT DROPS 43% IN JULY OWING TO HIGH STOCKPILE AT PITHEADS, PLANTS - PTI
“The market participants seem to have adopted a wait and watch approach and are currently looking for a direction. We do not expect to see an ...
Saturday, 08 August 20
GLOBAL COAL POWER PUZZLE - BALTIC EXCHANGE
Global Energy Monitor’s latest Global Coal Plant Tracker has put another nail in the coffin for the coal-carrying fleet with its finding that ...
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- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Parliament of New Zealand
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- The University of Queensland
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
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- Minerals Council of Australia
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- PTC India Limited - India
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
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