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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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- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Jindal Steel & Power Ltd - India
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Aditya Birla Group - India
- MS Steel International - UAE
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
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