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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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Thursday, 06 August 20
SUPRAMAX MARKET CONTINUED SIDEWAYS TREND, AND LITTLE INSPIRING NEWS APPEAR - FEARNLEYS
Capesize
There is presently a small correction in rates, but overall levels are up from previous week mainly due to increased demand in the Eas ...
Thursday, 06 August 20
KOREA SOUTH-EAST POWER INVITING BIDS FOR MIN 3,600-MAX 3,800 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) inviting bids for 80,000 Tons (MT) Min 3,600~Max 3,800 kcal/kg NCV coal f ...
Wednesday, 05 August 20
NO NEW MINING LICENSES - A REMINDER TO GOVERNORS IN INDONESIA - SSEK
Indonesia’s acting Director General of Mining and Coal (“DGMC”) has issued a letter to the country’s provincial Governors t ...
Wednesday, 05 August 20
AUGUST 2020 HBA HITTING ITS LOWEST LEVELS IN HISTORY
COALspot.com: The Indonesia Coal Price Reference for the month of August plunged 30.73% YoY, hitting its lowest levels in history and highlighting ...
Wednesday, 05 August 20
SLUMP IN OIL REVENUE CHALLENGES MIDDLE EAST OIL EXPORTERS - INTERMODAL
The Covid-19 pandemic has had far-reaching consequences on the global capital markets. Despite the US government’s efforts for a quick and de ...
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- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Carbofer General Trading SA - India
- Planning Commission, India
- Sical Logistics Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
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