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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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Monday, 29 June 20
ULTRAMAX: A 58,000 FIXING DELIVERY SINGAPORE TRIP, VIA EAST COAST INDIA, REDELIVERY CHINA IN THE LOW $12,000S - BALTIC BRIEFING
Capesize
As the halfway mark of 2020 arrives, the capesize market is making new highs for the year. From persistent lows earlier caused by a ba ...
Saturday, 27 June 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Friday, 26 June 20
WHAT TODAY'S BAILOUTS CAN DO FOR TOMORROW'S ECONOMIES - WORLD ECONOMIC FORUM
The COVID-19 crisis provides an opportunity for governments to build fairer, more sustainable and more resilient economies.
Governments a ...
Thursday, 25 June 20
ALL YOU WANT TO KNOW ABOUT COAL MINE AUCTIONS - THE HINDU BUSINESS LINE
Last week, Prime Minister Narendra Modi threw open the auction of 41 coal blocks for commercial mining. The decision, which was part of the announc ...
Wednesday, 24 June 20
MARKET INSIGHT - INTERMODAL
The World Bank estimates that the global economy will fall by 5.2% this year, underlining that the Covid-19 pandemic has had rapid and massive cons ...
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- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
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