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