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