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