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