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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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Tuesday, 04 August 20
KOEN INVITED BIDS FOR TOTAL 900K MT OF MIN 5600 NCV COAL FOR 3 YEARS
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 260,000 to 300,000 Tons (MT) min. ...
Tuesday, 04 August 20
THE WORLD’S FLEET OF COAL-FIRED POWER STATIONS HAS GOT SMALLER FOR THE FIRST TIME ON RECORD, WITH MORE CAPACITY RETIRED IN THE FIRST HALF OF 2020 THAN THE AMOUNT OPENED - IEA
This is according to the latest Global Coal Plant Tracker (GCPT) results by Global Energy Monitor (GEM), which we completed last month and report f ...
Monday, 03 August 20
U.S. COAL CONSUMPTION, WHICH HAS DECLINED SINCE ITS 2007 PEAK, FELL TO ITS LOWEST POINT IN APRIL 2020 - EIA
According to the U.S. Energy Information Administration’s (EIA) most recent Monthly Energy Review, the United States consumed 6.5 quadrillion ...
Monday, 03 August 20
LOW OIL PRICE AND CORONA VIRUS HIT SUB-SAHARAN AFRICA OIL PRODUCERS - FITCH RATINGS
The collapse in oil prices and the coronavirus shock is worsening the fiscal and external balances of sub-Saharan African oil producers, Fitch Rati ...
Saturday, 01 August 20
SHIP SHAPE - OUCH: FIS
Thursday afternoon saw a report that US GDP in Q2 shrank by 32.9%. Now this may have beaten expectations, but it’s a bit like saying that you ...
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- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Planning Commission, India
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- The University of Queensland
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- VISA Power Limited - India
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- MS Steel International - UAE
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Wilmar Investment Holdings
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- PTC India Limited - India
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