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