Welcome to the twilight of American coal. Peabody Energy Corp., the nation’s biggest miner, is on the verge of bankruptcy, crippled by $6.3 billion in debt. The company’s announcement Wednesday that it may file sent a decisive signal to the market: The U.S. coal industry is still too big.
“It’s the end of the era of publicly traded coal companies,” said Ted O’Brien, chief executive officer of Doyle Trading Consultants, an energy markets research group.
Peabody has lost 98 percent of its market value in 12 months and watched as its main rivals — Walter Energy Inc., Alpha Natural Resources Inc. and Arch Coal Inc. — all filed for bankruptcy, crushed by falling demand, massive debt loads, mounting environmental regulations and competition from cheap natural gas.
Coal prices have plummeted as much as 75 percent since 2011, and hundreds of mines across the country have been shuttered. The combined market capitalization of U.S. coal miners since 2011 has plunged from over $70 billion to barely $6 billion, according to data compiled by Bloomberg.
Many analysts reckoned Peabody would be the one to survive the downturn. As the biggest producer of them all, it has a diverse mix of operations from Illinois to Australia — including one giant open pit in Wyoming that churned out about one of every eight tons of coal mined in the U.S. last year.
But for all its reach, the 133-year-old company hasn’t posted an annual profit since 2011 and is now buckling under its debt.
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