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article imageCoal companies bankrupted as industry continues its slide

By Karen Graham     Dec 3, 2020 in Business
Lighthouse Resources Inc., a coal company with mines in Wyoming and Montana, and White Stallion Energy LLC, a miner that operates in Indiana and Illinois, both filed for bankruptcy after the Covid-19 pandemic dropped coal prices.
U.S. coal production in a number of sectors has declined 28 percent since seeing its peak in 2009, the Energy Information Administration (EIA) said on Wednesday.
Nearly all the coal produced in the U.S. goes for electricity generation, but its share has been eroded in recent years by growing natural gas-powered generation and rising share of renewable energy generation. And then, in early 2020, the global coronavirus pandemic hit.
The pandemic led to a decrease in demand for electricity to run offices, factories, and stores around the world, but in the U.S., coal power plants are usually the first place that utilities cut back when they need less electricity.
Peabody Energy Corporation has touted its ability to raise shareholder cash, but three years after emerging from a bankruptcy reorganization that purged $5 billion in debt from its balance sheet, warned last month it is again looking at bankruptcy because it's facing the same issues that it was looking at five years ago.
Peabody recently cited a number of factors that are destabilizing its balance sheet, including weak third-quarter results, additional collateral demands from sureties, and the possible violation of terms in its credit agreements. And the future does not bode well for the company, either.
There was a recent fire at a coal mine in Australia, the continuing closure of coal-fired power plants in the U.S., and the new, incoming Biden administration. All this could accelerate Peabody's decline and the decline of the coal sector.
Peabody coal mine in New South Wales.
Peabody coal mine in New South Wales.
Peabody Energy
Lighthouse Resources Inc, a coal company with mines in Wyoming and Montana, filed a voluntary petition for Chapter 11 bankruptcy on Wednesday in the U.S. Bankruptcy Court for the District of Delaware. Lighthouse has a debt of about $456 million, according to its declaration.
“In light of the challenging market conditions and other impacts on our business from COVID-19, we have been required to reduce costs and reorganize our business resulting in the reduction of our workforce in Montana," Everett King, Lighthouse’s chief executive officer, said in a statement.
"We are deeply saddened by this impact on individuals, families, and communities. A court-supervised reorganization process is necessary for Lighthouse and its stakeholders and we have no alternative.”
The Lighthouse-owned Decker coal mine in Montana produced just over 709,000 tons of coal and employed 164 workers in the second quarter of this year, according to U.S. Mining Safety and Health Administration data. Production during this year's third quarter dropped by nearly 42 percent, compared to the same period in 2019.
White Stallion Energy LLC,;, which operates mines in Indiana and Illinois, suffered a net loss of about $30 million in 2019. In the months before its bankruptcy, its financial situation worsened due to the decline in coal consumption at power generation facilities caused by the economic slowdown resulting from Covid-19, according to the bankruptcy declaration. The company expects that all its mines will remain idled during the bankruptcy process.
More about coal companies, Bankruptcy, peabody, Covid19, Industry
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