Peabody Energy, world's largest private mining coal is facing difficulties due to energy prices that globally declined, competitors such as inexpensive and less-polluting natural gas and the widespread economic instability. The US mining behemoth revealed on Wednesday that it is considering filing for bankruptcy protection in New York. This is a legal way of protecting it from creditors while it reorganizes after a non-consistent routine interest payment on its debt.
The coal mining company which is based in St. Louis, Missouri is a big appearance in Australian and American mining in which during the 1990's was owned by Britain's Hanson plc industrial conglomerate. The company was not able to pay the interest of $71 million that was due on Tuesday and was provided with a month deadline to settle the said amount.
Selling coal to electricity companies is the core business of Peabody aside from obtaining mining operations and having business around the world as well as providing to steelmakers. But because of the cheaper natural gas and strict environmental rules, many utilities are moving their raw materials, according to The Guardian report.
"We may not have sufficient liquidity to sustain operations," the world's largest private-sector coal company, Peabody Energy, wrote in filings this week.
That evokes Peabody could be the next large coal company to go bankrupt and file Chapter 11. Many analysts think that the companies in bankruptcy will decrease but will not disappear but some of their financial obligation may, says the MarketPlace.
Coal has significantly been beaten by the crash in commodity as governments around the world had begun to turn to more renewable energy sources and lessening carbon emissions. That was raised in late 2015 when the Paris COP21 conference ended with an international deal on cutting carbon emissions that requires less usage of coal that once became the major means of producing power around the world, MSN reports.
Peabody is not the only company that is suffering from the same situation. Rivals Arch Coal and Alpha Natural Resources filed bankruptcy within the last year including Walter Energy and Patriot coal. The company's shares declined by more than 95% last year.
Join the Conversation