Peabody Energy, the nation’s largest coal miner, filed for bankruptcy protection Wednesday as a crosscurrent of environmental, technological and economic changes wreak havoc across the industry.
Mines and offices at Peabody, a company founded in 1833 by 24-year-old Francis S. Peabody, will continue to operate as it moves through the bankruptcy process. However, Peabody’s planned sale of its New Mexico and Colorado assets were terminated after the buyer was unable to complete the deal.
The bankruptcy filing comes less than three months after another from Arch Coal, the country’s second-largest miner, which followed bankruptcy filings from Alpha Natural Resources, Patriot Coal and Walter Energy.
New energy technology and tightening environmental regulations have throttled the industry and led to a wave of mine closures and job cuts. Peabody makes most of its money by selling its coal to major utilities that power the nation’s electric grid. New drilling techniques have allowed U.S. energy companies to free enormous amounts of natural gas, driving prices lower. The result of those plunging prices and changing environmental regulations has pushed major utilities to choose natural gas over coal to power electric grids. There are growing concerns about the ability of financially-troubled coal companies can cover the cost of pushing dirt back in mines that might close. Peabody has more than $1 billion in self-bonding obligations in five top coal-mining states: Wyoming, Illinois, Indiana, Colorado and New Mexico.
Self-bonding allows coal companies to avoid paying reclamation costs up front through conventional bond. Interior Secretary Sally Jewell is among those who have expressed worry that self-bonding could leave taxpayers on the hook for billions in coal mine cleanup costs...
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