America’s Two Biggest Coal Miners Tell Feds They Need To Join Forces To Survive

In a region of northeastern Wyoming and southern Montana, seams of rich coal line the walls of open-air mines like layers of a marble cake, and supersized yellow trucks ferry around huge piles of coal as though on giant platters. This 37,500-square-mile region known as the Powder River Basin is home to some of the largest coal mines in the world, and it supplies around 40% of the country’s 700 million tons annually. It is also home to one of the energy world's highest-stakes legal battles. Peabody Energy and Arch Resources — the nation's two largest coal mining companies — want to combine their operations here in a bid to cut costs and harness economies of scale. Together, Peabody and Arch control around 60% of all the coal mined inside the basin. If created, their joint venture would tower over the handful of other coal producers here, so dominating the basin's overall production that the Federal Trade Commission alleges it would violate federal competition laws. Yet it might also just be the only option left to save the two behemoth coal companies from bankruptcy. This is what the end of America's coal mining industry looks like: so unneeded that its two biggest companies now say they can't compete without attempting a potentially illegal consolidation. According to Joshua Macey, a professor at the University of Chicago Law School who studies the industry, “That’s a pretty dramatic statement from an industry that has insisted its product cannot be replaced."Only a decade ago, the argument now being made by Peabody and Arch might have seemed absurd. In 2011 coal supplied 47% of America's electricity and the competition was deep in the rear-view mirror. Nuclear energy's popularity was tanking in the wake of the Fukushima Daiichi disaster; cost-competitive wind and solar energy were still a fever dream; and the fracking revolution that would unleash waves of cheap of natural gas was mired in controversy before it had even begun. Peabody Energy, the world's largest private mining company, had a market capitalization of $18 billion. The outlook is very different today. Peabody has a market capitalization of $268 million, 1/69th of its 2011 value. Coal is America's most expensive mainstream energy source and is shunned by investors around the world. Last year coal supplied only one-quarter of America's electricity and that share is rapidly falling, accelerated by the COVID-19 economic crisis and pandemic...MORE