Peabody Energy Corp. filed for bankruptcy protection Wednesday amid an unprecedented slump in coal prices.
Peabody, the largest privately owned coal mining company in the world, is just the latest of its competitors to file for bankruptcy since last year, joining Alpha Natural Resources Inc., Patriot Coal Corp. and Arch Coal Inc.
{mosads}The company cited a dramatic drop in coal prices, a slowdown in China’s economy and the Obama administration’s regulatory agenda as some of its top reasons for needing Chapter 11 bankruptcy.
“This was a difficult decision, but it is the right path forward for Peabody,” Glenn Kellow, the company’s president, said in a statement.
“Through today’s action, we will seek an in-court solution to Peabody’s substantial debt burden amid a historically challenged industry backdrop. This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we’ve made in recent years and lay the foundation for long-term stability and success in the future.”
It said all of its mines and offices are continuing to operate normally, and it expects that to remain the same throughout the bankruptcy process.
Peabody produced 189.5 million short tons of coal in the United States in 2014, the most recent year for which the Energy Information Administration has data. It was 19 percent of the country’s production.
The company employs about 8,000 worldwide in the 25 countries in which it operates.
While competition from cheap natural gas and low demand are the main factors hurting the coal, the industry also puts a large amount of blame on President Obama.
Major Environmental Protection Agency regulations in recent years have hit the industry hard or will soon, like limits on power plants’ mercury emissions and their carbon dioxide output.
Additionally, the Interior Department announced in January a moratorium on new coal mining leases on federal land. Peabody is one of the most active coal companies on federal land, with significant operations in Wyoming and Montana’s Powder River Basin.
Nonetheless, Peabody is optimistic for the future.
“The factors affecting the global coal industry in recent years have been unprecedented,” it said in its statement. “Still, multiple third-party estimates project that both the U.S. and global coal demand will stabilize. Coal currently fuels approximately 40 percent of global electricity and is expected to be an essential source of global electricity generation and steel making for many decades to come.”