The decision by coal giant Peabody Energy to cut the declared value of the United States’ biggest coal mine by US$1.42 billion is an acknowledgement that “thermal coal mines in the U.S. have little value anymore and not much of a future,” the Institute for Energy Economics and Financial Analysis (IEEFA) writes in an assessment of the August 5 announcement. The decision by the world’s biggest privately-held coal producer reduces the asset value of the North Antelope Rochelle mine in Wyoming’s Powder River Basin by 22%, IEEFA writes. It was the biggest loss the company had ever reported, on a mine that accounted for about 12% of U.S. coal production last year, Bloomberg reports. Like this story? Subscribe to The Energy Mix and never miss an edition of our free e-digest. The mine “has about 19 years of reserves, but with utilities increasingly shifting away from coal, the company may now be recognizing that its supply will outlive demand,” the news agency adds, citing Bloomberg Intelligence mining analyst Andrew Cosgrove.“They might have cut the mine life in half,” Cosgrove said. “There really is no respite in sight, and the bottom for coal demand continues to remain elusive.”Three years ago, Peabody emerged from bankruptcy after offloading about half of its $10.1-billion debt load, IEEFA recalls. At the time, CEO Glenn Kellow claimed the company was “well positioned to create substantial value for shareholders and other stakeholders over time.” Since then, the company’s stock value has fallen from $27.25 on April 4, 2017 to $2.90 on August 5, 2020—a “comeback” that cost shareholders nearly 90% of what they’d invested in the company.
Source: Peabody’s Massive $1.42-Billion Write-Off Shows ‘New Reality in U.S. Coal Mining’ – The Energy Mix
