World Coal Miner Broke; Files Bankruptcy ProtectionLatest News, World News Wednesday, April 13th, 2016
The world’s largest privately-owned coal mining firm, Peabody Energy, has filed for bankruptcy protection in the US, owing to crash in coal prices, which has left it insolvent to pay its huge debts.
The firm disclosed that the move was aimed at reducing debt and that all its mines and offices would continue to operate. Its Chief Executive, Glenn Kellow declared: “This was a difficult decision, but it is the right path forward for Peabody,”
The Coal giant’s travails began after its takeover by an Australian rival, Macarthur.
The company paid about 5bn Australian dollars (£2.5bn) to acquire the coalminer in 2011, but prices of coal crashed, when it struggled to repay its subsequent debts.
Macarthur’s move is the latest in bankruptcy cases in the industrial sector, with miners as the worst hit; combination of low energy prices, tougher environmental regulations and a shift to natural gas.
Peabody in Chapter 11 of its bankruptcy filing stated: “The factors affecting the global coal industry in recent years have been unprecedented,” “Industry pressures in recent years include a dramatic drop in the price of metallurgical coal, weakness in the Chinese economy, overproduction of domestic shale gas and ongoing regulatory challenges.”
The filing ranks among the largest in the commodities sector since energy and metals prices began to fall in the middle of 2014. Prices were hit as demand in emerging markets such as China and Brazil began to slow.
Peabody according to its official website prides itself with about 8,000 employees and customers drawing from 25 countries.
Short URL: http://www.africanexaminer.com/?p=31793