Big coal and St. Louis: What's happening at a glance
The coal industry continues to adjust to economic realities. Peabody Energy has announced a deal to sell assets in Colorado and New Mexico, while Arch Coal is suggesting that a bankruptcy filing may be in order. Tracking the sector can be a challenge, so we have put together a snapshot of some major players and their ties to the St. Louis region.
Overall, big coal is in trouble mainly because of low natural gas prices and some declining global demand.
There are essentially two kinds of coal that companies focus on: thermal and metallurgical.
Thermal coal is used to produce electricity and its section of the industry is being hurt by low natural gas prices.
Metallurgical coal is used in steel production. It is part of the overall coal sector’s struggles mainly because of less demand from China.
We used various sources to put this together including old news releases, Securities and Exchange Commission filings, bankruptcy documents and previous reporting from St. Louis Public Radio's Maria Altman. We also received information directly from representatives of Peabody Energy, Arch Coal and the United Mine Workers of America.
Peabody Energy Inc.
- The world's largest privately-held coal company.
- It has been headquartered in St. Louis since 1955.
- The company's share price has dropped 97-percent in the last five years.
- It has been hammered by cheaper natural gas prices and less global demand, especially in China.
- Peabody closed some U.S. offices in the past year and is reviewing the sale of “none-core assets.”
- It also announced plans to cut about 250 corporate and regional positions.
- There is a $358 million deal in place to sell operations in New Mexico and Colorado to Kentucky-based Bowie Resource Partners.
- Peabody currently has operations in nearly 25 countries on six continents.
Arch Coal Inc.
- The second largest coal company in the U.S. with approximately 5,000 workers.
- Formed in 1997 through a merger of Ashland Coal and Arch Mineral Corp.
- The St. Louis-based company has mining operations in seven states (Wyoming, Colorado, Illinois, West Virginia, Kentucky, Virginia and Maryland).
- Hard hit by electric companies shifting to less-expensive natural gas.
- Sold union and non-union subsidiaries to Magnum Coal Company in 2005. Those assets were sold to Patriot Coal about two-and-a-half years later.
- Patriot filed for bankruptcy. A judge approved the reorganization plan, which makes Arch responsible for the benefits of certain workers who retired before October 1, 1994.
- Arch warned of a probable bankruptcy filing after posting a $2 billion loss for the quarter ending September 30, 2015.
Patriot Coal Inc.
- Spun off from Peabody Energy in 2007.
- Moved headquarters in early 2015 from St. Louis to West Virginia.
- Filed for bankruptcy in 2012 and again in 2015.
- The 2015 bankruptcy plan was recently approved by a judge and most assets were sold to Blackhawk Mining.
- It allows Patriot to stop making payments to a trust* for retiree health claims.
- That trust will run out of money next year if Peabody withholds a $75 million payment. Peabody says it is not responsible for the payment.
*The trust fund is a Voluntary Employees Beneficiary Association. The United Mine Workers of America says the VEBA is supposed to cover benefits for roughly 12,000 retired miners and dependents.