The company cited “unprecedented” factors for its financial woes, including low coal prices, a weak Chinese economy, “overproduction of domestic shale gas and ongoing regulatory challenges.” Peabody says it will continue to operate its Australian coal mines.
Peabody joins a rash of major coal producers to file for bankruptcy in the past couple years, including Alpha Natural Resources, Patriot Coal and Arch Coal, representing about 45 percent of US coal output, according to the New York Times.
“This was a difficult decision, but it is the right path forward for Peabody. We begin today to build a highly successful global leader for tomorrow,” said Peabody president and CEO Glenn Kellow 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.”
Peabody’s bankruptcy comes as the US Court of Appeals for the DC Circuit prepares to hear oral arguments on the EPA’s Clean Power Plan on June 2. The emissions rule requires existing coal-burning power plants to cut carbon emissions by 32 percent by 2030, compared to 2005 levels.
Peabody had also been under investigation by New York attorney general Eric T. Schneiderman, who said the coal giant violated state laws by lying to shareholders and the public about how climate change would affect its business. ExxonMobil is under a similar investigation. In the case of Peabody, the company agreed to file revised shareholder disclosures that reveal such risks.
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