The country’s biggest coal mine, Peabody Energy Corp., will cut several jobs.
The St. Louis Post-Dispatch reports that Peabody is cutting 235 jobs, or 15 percent of its staff, at its North Antelope Rochelle Mine in Wyoming. The report states this is evidence “that coal’s collapse has spread beyond Appalachia’s hills to the biggest open pit in America’s cheapest coal-producing region, the Powder River Basin.”
Peabody Energy cut 235 ppl at its North Antelope Rochelle mine; Arch Coal to cut 230 ppl at its Black Thunder Mine https://t.co/U9560Wi5NT
— InsideClimate News (@insideclimate) March 31, 2016
Peabody is said to be “an incredibly efficient, low cost mine” to run, according to Clarksons Platou Securities Inc. analyst, Jeremy Sussman. He notes that Peabody job cuts just goes to show how the “low-cost guys aren’t completely unscathed” by workforce layoffs. Sussman reveals that this “is a trend that’s going to continue.”
The St. Louis-based company produced one of every eight tons in the U.S. in 2015.
Peabody Energy digs coals from seams that are as tall as a six-story building below the Wyoming plains.
Peabody is cutting jobs at a time they’re facing a possible bankruptcy, since it’s in $6.3 billion of debt. The coal mining business has until April 14 to make an overdue interest payment of $71.1 million. It scrambled to complete the sale of three Colorado and New Mexico mines to Bowie Resource Partners. Peabody believes it needs these mines in order to comply with loan contracts.
The Dickinson Press reports that Peabody will be allowed to cancel the sale after April 7, while Bowie won’t be able to do so until after April 15, Peabody said in a filing. The two companies had agreed to waive their termination rights and evaluate alternative payment structures.
Bowie’s $650 million loan to finance its purchase of Peabody’s mines in New Mexico and Colorado was “temporarily shelved,” according to a source close to the arrangement.
One reason Peabody is cutting jobs is because the coal industry is feeling the hit of decreased demand as power plants burn less of the fuel because of low-cost natural gas and more stringent environmental policies. Morning Consul adds that the Obama administration’s aggressive approach to reduce carbon emissions has played a role in the changing sphere of mining. Wyoming produced 66.5 million tons through March 26 — 30 percent less from a year ago, according to the U.S. Energy Information Administration.
“Utilities are burning as much natural gas as they can and will likely spend the entire year whittling down their bulging coal inventories,” said Mark Levin, an analyst at BB&T Capital Markets.
Two of Peabody’s competing companies — Alpha Natural Resources Inc. and Arch Coal Inc. — have already filed for bankruptcy. Likewise, they also operate in the Powder River Basin. Arch announced on Thursday that it was laying off 242 workers at its Black Thunder mine, not far from North Antelope.
— Jonathan Rowland (@jonorichard) March 31, 2016
Black Thunder produced 99 million tons last year, making it the country’s second-biggest coal mine, according the Mine Safety and Health Administration; North Antelope produced 109 million tons.
Peabody Energy employed 7,600 people as of December 31. It’s looking at bond exchanges, cost cuts, and waivers to its credit agreements to improve its finances.
“While our asset position and contracting strategies give us relative strength, we are taking these actions to match production with customer demand,” Kemal Williamson, Peabody president for the Americas said in a statement. “We regret the impact of these actions on our employees, their families and the surrounding communities in the Campbell and Converse County areas.”
There will be 1,150 employees left at the Wyoming-based plant after the Peabody Energy job cuts, according to Morning Consul.
[Photo by AP Photo/Seth Perlman, File]