Thursday, February 07, 2013

More coal companies could enter bankruptcy, credit rating agency says

More coal companies are shutting down or entering bankruptcy because of competition from cheap natural gas for power generation and rising costs from increased environmental regulation. New data from the Fitch Ratings credit agency predicted increased financial hardships and bankruptcies for coal companies, Moran Zhang reported for International Business Times.

"Since 1994, there have been 11 mining company defaults among producers with at least $25 million in assets as of their bankruptcy filing date," Zhang reported (table below)America West Resources Inc., headquartered in Salt Lake City, was the most recent coal company to file for bankruptcy, on Feb. 1.

U.S. coal production is down 7 percent, with Central Appalachia declining the most, 16 percent. Zhang noted that more coal plants are scheduled to shut down by 2014 in order to comply with new rules of the Environmental Protection Agency. (Read more)

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