Monday, January 11, 2016

Arch Coal files for bankruptcy protection, says it will keep operating as usual

Arch's Black Thunder Mine, 2007 (Photo by Matthew Brown, AP)
Arch Coal Inc., "the holder of the second-largest reserve of coal in the U.S., filed for creditor protection Monday" in St. Louis, Bloomberg News reports. "The company said it has an agreement with a majority of its senior lenders to erase $4.5 billion in debt from its balance sheet and allow it to keep operating without interruption. Arch has been losing money since 2012."

In a statement filed with Arch's Chapter 11 bankruptcy petition, Chief Financial Officer John T. Drexler said “A confluence of economic challenges and regulatory hurdles has hobbled the coal industry.” Less Chinese demand, Australian competition and cheap natural gas "pushed competitors Patriot Coal Corp., Walter Energy Inc. and Alpha Natural Resources Inc. into bankruptcy last year," Bloomberg notes, also citing "high pension costs and the threat of stricter environmental regulation."

Arch said environmental rules have made it more expensive for companies to use coal. "It blamed Environmental Protection Agency rules for causing more than 400 coal-fired generators to close," Bloomberg reports. "Overall, 23 percent of the generating units are expected to retire or convert by 2025, Arch said." For more from the company on its reorganization, click here.

The company has 11 mines in seven states. An environmental group in Wyoming's Powder River Basin, where Arch has more than 90 square miles of mines, including the nation's second-largest, Black Thunder, said the bankruptcy should not reduce the company's responsibility to reclaim its strip mines. "Arch has a $458 million reclamation liability. State and federal taxpayers must not be left with the bill," said Bob LeResche, president of the Powder River Basin Resource Council. (Read more)

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