St. Louis-based coal giant Peabody Energy Inc. is cutting 550 jobs, slowing production of metallurgical coal for steel-making, and suspending its quarterly dividend to investors after losing US$1.04 billion in the second quarter of 2015.
The company lost US$73.3 million over the same three months last year.
“Prices for thermal coal used in power production have slumped as utilities switch to cheaper and cleaner natural gas,” Reuters reports. “Prices for metallurgical, or steel-making, coal have also dropped due to weak demand from Chinese steel mills. Peabody said the benchmark price for high-quality metallurgical coal exports fell 15%.”
Of the 550 job cuts, 300 will be in mines in Australia that produce 18 million tons of metallurgical coal per year and more than one-third of Peabody’s annual revenue.
Another major coal producer, Pennsylvania-based Consol Energy, “reported a much bigger quarterly loss earlier on Tuesday and said it was delaying a planned initial public offering of a unit holding steel-making coal assets because of weak prices.”