The second-largest coal company in the United States, Arch Coal, filed for bankruptcy protection Monday, in an attempt to shave US$4.5 billion in debt from its books.
The company expects its mining operations and shipments to continue without interruption, prompting the Sierra Club to issue an action alert
yesterday to stop a large forest clearance and mining operation in Colorado.
“Arch Coal, saddled with debt since its 2011 acquisition of International Coal Group, has been suffering from a sharp drop in coal prices, stricter pollution controls, falling demand from China, and increasing competition from natural gas,” Reuters reports. “Arch said it has a debt-for-equity agreement that will give control of most of the company to senior lenders, which as of September included Eaton Vance Management Inc, Tennenbaum Capital Partners, and Highland Capital Management.”
Arch had previously cut production, wages, prices, and dividends in response to falling demand for coal. Late last year, investors blocked the company’s plans to buy time on its debt obligations by exchanging nearly US$2.4 billion in bonds for new loans with later maturity dates.
The company’s action this week had a rebound effect on at least one other U.S. coal producer, the news service notes. “Shares of leading U.S. coal producer Peabody Energy Corporation hit a record low on Monday and were still down 18.7% in afternoon, after Arch warned that 2016 pricing is expected to be weaker than initially feared,” Rucinski writes.
In its action alert, the Sierra Club called on the U.S. Forest Service to reject Arch’s plan to “bulldoze through thousands of acres of publicly-owned, roadless forest in Colorado so they can mine millions of tons of taxpayer-owned coal. This plan would give Arch Coal access to 172 million tons of coal with the potential to release up to 486 million tons of carbon pollution.”
Analysis by the Forest Service “found that this carbon pollution could cause up to $13 billion in damages to the world’s economy and environment,” Sierra notes, while keeping 40,000 gigawatt-hours of clean electricity off the grid over the lifetime of the project.
