Largest private mining company bankrupted-
The world’s largest private mining company bankrupted due to sharp collapse in coal prices. Peabody Energy, which is the second largest coal producer in the world and largest private company in the sector, submitted Chapter 11 restructuring application and listed all its assets, which are at worth between 10 billion USD and 50 billion USD. The company failed to improve its liquidity and cash flows, despite of the strong cost reduction program started during the last year. The drop of coal prices significantly affected the balance sheet in 2015 and increased the net debts at the beginning of the current year. Peabody also revealed that a planned sale of its New Mexico and Colorado mines has fallen through. Mine operations are continuing as usual.
Already in March, the top management of Peabody Energy said that as a result of operating losses and negative cash flows, there is a significant risk of default because of the lack of liquidity may cease to function as a going concern. Only last year the shares price of Peabody fell by 95% because of cheap coal. The coal price is under pressure during the last four year and has permanent negative trend, losing 41% from its value.
The global steel oversupply and slowing growth in China have pressured US metallurgical coal producers. Closer home, the US shale boom made natural gas competitive with thermal coal, while stricter environmental regulations raised operational costs.